Is Sharing Really Caring? The Debate Heats Up in Transatlantic Cities

The sharing economy is coming under strict scrutiny from cities, states, and countries in both the United States and Europe as platforms like Uber, Airbnb, and Lyft gain in both popularity and economic importance. Cities by their nature are sharing spaces. Urbanites share limited space with lots of people, must address challenges head on at a community level, and live with tolerance and empathy for other cultures. But what cities are struggling with now is the intensification and commodification of sharing brought on by market shifts. The existing set of rules and regulations are not yet equipped to manage this new reality, and cities are struggling with how to adapt. As the sharing economy becomes more mainstream governments and companies must work together and share the responsibility of creating safe, equitable, and efficient policies for consumers. So far, they are not playing nice with each other, and it is getting ugly. Uber has pulled out of San Antonio and Austin, Texas in the United States in recent months after years of combat with city halls. Airbnb is virtually banned in the city of Berlin, Germany, and the company fears the ruling will go country-wide soon.

When it comes to what lies ahead for the sharing economy, there are a few things that are mostly certain. The first is that it is not going away. The innovative platforms create competitiveness in extremely rigid and at times monopolistic markets. Millennials comprise 40 percent of the sharing economy’s consumers, and most of this group favors the sharing economy according to a recent study. Additionally, city legislation that is aimed at banning companies like Uber or Airbnb could likely create sharing black markets that create illicit flows of activities much more onerous than renting out a pool house to a college student for the weekend. Cities should weigh these unforeseen externalities with the negatives of the sharing economy that are already apparent. Rather, cities should use these recent cleavages with sharing companies as opportunities to adjust rules and regulations to ensure safety, reliability and equity in the new digital reality. This might be tricky for city halls.

Secondly, market forces led by growing demand in sharing will most likely win out over city halls in the end, and some form of compromise will have to be reached between these reticent cities and sharing companies as they grow in popularity. Instead of creating fortresses out of cities for sharing companies, cities should work with sharing platforms to create better policies and frameworks. When Uber was starting up in Poland, the municipality of Warsaw worked with the national government to update their regulatory structures to the digital marketplace. “The transportation laws [in Poland] were written back in the day when we did not even have the internet, so we had to come up with ways that our product was safe and great for the customers,” said Kacper Winiarczyk, general manager for Uber Poland. Albeit slow and sometimes not so steady, many public officials in key European cities like Warsaw and Amsterdam have begun to reexamine their administrative processes, considering the needs of young startups as they begin to bring products to market and create jobs. This will be tricky for city halls.

These embattled sharing companies are not infallible just because sharing is here to stay. As the debate moves forward, city halls have indeed been raising important questions around the safety and equity of their citizens, questions that sharing platforms have not given enough thought about in many instances. Without a doubt, Airbnb is wishing to be the victors of a landmark case as they prepare to sue the city of New York and Mayor Bill de Blasio after a slew of new restrictions and regulations for the company were signed into law by Governor Andrew Cuomo.  

In many meaningful ways, both sides are in the right for different reasons. Without the sharing economy, gaps will be left in many people’s incomes as the ability to use their houses and cars on platforms disappear, and at the same time, consumers will have to pay more for services from traditional businesses like hotels and car services, leaving them with less disposable income. Income volatility is a major concern for the United States and the European Union since the crash of 2008 and 2009, and sharing can at least provide some relief for many sharers using their equity, either a car or a house, as cash flow. The other concern is that special interests like the very powerful hotel lobby in major cities are influencing policy and skewing markets in their favors. “In typical fashion, Albany back-room dealing rewarded a special interest — the price-gouging hotel industry — and ignored the voices of tens of thousands of New Yorkers. A majority of New Yorkers have embraced home sharing, and we will continue to fight for a smart policy solution that works for the people, not the powerful,” Airbnb’s head of New York public policy Josh Meltzer said in an incendiary statement in response to the most recent ruling. This is what sharing companies get right about the scenario.

Without rules, proper taxation, and oversight from city governments on markets, sharing platforms are taking away tax revenues from city governments for services people rely upon in their daily lives. Ever wonder what surcharges are for when you get into a taxi? In many cities, some those charges go to public infrastructure projects for roads, bridges, and transport systems that keep cities moving. In New York, there is a 50-cent Metropolitan Transit Authority (MTA) State surcharge for all trips that end in New York City or Nassau, Suffolk, Westchester, Rockland, Dutchess, Orange, or Putnam Counties. Uber has continuously fought paying into this system, claiming that they are a platform service and not a transportation company. The city is adamant that Uber and Lyft begin to pay this surcharge, and their platforms operate on the same plane as city taxis, making them part of the overall New York City transportation system and marketplace. This is what city governments get right about the scenario.

Whatever the resolution, both sides will have to learn to play nicer in the coming years, and both sides will have to innovate to find suitable outcomes. City halls will likely begin to adopt policies more conducive to a 21^st century economy. People will go where they have opportunities, and if platforms are unavailable in certain places, cities may begin to experience sharing brain drains as citizens wanting or needing to share move to the suburbs or other more sharing-friendly metropolitan areas. Additionally, sharing companies will most likely begin to realize that too much animosity towards governments has its own set of challenges. Apple’s recent fine from the European Union is case-in-point. In the end, cities and companies must share the responsibility. 

^{Photo credit: Raysonho}