Caring for the 'sharing economy'

Potential regulations threaten new hospitality businesses


Traditional business interests are challenging a new, growing economy - one in which locals with spare beds or room in their cars "share" with willing consumers - for a small fee, of course.

The "sharing economy," as it's coming to be known, has attracted increasing attention the past few years, initially due largely to its novel nature. But recently, the publicity has stemmed from the growing legal and regulatory challenges posed by the unique new business sector.

Businesses in the sharing economy, such as room-sharing AirBnB (AirBed and Breakfast) and ride-sharing service Uber, use the Internet to link room or car owners willing to sell their time and space to perfect strangers in need of a bed or a lift. The businesses themselves collect a small fee from the transactions between the strangers for offering the service that connected them.

It might sound crazy at first - getting a ride from a stranger or sleeping in their guest room. But the idea has taken off, catching the attention of more enthusiastic users and powerful detractors.

The issue facing the sharing economy forerunners isn't that consumers don't like them. It's just the opposite - they are getting too popular.

The services offered, linking people to people, are significantly different from their more formal, traditional counterparts, like hotels and taxis. But with businesses like AirBnB reaching over 200,000 rooms for rent worldwide, traditional business is starting to see the market as insufficient to share with the sharing economy.

A string of legal challenges, from regulations capping the number of Uber drivers in Seattle to a lawsuit against AirBnB in New York City, is raising questions about these new social services and their viability in a market dominated by entrenched business lobbies.

But these challenges are less because there is a clear and present danger to consumers or citizens, and more because of the threat to hotel and taxi profit margins.

The subpoena against AirBnB and similar actions against the booming startup should come as no surprise given the powerful hotel lobby that has an interest in their demise. Similarly, Uber has faced numerous legal actions taken by taxi companies in just the past few years.

Traditional business, threatened by a promising new industry, is reacting aggressively; when the next generation butts against the old, there will always be some sparks.

Calls for regulation threaten to quash this burgeoning new arena for consumption, stifling innovations and entrepreneurialism to serve the profiteering of existing industries.

This is unacceptable - the job of regulation and governmental action is not to stymie the new, but manage it responsibly. Regulation should not be beholden to (big) business.

Certainly, this new arena requires some government and legal involvement. There are understandable concerns about the safety of these programs. Some oversight is called for in the space where AirBnB and Uber exist, between largely unregulated private ownership and strongly regulated commercial interaction.

Through self-regulation, like verifying identities and putting rules around who can offer services, these businesses have created an air of trustworthiness around them, allowing for their meteoric rise.

Ensuring continued self-regulation and instituting minor, though vital, oversight - as opposed to onerous regulation and lawsuits - is the place for the state in regard to this new sector.

Innovation and entrepreneurialism have always driven economies forward, though not without controversy. Traditional businesses expectedly denigrate the newcomers.

The place of regulation, however, is in protecting our best interests, not business' interests.

email: editorial@ubspectrum.com