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“The Sharing Economy has a small-scale community feel (…) But trying to turn this kind of initiative into a major international company is asking for trouble.”

Telos: You are one of the first critics of so-called “Sharing Economy”. What triggered your interest in this topic?

Tom Slee: I have a longstanding distrust of people who claim to be building decentralized, community-oriented person-to-person networks that just happen to involve creating global enterprises that turn their founders into billionaires. We’ve seen this happen with earlier cycles of Internet innovation especially around the idea of openness: Google claims to be about openness except for the advertising and search algorithms that make it money, Facebook is all about openness on the part of its users, but not about its newsfeed algorithm, and so on. So when the “sharing economy” started up, with appealing talk about empowering individuals and creating networks of trust, yet funded by venture capitalists looking for a return on their investment, it seemed probable that the sharing economy and the values it claimed to promote were going to be incompatible. And so it has proved.
The sharing economy has a small-scale community feel (sharing tools) and that works fine in the same way that other neighbourhood initiatives work – there can be problems, but also rewards. But trying to turn this kind of initiative into a major international company is asking for trouble. It’s those companies, and particularly the two sharing giants Uber and Airbnb, that cause most of the problems.

In your book “What’s yours is mine” you challenge the apparent benefits for the people of the sharing economy business and call them the ‘unforeseen dangers’. What dangers?

Not so much danger for the people undertaking the exchange (although there is some of that – damage to houses, last-minute cancellations, guests who won’t leave, bad drives, occasional assaults) as danger for the kind of society they are ushering in. They promise a humane world of sharing, but they are extending the harshest of deregulated free-market economics to parts of our lives that were previously protected. For example, both Uber and Airbnb users have been shown to face discrimination: drivers and guests of colour have a hard time getting treated fairly. For taxi and hotel companies there are laws that can be used to demand accountability, but both Uber and Airbnb deny that providing a discrimination-free experience is their responsibility. The same goes for topics like insurance and safety. The technology companies would like us to believe that they have these topics covered, but they don’t. Unfortunately, insurance and safety are very boring topics until you are in an accident, but as consumers we tend to assume that they are all in place. With the sharing economy, that assumption is often wrong. These are very large companies now (Uber is worth as much as the largest car manufacturers, and Airbnb is worth as much as the biggest hotel chains). It’s time they took responsibility for the costs of their business.

Regulating the sharing economy is, in your view, necessary. Whether this is true or not is still an open question in the public debate. What are your thoughts about it?

City governments around the world have problems, but they are at heart democratic institutions. As citizens, we have a say in how our cities are run, and that means balancing the interests of corporations, citizens, visitors, and workers.
The more successful the large sharing economy companies become, the more they damage the cities where they operate. Taxes are an example: both Uber and Airbnb have set up subsidiaries in low-tax environments and direct all their revenue through them, so they pay no taxes on the money they make in Italy or any other country outside the US. Airbnb has over 25,000 listings in Rome, and the number is still growing, but playing tax avoidance games puts all the costs of tourism onto the cities. For me, the issue is not so much regulation as accountability. Companies need to be accountable for the effects of their own business, and regulations are just one way to enforce accountability. But accountability is key.  A lot of the early talk was about how rating systems could replace regulation (algorithmic regulation). But we’ve seen that they don’t work: they are like a bad-tempered boss: you may behave better because you don’t want to be the target of random discipline (or random bad reviews). So now an Uber driver can be deprived of his or her livelihood because some passengers in a bad mood. Much as Uber would like us to believe that their drivers are not employees, this kind of dismissal is very troubling to me. For all the talk of Uber as the inevitable future of transportation, it is losing money: it looks like it will lose $3 billion on $3 billion of revenue in 2016. So what we are seeing right now is an effort by a consortium of very wealthy investors, prepared to pay billions of dollars in an attempt to remove consumer and worker protections so that they can enrich themselves further. Not a pretty sight.

A very interesting view of yours is that ‘sharing economy companies have been so successful at getting their clients to fight regulations that they’ve essentially outsourced their lobbying as much as they have their business operations. If you’re renting out other people’s stuff, you may as well have them write letters to policy-makers on your behalf while you’re at it’. Would you tell us more?

I have to keep going back to Airbnb and Uber because they are so much more influential than any other sharing economy businesses and they are creating a template that others are trying to follow. A few years ago Airbnb set up a group called “Peers”, which they called a “grassroots” groups to support the sharing economy. That has folded, but this autumn they set up “homesharing clubs” which are advocacy groups made up of Airbnb hosts. Through its app, Uber can target users in particular cities and get them to send a message to legislators with the tap of a button. And both companies have seen some successes: Uber in New York City and Airbnb in San Francisco. Also, Uber intervenes to pay driver fines in some cities where it is operating without permission. The idea of an American company paying people to break democratically made laws in other countries reflects an “ugly American” arrogance that needs to stop. But customer lobbying is just one wing of the companies’ efforts. It is supplemented by heavily funded paid lobbying, and with the billions of dollars to use, the companies exert a very high pressure on the cities they target. But recently cities have been pushing back: Berlin and Barcelona, New York and San Francisco have all put limits around Airbnb’s operations. Austin and Montreal, and many parts of Europe have told Uber to leave. This is a good sign of robust democratic actions against an ideological movement that threatens decades of progress in workers rights and in city governance.

Marco Sonsini