Regulation could strengthen sharing economy in long run

Cities are finally figuring out how to integrate disruptive technology companies. Will it spell the end of a sharing economy based largely on a free, unhindered market?

'The great beauty of the sharing economy is that it's so simple,' tech policy expert says

Regulating the so-called sharing economy has proven difficult for cities across Canada. Once rules are in place, however, companies involved in the sharing economy could help improve urban planning, experts say. (Reuters)

At the core of the so-called sharing economy are freewheeling, innovation-obsessed, algorithm-driven companies that, by their very nature, resist regulation.

They have, in the parlance of our times, "disrupted" all sorts of very large, well-established industries and, in some cases, thrown them into total chaos (looking at you, Big Taxi). 

There's no question that these companies are playing by a different set of rules than their more traditional competitors.

Increasingly, though, cities are moving to regulate the sharing economy — ostensibly to "level the playing field," as the regulators often say — and maybe take a piece of the action for public coffers in the process.

But does regulation put the sharing economy at risk of losing all the things that make it appealing in the first place? Will UberX be just another cab company? Will Airbnb still be cheaper than renting a hotel room? 

"The great beauty of the sharing economy is that it's so simple and low cost for consumers," says Sunil Johal, policy director at the Mowat Centre, a think-tank based at the University of Toronto.

"There's not a lot of red tape, so people can get into it easily, whether as a consumer or as someone offering a service."

And people have.

A 2015 report by the accounting firm PwC estimated that in 2014, sharing economy businesses raked in about $15 billion in revenue. By 2025, that figure will be closer to $335 billion, according to the report. 

One size doesn't fit all

The explosive growth is easy to understand. Need a ride? Call an UberX. Looking for a place to stay last minute? Check Airbnb. Have to find someone to watch your pooch? Dogvacay is a digital Arkham of crazy canine lovers. Do it all on your smartphone.

A map showing where Uber operates in Canada. (CBC)

That "ease of use," as Johal calls it, is fundamental to the sharing economy's success and future. 

"Regulations cannot be a one-size-fits-all approach. And they must allow these companies to preserve the customer experience at their heart," says Joeri van den Steenhoven, director of the Toronto-based MaRS Solutions Lab.

"They should focus on fairness and consumer safety."

Those things have been at the centre of the protracted battle between the taxi industry and Uber in Toronto, a fight that has played out in cities across the country. A draft bylaw released this week by the city would regulate the UberX service, allowing it to operate legally in Toronto. 

Dangerous confrontation between taxi driver and apparent UberX driver

7 years ago
Duration 0:37
Video shows dangerous confrontation between a protesting taxi driver and someone he said was driving for UberX in downtown Toronto

Simultaneously praised and denounced, there's a lot to take in (you can read it all here). But a critical point is that an UberX ride will likely cost a little more than it previously did. 

"The big question is, 'Will these regulations raise costs on the service UberX provides to a point that they aren't really beneficial to the consumer anymore?'" said Johal. 

Either way, there will be a "convergence between the two models over time," he said. "But since people have taken to Uber like they have, the traditional taxi companies will start to look more like Uber, rather than the other way around."

'How can it help create a better city?'

While Uber is notorious for its uncompromising, cutthroat approach to negotiating with cities, other major players in the sharing economy have actually asked for more regulation.

That's the case in Vancouver, where Airbnb is facing criticism from affordable housing activists who are concerned the company and others like it are putting pressure on the city's rental housing stock, already in short supply

The company says it wants clearer directions from the city so it can operate without fear of potential legal consequences down the road.

"We're committed to working with cities to create sensible regulations that are really simple and clear to understand," an Airbnb representative told CBC News earlier this month.

Co-operation is the key, says van den Steenhoven, because a myopic focus on Uber and Airbnb is obscuring the ultimate potential of the sharing economy to transform cities. These companies also hoard a tremendous amount of potentially useful data that could help city planners design better urban environments. 

"It's so much more than just ride-sharing, or home-sharing," said van den Steenhoven. "Cities need to be less responsive and more pro-active in preparing for sharing economy companies.

"They should be developing strategies asking, 'What kind of sharing economy do we want? How can it help create a better city?'"


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