Sharing Economy vs. Platform Capitalism
Governments across the world are encouraging people to share resources and show private initiative. The sharing economy is their natural ally. Meanwhile, professional on-demand service platforms are disrupting regulated industries bypassing existing legislation in the name of sharing. We need to draw a line.
Now everybody is an entrepreneur
People across the globe are discovering their entrepreneurial potential by tapping into their existing skills and resources: with the tap of a button anybody, anywhere can now rent a spare bedroom or share an empty seat in their car. Low barriers to entry and intuitive marketing make putting underused assets to work and creating supplemental income a smooth, mobile experience.
As an early team member of Airbnb, the apartment sharing site, and founder of Wunder, an urban carpooling app, I personally know hundreds of people whose lives were positively impacted by the additional financial freedom that came from sharing their home or car and by the social connections they formed along the way.
Governments want sharing
Long before the internet, local governments have encouraged entrepreneurship and sharing. Cities promote carpooling to ease congestion and central governments have invested in programs to diversify and strengthen economic opportunities for individuals and their families.
In my work at Airbnb and now at Wunder I regularly meet with law makers on a local and federal level in European countries. Whether it’s Berlin or Budapest I see a willingness to embrace the sharing economy everywhere: the government in Germany wants to promote digital transformation; in Hungary, decision makers want to accelerate economic growth.
The spectrum from sharing to selling
What was designed as a casual, peer-to-peer experience in some cases turns into an unregulated professional service. Highly motivated by seeing immediate rewards for hard work or an original idea, some people even give up their day jobs to become a full-time virtual entrepreneur, renting a second and third apartment.
In other cases, platforms are designed as a professional service experience from the beginning. On Uber, “everyone’s private driver”, a driver cannot set the direction of her trip. Instead of sharing a seat with someone headed in the same direction, drivers are working for you, taking you where you need to go. To confuse the regulator and the media, it has become common practice for on-demand service platforms to call their product sharing, too.
A wolf in sheep’s clothing
The mislabeling of professional services as the sharing economy not only discredits the idea of sharing it threatens hard-won employee and consumer protections rights for Europeans. While hundreds of millions of Euros from private investors flow into professional service companies aimed at extracting a competitive advantage through low-cost labor, tax and license evasion, platforms built around sharing are challenged to stay true to their original vision. Given the prospect of short-term financial gain, it is unsurprising that some companies give in to the temptation.
The mislabeling of professional services as sharing economy discredits the idea of sharing. It is in the best interest of those pursuing a sharing model to push for clear regulation.
Drawing a line between P2P and professional services
In order to reap the social, economical and environmental benefits of sharing but avoid its professional abuse, we need a clear, legal distinction between peer-to-peer models and professional services. Here is a simple definition:
“Renting an asset that you have anyhow is sharing. Providing an asset that you wouldn’t otherwise have is a service”
If you rent your own apartment while you are on vacation it’s sharing. If you get a second apartment to rent out all year round it’s a service.
If you carpool to work with a person headed in the same direction it’s sharing. If you take people wherever they want to go it’s a service.
Where is the cut-off point?
How many nights should I be allowed to rent out before I am considered a hotel?
How many trips should I be allowed to share before I am considered a taxi?
“As long as you make less in a year sharing an asset than it costs, you did not buy the apartment / car / whatever to rent it out.”
It is in the best interest of consumers to receive necessary protections based on clear rules that also enable a common-sense level of sharing.
The most transparent economy
Tell your grandparents about sharing a ride and offering a stranger a room in your home and you will be surprised: “All this is not new!” they will tell you. Carpooling organized through billboards and subletting a spare bedroom have been around for decades. With the advent of smartphones, online identities and ubiquitous internet they are only becoming much easier.
What is new is the level of transparency created in the sharing economy. Peers not only transact in a community but also rate one another. Often people are able to see elaborate user profiles before deciding to make a purchase.
Accountability is good for fair and equal tax collection as well. There is a clear understanding in the companies that I work with that all income must be declared for tax purposes. Established companies like Airbnb provide the necessary tax forms and send reminders to its users, in some cases even collecting taxes on behalf of the local government.
An opportunity for growth
The sharing economy is an opportunity for people to use their assets more efficiently, build new social connections and become financially more independent. It is an opportunity for regulators to ease congestion and collect taxes on additional economic activity.
Governments that positively regulate the sharing economy through a clear definition will be able to ensure a level playing field for all professional service providers and encourage private entrepreneurial activity.
