The promise of so-called “sharing economy” platforms like Airbnb, Uber, Lyft and TaskRabbit was that by using social media tools and digital technology, markets for goods and services such as taxis, hotel rooms and cheap labor could be made more efficient. But this golden vision of the future has started to look a little tarnished of late.
Airbnb, for example, grew at a torrid pace over the past eight years by allowing house and apartment owners to rent their dwellings to any traveller quickly and easily. Millions of people have taken advantage of these services, and Airbnb now has a market value estimated at $30 billion, roughly the same size as the Marriott International hotel chain.
Some regulators, however, are less enthusiastic. A number of cities and regions from Berlin to San Francisco have implemented restrictions on Airbnb rentals, arguing that they are in violation of zoning and other regulations, and the company is currently trying to negotiate a cease-fire by offering to share tax revenue and make other concessions.
The problem for Airbnb is that these concessions and restrictions are likely to significantly decrease its potential revenue generation and earning power, and thus remove some of the benefits and efficiencies that were supposed to flow from the sharing economy. And Airbnb isn’t the only peer-to-peer service provider facing that problem.
Note: This was originally published at Fortune, where I was a senior writer from 2015 to 2017
Uber has been fighting similar battles with regulators since it started its alternative to taxicabs in 2009. In some cities, it has been banned outright. many cases, municipalities (and competitors) argue that whatever efficiencies or cost savings Uber offers are a result of it avoiding many of the costly regulations that taxis and other services are subject to.
Among other things, Uber drivers aren’t entitled to things like wage protection, health benefits or vacation because they are considered independent contractors. But that status has been challenged in the courts in a number of jurisdictions, including California and the United Kingdom, and losing that distinction could raise Uber’s costs and make it even less efficient.
If regulators keep up this kind of relentless chipping away at the sharing economy’s benefits, much of the appeal of these new tech giants could be diminished, especially in the eyes of investors who have pushed their valuations into the stratosphere.