Newspaper article International New York Times

Digital Start-Ups vs. the Real World ; Uber and Airbnb, Acting as Online Middlemen, Face off with Regulators

Newspaper article International New York Times

Digital Start-Ups vs. the Real World ; Uber and Airbnb, Acting as Online Middlemen, Face off with Regulators

Article excerpt

The regulatory problems seem to be never ending for the on- demand apps that connect people who need something with people who want to do the job.

The regulatory woes seem to be never ending for the newest wave of technology start-ups -- the on-demand apps that connect people who need something (a driver, a house cleaner, a grocery shopper) with people who want to do the job.

On Thursday, the New York State attorney general said most Airbnb listings in New York City violated zoning and other laws. Officials in California and Pennsylvania recently warned car services like Uber and Lyft that they might be unlawful. And workers' rights advocates have questioned whether the people who provide these services should receive benefits, spurred by recent reports that some Homejoy house cleaners are homeless.

Why have these companies run into so many problems? Part of the reason is that they think of themselves as online companies -- yet they mostly operate in the real world.

They subscribe to three core business principles that have become a religion in Silicon Valley: Serve as a middleman, employ as few people as possible and automate everything. Those tenets have worked wonders on the web at companies like Google and Twitter. But as the new, on-demand companies are learning, they are not necessarily compatible outside of the web.

The first principle is to be a middleman -- or in technology lingo, a platform -- connecting the people who post on YouTube with those who watch their videos, or the people who need a ride with people who will drive them. As platforms, the thinking goes, they are just connectors, with no responsibility for what happens there.

For websites, this is codified in law -- they are not legally responsible for what their users publish, according to the Communications Decency Act, perhaps the most influential law in the development of the web. That is why Yelp avoids liability when people post inaccurate or abusive restaurant reviews, and why YouTube does not have to remove videos that some find offensive.

The law protects online speech, not actions people take in the offline world. Yet its ethos has permeated Silicon Valley so deeply that people invoke it even for things that happen offline.

"These folks grew up in a world where platforms are not responsible, and then when they go do stuff in the real world, they expect that to be the case," said Ryan Calo, an assistant professor at the University of Washington law school who studies cyber law.

Take Airbnb's terms of service. "Airbnb provides an online platform that connects hosts who have accommodations to rent with guests seeking to rent such accommodations," it says. "Airbnb has no control over the conduct" of hosts or guests, the terms continue, and "disclaims all liability in this regard."

Airbnb, like others, has been forced to learn the limits of its status as a platform. …

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