Of the many commentators who have weighed in over recent months about what regulations should apply to sharing economy companies, I think few have a fundamental understanding of what the term “sharing economy” actually means.
For many it equates to a single company: Uber. But the $50 billion company disrupting taxi services isn’t involved in the sharing economy in the true sense of the word. Most of its services, from hailing taxis to hire cars, are simply traditional driver services powered by apps instead of call centres.
UberX, the controversial ride-sharing service, does involve a transaction between two peers. But when Uber touts uberX as a viable form of full-time employment for drivers with lofty salary goals, it falls short of the true nature of the sharing economy: taking the under-utilised assets in our country – from cars to driveways, tools, homes and our own time – and using them more efficiently.
You don’t have to look far to see how the real sharing economy is thriving. Thousands of Australians rent their homes every week on Airbnb. Airtasker’s crowdsourced army of 250,000 freelancers completed $10 million worth of outsourcing tasks last year. And DriveMyCar has organised more than 4600 bookings for long-term car rentals, with everything from a small hatchback to a Porsche on call.
DISRUPTING WITHIN THE LAW
Each of these are just as disruptive as Uber, without skirting the laws. Yet the legal challenges and question marks that sit over app-driven taxi services have the potential to harm real sharing economy services.
There is a difference, after all, between disrupting old business models and simply circumventing the law.
The majority of peer-to-peer businesses operate comfortably within existing regulatory frameworks. Most are Australian-owned, pay their taxes as required and use none of the sophisticated income-shifting tricks to avoid paying their share of tax.
Peer-to-peer businesses do more than most other businesses to ensure successful transactions and happy customers. They have to satisfy the needs of customers on both sides of the transaction – without it, they have no customers or suppliers.
And they act as an intermediary, to establish trust between owner and renter and ensure that the appropriate checks and balances are in place to avoid any issues.
That sort of trust, in sharing economy participants and the intermediary itself, is paramount. Recent PwC research suggested those who participated in the sharing economy were more interested in a service regulated by their peers – effectively determining the reputation of those who transact in this economy – rather than by government.
But where regulation is required, policymakers need to be careful as to how they weigh up these differences. The Australian Tax Office’s ruling last week was a small but positive step to show why this distinction needs to be made. In recognising Uber and Airbnb – and by extension many other sharing economy companies – as fundamentally different business models, it recognised the difference between a true sharing economy business, as opposed to one that simply says it is.
Labor’s recent Sharing the Future discussion paper, released in March, is a step in the right direction. The NSW government has also shown that it is willing to embrace peer-to-peer collaboration to make better use of its own assets.
Given recent discussions around governments conflating start-ups with small businesses, it should probably come as no surprise that the sharing economy faces a similar identity problem.
The problem is greater than just the government. When DriveMyCar attempted recently to book advertising on the back of taxis, we were told they wouldn’t accept the ads because they thought we were an unregulated, competitive taxi service, when in fact DriveMyCar complies with all regulations and provides long-term rental cars, not taxis.
We welcome greater engagement with governments at all levels and look forward to a greater understanding of the scope and potential of peer-to-peer transactions to deliver benefits for consumers and businesses on financial, social and environmental levels.
But as Dutch academics Toon Meelen and Koen Frenken have argued, policymakers must get over the first obstacle – separating Uber from the true sharing economy – before they proceed with laws that have the potential to tar everyone with the same brush.
This article originally appeared in Australian Financial Review http://www.afr.com/technology/uber-obsession-means-policymakers-are-missing-the-point-of-the-sharing-economy-20150525-gh7s9q