The Myth of the Sharing Economy and Its Implications for Regulating Innovation

By Stemler, Abbey | Emory Law Journal, January 1, 2017 | Go to article overview

The Myth of the Sharing Economy and Its Implications for Regulating Innovation


Stemler, Abbey, Emory Law Journal


INTRODUCTION

If you walk through the sundrenched spaces of the world headquarters of Airbnb, the online accommodation Platform, you will notice that there are no private offices, not even for the CEO. Instead, collaboration spaces fill the 72,000-square-foot building, many of which are literal translations of Airbnb listings around the world.1 If you look closely, you will stumble upon an unremarkable space: a perfect replica of Joe Gebbia and Brian Chesky's apartment circa 2007.2 It was there that the two blew up air mattresses for the first time and allowed people to pay a small fee to sleep on their floor. It was also there that they monetized their excess capacity, made rent, and birthed a $31 billion company.3

A deflated air mattress rests in the corner of the facsimile birthplace.4 It symbolizes the inspirational story of Airbnb, where "regular, local people [can] make a little extra money by sharing their homes with respectful guests from around the world."5 Yet this symbolism of "democratizing capitalism"6 fails to represent what the company has become. Only approximately 1% of Airbnb revenues in New York City come from sharing rooms like Gebbia and Chesky did.7 By contrast, much of Airbnb's revenues in many cities come from fulltime Airbnb listings.8

Airbnb provides a platform that enables a cadre of new hoteliers to access customers. But, instead of utilizing excess capacity, these "hosts" are snatching up desired spaces solely for the purpose of listing them on the site. And in many places, at least initially, they benefit from loose or absent regulations made possible by Airbnb's rhetoric.9 This lack of regulation not only puts consumers at risk, damages the make-up of neighborhoods, and disrupts the existing accommodation industry, but it has helped Airbnb become a powerful influencer in Silicon Valley, city councils, state legislatures, and beyond.10

As Part I of this Article explains, in addition to Airbnb, other "unicorns"11 within the Sharing Economy12 convince communities, regulators, and courts that they are facilitating altruistic activities that utilize excess capacity, support job growth, and alter how we consume. This Myth helps these Platforms13 avoid everything from employment laws (by claiming supply-side14 users are independent contractors) to liability for consumer harm (by claiming they are technology companies shielded by the Communications Decency Act). As argued in Part II, this subversion produces numerous market failures and gives the dominant players in each modality the space they need to grow strong and powerful via network effects.

Once successful, these Platforms are armed with more than the cash necessary to influence regulators and courts via lobbyists and attorneys. They are fortified with formidable legions of users. These users are encouraged, largely through Platform interfaces, to advocate on behalf of the Platforms and drive regulatory agendas. As a result, Part III demonstrates how most Sharing Economy regulations simply codify existing business practices, leaving concerns about consumer privacy, worker protections, anticompetitive behavior, and discrimination among other issues unaddressed. How Platforms have accomplished this type of regulatory avoidance is worth understanding, particularly as regulators prepare to tackle the market failures of future network technologies.

While much has been written about the benefits of the Sharing Economy and how to regulate it,15 this Article is the first to critique the sharing economy by exploring the intersection between narrative and regulation.16 In particular, it shines a light on how start-ups that defy existing legal norms and classifications achieve and maintain power. While excellent articles have been written about the strategy used by innovative firms to avoid regulations, this Article breaks down the rhetorical devices used by firms to avoid legal rules and obligations.17 The Article concludes by distilling key lessons for regulating future innovations and demonstrates the importance of questioning the difference between rhetoric and reality to achieve the desired ends of regulation. …

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