G IACOMO S KEATE
Should internet companies like Uber and Airbnb be regulated?
To say that the relationship between innovation and regulation is a contentious one is a huge understatement. Never has this been more relevant than in today’s climate of technological change. It has been exemplified by the emergence of the so called “sharing economy”, spearheaded by tech giants such as Uber and Airbnb. Their disruption of the traditional framework of their respective industries has brought about cost effective and innovative solutions to consumers, but also a tide of bureaucratic and slow moving regulation which threatens to hinder
innovation. Whereas, on the opposite side, the argument exists that these regulations serve the consumer and protect them from potential threats, such as higher prices and a lack of appropriate safety laws and procedures, instead suggesting that they help these fast growing companies keep their feet firmly on the ground. The sharing, or “gig”, economy has challenged the traditional landscapes of not just entire industries but of the notion of private ownership itself. This is because individuals can now turn their homes and cars into common resources in return for income. Such shifts in the way resources are utilised will inevitably gain the attention of regulatory bodies and government institutions seeking to maintain a “level playing field”. These include a great deal of health and safety requirements met by hotels and landlords being translated into equivalent regulations for Airbnb hosts; such as rigorous fire safety procedures which, at the time of writing, Airbnb hosts are exempt from. Much the same applies to Uber; with concerns over whether Uber drivers should have to have the same safety, route knowledge and insurance measures imposed on traditional commercial taxis, such as Black Cabs in London. Taxation of these new pioneers of the sharing economy has also proved to be a challenge for regulators because classifying these new companies in terms of what and how much tax they should pay is difficult due to their unique business models. For example, Airbnb hosts are currently exempt from New York City’s 5.875% hotel tax rate as the New York Department of Finance considers them as “neither hoteliers nor room re-marketers”. Similar issues have arisen with Uber because their drivers are not employees of Uber but rather “freelance licensed drivers” and, therefore, are not strictly able to be taxed as full time employees. In this sense, it does create an unequal playing field as certain enterprising individuals exploit the time lag between existing regulations for established industries and future adjustments that incorporate the new business models of the gig economy; whether this is an Uber driver’s generous tax advantages over his Black Cabbie competitor or the exemptions of an Airbnb host from complying with health and safety procedures that a hotel in the area would be required, by law, to adhere to. This latter point regarding safety could potentially cause problems because, if an Airbnb listed property caught fire, there could be injury due to an unidentified health hazard in the property. Who would be accountable in this case? And how does insurance come into play? Many of the problems associated with health and insurance tie in with the argument that Uber and Airbnb hide behind their status as a “platform” as this, by definition, brings together consumers with suppliers across the internet. Many regulators argue that they have the ability to shirk out of the responsibilities of traditional hotel chains or commercial unions. In the case of taxi drivers this provides a corporate safety net for their employees or members for lack of a better word. The risk is shifted from the shoulders of large organisations to a few enterprising individuals. Many would argue that whilst risk and entrepreneurship go hand in hand, income
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