7.1 Introduction
As with any new and disruptive market force, the sharing economy has posed a significant regulatory challenge. Indeed, it is fair to say that the first generation of regulations of the sharing economy exhibits confoundment over basic definitional questions. What are the best legal analogies for sharing economy platforms? What are the goals and interests at stake? And how do the participants in the sharing economy view the need for, or value of, regulation? These definitional struggles have obscured equally important questions that remain unanswered. Significantly, it remains unclear how different sharing industries will develop, and this unknown continues to make regulation extraordinarily challenging.
Yet, as we consider the next generation of regulations of and for the sharing economy, we do have at least some of the benefit of hindsight. We have now seen the values held by platform proprietors, consumers, and workers in the sharing economy as such values are expressed through market practices. For example, we have seen the extent to which Uber and Lyft have replaced busses and subways as an essential form of transportation, and we have seen the increased access they create to areas that are inaccessible by public transportation. These developments redefine values such as convenience and accessibility in ways that the first generation of sharing economy regulations did not anticipate. We have even experienced the extremes in need, usage, and access dictated by a global pandemic. We know, for example, that while platform proprietors tend to portray platforms as attractive online alternatives to consumer marketplaces for accessing products and services, an increasing number of consumers view some forms of sharing economy businesses as basic necessities.
This chapter reviews the first generation of sharing economy regulations and proposes an approach for developing the second generation of regulations. In Section 7.2, I argue that first-generation sharing economy regulations rely on legal categories and assumptions that have been used to address business operations that have developed over decades (sometimes centuries), but that such legal approaches are at times ill-suited to regulation of the sharing economy.Footnote 1 In Section 7.3, I argue for a new regulatory approach that directly addresses core principles or values in the sharing economy. I focus in particular on four core principles that ought to serve as foundations for the next generation of sharing economy regulations.
7.2 First Generation Regulations
7.2.1 Safety and Consumer Protection
Some of the earliest and most important regulations of the sharing economy were those responding to safety and other consumer protection concerns raised by users of sharing platforms, especially those who used home- and car-sharing services such as Uber and Airbnb. Such concerns included reports of sexual assault, harassment, and other forms of unsafe behavior by drivers.Footnote 2 While renters also raised similar concerns with respect to home-renting services, some of Airbnb’s most prominent troubles were raised by hosts whose homes were burglarized or misused by renters.Footnote 3
The first generation of regulatory responses to such safety concerns was either to ban sharing businesses from operating, to sanction them, or to require them to obtain the same permits required of their competitors in the non-sharing economy for rooms, rides, and other services. Thus, for example, London recently banned Uber citing safety concerns, and California fined the company $59 million for failing to turn over information on sexual assaults.Footnote 4 These and other car-sharing services also faced repeated efforts by states to require some level of permitting.Footnote 5 Similarly, Airbnb became entangled in disputes about the legality of its business operations in New York City, Paris, and other cities.Footnote 6
Sharing economy businesses typically fought these regulatory measures by arguing that they were not hotels, rental agencies, or taxicab companies.Footnote 7 Rather, they claimed they were only the providers of software that facilitates online markets.Footnote 8 They also developed their own internal measures for assuring customers about safety and product efficacy, many of which increased the transparency of their measures as a means of transferring the burden of safety assurance to their customers.Footnote 9 For example, Uber claimed to screen criminal and driving records and to provide a transparent system for reviewing driver profiles and the anonymous ratings of other users.Footnote 10 In 2019, in partnership with the National Sexual Violence Resource Center, the company released its own safety report detailing the number of accidents and assaults that occurred during Uber rides.Footnote 11 Airbnb went considerably further by providing hosts with a “host guarantee.”Footnote 12 In 2019, after five people were killed at an Airbnb property, the company pledged to verify all its listings and provide a hotline for neighborhood complaints.Footnote 13
More recently, regulators at especially the municipal level in some cities have begun to think about safety and consumer protection from a broader perspective, including traffic safety and congestion, neighborhood safety and preservation, and environmental protection.Footnote 14 Some cities have even begun responding to concerns about loss of permanent housing and neighborhood gentrification.Footnote 15 While most, and arguably all, consumer protection regulation is justified on the grounds that it forces the internalization of negative externalities,Footnote 16 these more recent regulatory moves seem to recognize the breadth of the negative externalities that have proliferated in some sharing economy sectors. Though reactive, such regulation implicitly acknowledges the enormous extent to which network effects drive the development of the sharing economy. However, the piecemeal manifestation of these regulatory acknowledgements does not really comprehend the systemic relevance of both positive and negative externalities in the sharing economy.
7.2.2 Discrimination
A significant interdisciplinary literature has captured the proliferation of racial and other forms of discrimination across sharing economy industries. One well-known analysis, by Nancy Leong and Aaron Belzer, described the differing experiences of White and Black Uber customers, wherein the former were able to obtain Uber rides quickly and easily, while the latter had more difficulty obtaining Uber rides. Leong and Belzer traced the differing experiences partly to discrimination by Uber drivers, and particularly the rating system pursuant to which the drivers gave lower ratings to Black passengers.Footnote 17 But multiple studies have also traced discrimination to the very algorithms used by Uber.Footnote 18 In the United States, these algorithms incorporate geographical and other data that reflect residential racial segregation resulting from redlining and other hallmarks of structural racism.
The proprietors of platform technologies argue that the product features that have contributed most straightforwardly to discrimination on their platforms have other claimed benefits. For example, Uber’s ratings system is intended to increase transparency for both drivers and passengers, which Uber claims makes its ridesharing service safer for all involved and “includes steps to mitigate racial bias.”Footnote 19 Airbnb and other home-sharing services make similar claims about their ratings system.Footnote 20
With some important recent exceptions, the first generation of regulations has barely addressed these forms of discrimination. While algorithmic bias is the subject of intense scholarly attention by legal experts, it has not translated into many lawsuits or much law reform.Footnote 21 Moreover, to the extent they have resulted in legal redress, successful claims have relied largely on existing laws that are not well-tailored to addressing algorithmic bias or other forms of discrimination that result from the industry norms of platform operation. Thus, for example, current regulation has failed to address the lack of transparency in the development of algorithms or the extraordinary extent to which intellectual property rights shield discriminatory behavior.Footnote 22
7.2.3 Workers Rights
Some sharing economy firms, especially Uber, have also come under attack for their treatment of the workers who provide services through their platforms. Several lawsuits have claimed that these individuals are not really independent contractors or businesses that contract with companies such as Uber; rather, they are employees.Footnote 23 This distinction has significant consequences, because some states (such as the Commonwealth of Massachusetts) provide extensive protections to employees, including requiring employers to provide unemployment and health benefits.Footnote 24 Lawsuits in Massachusetts and California also defeated Uber’s restrictions on the ability of drivers to request and retain tips.Footnote 25 These regulatory moves are another example of the growing recognition that negative externalities are also proliferating on the supply side of the sharing economy.
Of course, these companies dispute such claims, arguing instead that they have a much more limited role in these networks. However, the tide has begun to turn against them, opening a path for at least some sharing economy workers to have the benefits of true employment, including perhaps even unionization. The first generation of sharing economy regulations has left a significant open question, though, about the appropriate legal perspective on workers in platforms that are more genuinely peer-to-peer in their operation.Footnote 26
Recent scholarship has also begun to capture the racial inequalities among workers that are perpetuated by such platforms. In her analysis of a recent survey of platform workers, Daria Roithmayr noted: “Because workers of color have fewer options than their white counterparts, they are less free to refuse precarious work, and are more likely to form the core component of motivated workers on which the on-demand economy relies.”Footnote 27 Thus far, this form of discrimination on platforms has not resulted in much regulatory intervention.
7.2.4 Anticompetitive Behavior
A prominent form of first-generation regulatory interventions was aimed at preventing perceived anticompetitive behavior by businesses involved in the sharing economy. These claims were generally raised by traditional businesses, such as hotel or taxicab companies, that competed with sharing networks. Such businesses argued that by avoiding the costs associated with obtaining permits and complying with other regulations, sharing businesses were able to operate at lower costs.Footnote 28 Taxicab companies in Maryland even claimed antitrust violations on the grounds that Uber engages in price-fixing.Footnote 29
The regulatory responses to these claims of anticompetitive behavior generally involved revising state or local anticompetition and permitting laws to apply to sharing networks. For example, Chicago considered an ordinance imposing permitting requirements on car-sharing services.Footnote 30 Similarly, New York City radically limited the extent to which people could work as hosts through Airbnb. Both in their narrower focus on anticompetitive behavior and in their implicit recognition of the effects on neighbors of Airbnb hosts and other third parties, such regulations are yet another example of first-generation regulatory efforts to address negative externalities.
7.2.5 Taxation
Finally, and not surprisingly, regulatory authorities have puzzled over the question of how to tax the first generation of sharing economy businesses. One pair of prominent scholars described Congress and the Internal Revenue Service as cycling between a “Proactive Approach,” whereby they “change existing regulations to encourage the growth of new industries,” and a “Neutrality Approach” in which they “cut back on regulatory benefits all around.”Footnote 31 Meanwhile another pair of prominent scholars concluded that current tax law largely is capable of “tax[ing] sharing” and that the application of tax doctrine to sharing businesses is “not particularly novel.”Footnote 32 They did, however, caution that some sharing businesses have behaved opportunistically in exploiting regulatory ambiguities in the tax arena.Footnote 33 Indeed, this observation seems to be shared by many tax law experts. More generally, these and other commentators have noted that, as is the case with other first-generation regulations, much of the regulation in this arena is reactive, piecemeal, and less than ideal.
7.3 Governing Principles for the Next Generation of Regulation
The next generation of regulations must transition from reactive regulations that seek a rudimentary level of stability in the face of the upheaval of industry norms to proactive regulations that recognize the longer-term goals, expectations, and strategies of all relevant constituencies in sharing economy industries.
Perhaps the first and most basic regulatory transition that is required is a transition from substantive regulatory silos to regulation that directly addresses core principles or values in the sharing economy. This is not to say that the trend toward more robust treatment of platform workers as employees, for example, is wrong or ineffective. But it is to argue that current regulatory systems, and the assumptions on which they have been built, are not the best basis for approaching the next generation of regulation. In making this argument, I take issue with some prominent legal commentators who claim that the sharing economy is not really that new or different as a market phenomenon,Footnote 34 at least to the extent that such claims lead to the conclusion that the same regulatory approaches we have used with other seemingly disruptive technologies will suffice for regulating the sharing economy. Instead, I am more convinced by Pollman’s and Barry’s observation that platform proprietors are very effectively taking advantage of regulatory gaps and conflicts to innovate their business models in new directions to avoid regulations that they disfavor.Footnote 35 This sophisticated (and Legal Realist) understanding of the regulatory landscape has allowed some sharing economy businesses to attenuate traditional legal categories to the near breaking point, as the increasingly frequent queries about the future of work in the “gig economy” reveal.Footnote 36
Thus, policymakers would be better served by regulating on the basis of the core principles that they seek to promote in the next generation of sharing economy businesses. Returning to the example of platform workers, rather than trying to analyze whether Uber drivers or Airbnb hosts are employees or independent contractors according to the laws of any given jurisdiction, it will be more efficacious for policymakers to regulate in recognition of the actual roles such platforms play as a source of work and income. This in turn requires recognition of who exactly participates as workers in various sharing industries.
In this section, I review four core principles that have emerged essentially as consensus principles that ought to govern sharing economy practices. These are principles that scholars across disciplines have argued should govern continued development in the industry. Such scholars have argued, for example, that sharing economy businesses must optimize for more than profit.Footnote 37 They must optimize for values such as equity.Footnote 38 I argue here that these principles also should anchor the next generation of sharing economy regulation. The four principles on which I focus here are by no means a closed list. To the contrary, this list ought to be developed, expanded, and edited as the sharing economy continues to mature.
However, this list does serve several crucial functions for policymaking moving forward. First, it provides a model for policymaking that is a compelling alternative to the piecemeal, reactive, and often ill-fitting regulatory approaches that have thus far dominated the landscape. Second, it serves as a powerful basis for regulation of the sharing economy at this point in time, capturing a phenomenon that has established itself as a ubiquitous market force that significantly disrupted prior market practices and has yet to assume its ultimate (and perhaps more stable) form. Third, it forcefully reminds us that regulation that “leaves to the market” the opportunity to optimize just for profit is in fact regulation. Said another way, the perceived absence of regulation is a form of regulation that tips the balance of legal power and privilege precipitously in favor of platform proprietors. By providing regulatory support for optimizing for values other than profit, policymakers can and must acknowledge the reality that they have already been regulating the sharing economy. Moreover, and crucially, lawmakers can be more proactive in regulating the profit-making and economic behavior of sharing economy businesses in such a way as to enable greater innovation and ultimately competition among businesses in any given sector. In short, lawmakers must take active responsibility for regulating forward.
7.3.1 Principle 1: The Sharing Economy as Infrastructure
Our experience with the pandemic has starkly revealed the extent to which some platforms, including some sharing economy businesses, have begun to serve as essential infrastructure for many individuals, especially those in urban locations. For example, many of us have been utterly dependent in our work lives on platforms such as Zoom and Microsoft Teams, with all the attendant dependencies such as handing over our private lives for data collection by these platforms during the many hours in which we use these platforms for meetings.Footnote 39 Such dependencies extend to other core sharing economy sectors. Many of us have come to rely even more extensively on cloud technology to store both business and personal materials. Many of us have relied on ridesharing services both to get ourselves to workplaces, medical appointments, and grocery stores (during times when subways and busses have operated on much more limited capacity) and to provide additional income. Many of us have used sharing economy platforms to order products and services that are essential to our daily living, thereby also relying on last-mile delivery systems and other attendant services. And the list goes on.
These examples reveal that sharing economy businesses have directly replaced those things that we explicitly label as infrastructure, including modes of communication, transportation, storage, and essential equipment. Equally basically, such businesses have replaced – and displaced – those things that our federal, state, and local governments have built as public works. This basic reality dictates qualitatively different regulation. It is a given that policymakers develop fundamentally different rules for overseeing the operation, management, and maintenance of infrastructure.Footnote 40 Even when such infrastructure is privately owned, policymakers do not – and cannot afford to – leave the owners and managers of such infrastructure to their own devices for maximizing profit and efficiency. The stakeholders of such businesses include more constituencies than just their shareholders. The role of regulation is to ensure that the public has the right to access and use such infrastructure, regardless of whether it is publicly or privately owned.Footnote 41
Perhaps more than anything, this qualitative difference boils down to a recognition that the line between “public” and “private” in these sharing economy sectors is illusory in meaningful respects. Across a range of legal fields, the illusoriness of the public/private distinction has been the subject of more than a decade of robust legal scholarship, and much of this critique is directly applicable to the sharing economy.Footnote 42 Thus, for example, the argument by a platform proprietor that it is a private entity with the right to treat its workers as independent contractors, ought to be of little consequence in this arena. It may be an apt argument that Uber should be forced to internalize the negative externalities it produces by not treating its drivers as employees. But it is an equally realistic argument that Uber’s operations should be regulated in ways that other forms of infrastructure are regulated because it is now providing an essential service. Thus, just as regulations protect subway drivers and electrical service technicians by prioritizing their ability to work safely and for fair wages,Footnote 43 so too must regulations protect sharing economy workers so that they can continue to provide essential services without work interruption. The value of recognizing such platforms as infrastructure is that it forcefully creates more space for a broader range of regulatory interventions.
What regulatory possibilities might flow, then, from the recognition of at least some (perhaps many) sharing economy sectors as infrastructure? Consider the possibilities that such a perspective could have created during the coronavirus crisis. There should have been little question that Uber drivers should have received the same treatment as other essential workers in receiving personal protective equipment and early vaccinations. On the consumer side of the equation, the safety of consumers of such services should also have received more sweeping consideration. Meanwhile, just as we have enhanced rights of privacy from governmental surveillance,Footnote 44 so too should companies like Zoom and Microsoft have been regulated more strictly to protect the privacy of their many users.
Indeed, the pandemic has clarified the real role and value of such businesses, and it has also provided a basis for gaining much-needed regulatory perspective. Out of the many regulatory possibilities, three seem particular efficacious. First, and most basically, public monitoring of such sharing businesses is imperative. Just as the Consumer Financial Protection Bureau, the Consumer Product Safety Commission, and a robust list of other federal and state agencies monitor and oversee a very broad range of consumer products and services, so too must sharing economy businesses receive the same careful scrutiny for safety, accessibility, value, and basic fairness.Footnote 45 Indeed, while monitoring is appropriate across all sharing economy sectors, it should be more extensive for those that serve as infrastructure.
Second, those sharing businesses that provide services that directly replace public infrastructure could be regulated as public utilities. Such regulation could take the form of treating some platforms as “essential facilities,” a possibility that Nikolas Guggenberger discusses as efficacious as a means of limiting monopoly power. As Guggenberger notes, “[t]o define the suitable remedies and to open the digital economy for competition, we can learn from the past. In the early twentieth century, the railroads controlled critical infrastructure and excluded competitors from crucial markets.”Footnote 46
Finally, it ought to be a routine option for public agencies at the federal or state level to consider investing in both research and development as well as the operation of government services that compete with and service as a public alternative to private sharing economy businesses that provide critical infrastructure. We have seen exactly this form of investment proposed by local governments such as New York City and the Biden Administration with respect to broadband access.Footnote 47 This form of regulatory investment has also been proposed in the ridesharing context, as is discussed by Behroozi in Chapter 8. It provides an intriguing opportunity for rebalancing and democratizing technological access that could contribute enormously to closing the digital divide and preempting some of the injustices that have proliferated as a result of the extreme emphasis on profit that we have seen in first-generation sharing economy businesses.
7.3.2 Principle 2: Protect Resilience
The pandemic has also helped to clarify the importance of a second principle – resilience – that I argue should define the next generation of regulatory approaches to the sharing economy. Indeed, the value of resilience is closely related to the recognition that some sharing economy sectors have become part of the infrastructure of modern society. However, I have separated resilience out as an independent core principle that must be promoted through regulation across all sharing economy sectors, even those that do not provide goods or services that can be deemed as essential facilities or infrastructure. Such a regulatory prioritization acknowledges that even niche markets, contexts, and consumer clusters can rely heavily on platforms, and concomitantly, that these consumers deserve protection also.
Returning again to the nature of work during the pandemic, Zoom glitches literally could mean hours of missed work, which had to be somehow made up, excused, or explained. When workers that our society labeled “essential” started catching COVID-19 in clusters, policymakers were forced to quickly discern the protections that were required in order to keep them at work. They also had to develop regulations that forced employers to provide such protections on an ongoing basis. Because the essential nature of some sharing economy sectors was invisible to policymakers, however, they did not have the information, nor often the motivation, to protect workers in those sectors who often were just as essential. Meanwhile, on the consumer side of the picture, prices of essential consumer goods fluctuated wildly, at times triggering price gouging laws,Footnote 48 as a result of problems with supply chains and delivery systems.Footnote 49
These lived experiences of crisis-generated disruption have taught new lessons about the importance of regulation that motivates and supports the development of resilient systems. Part of the function of regulation is to ensure that such lessons are not short-lived. The pandemic, and the range of economic and social crises that have surrounded and preceded it, have revealed a great deal about the fragility of many of the systems on which we rely. Our job now is to plan forward in building resilience for the crises we currently face and that we inevitably will face, including climate-related, health, financial, racial, and other disruptions and crises. Resilience can serve as a touchstone that clarifies both the need for regulation and the regulatory choices that ought to be made. In the realm of sharing economy businesses, one commonality across many sectors may be that sharing businesses have the capacity to rapidly and efficiently allocate resources for a very broad range of consumer needs. This makes them enormously attractive and useful in times of crisis.Footnote 50 Without regulation, however, such businesses may have little incentive to ensure that their allocation choices are equitable, accessible for all, and built to last.
Again, a rich array of regulatory options is available to optimize for resilience in the sharing economy. One important consideration is to ensure consistent consumer access by actively monitoring, and at times capping, prices. Uber’s and Lyft’s surge-pricing schemes taught important lessons about the predation that can easily occur when a business both monopolizes a market and is free to set its own prices.Footnote 51 While price caps seem particularly relevant during times of crisis, as evidenced by price gouging laws which typically only apply during states of emergency,Footnote 52 such caps should be in consideration more broadly as a means to ensure accessibility to all. Thus, for example, just as utility companies are constrained from “turning off” a service if individuals are unable to pay,Footnote 53 so too should at least some sharing sectors be subject to broader regulations on pricing. This is not to say that all forms of dynamic pricing are problematic. To the contrary, the reasonable use of such pricing can help to ensure temporally efficient supply during times when demand suddenly spikes. However, regulation has a role to play in establishing the parameters of what is reasonable in this context.
As I have discussed, a second area for regulation is in the realm of worker protections. While all workers deserve fair treatment and wages, the need to develop resilient systems within a range of sharing economy sectors should serve as an independent basis for considering regulations relating to workers and workplace conditions.
Finally, and more broadly, it will be important for policymakers to consider regulating in favor of redundancy in sharing sectors. This broad objective still leaves open many regulatory possibilities. For example, regulators could choose to develop their own publicly operating platform, as described above, or they could choose to regulate in such a manner as to promote competition within a sharing economy sector. Though radically different, both possibilities could avoid the fragility that results from over-dependence on a single provider of an essential platform service.
7.3.3 Principle 3: Create Equity
While the coronavirus pandemic has highlighted the importance of regulating to optimize for resilience, another ongoing crisis has shone a harsh light on the need for regulations across sharing economy sectors to address the imperative of equity. The murder of George Floyd has activated a long-overdue and more sustained reckoning with systemic racism and violence than has occurred in some time. While the almost weekly police killings of Black individuals demonstrate the urgency of such a reckoning in the area of criminal justice practice and regulation, no sector is immune from scrutiny. Indeed, that is one of the most important lessons from the recent dialogue about the nature of structural racism in US society.
Moreover, compelling research has revealed the extent and depth of racism in the sharing economy. The combination of individual decision making, such as the choice of Airbnb hosts not to rent to Black guests, and machine learning, namely the rampant nature of algorithmic bias, has resulted in tremendous inequities. Uber drivers have consistently given lower ratings to Black passengers. Gig workers who rely predominantly on gig work are also predominantly people of color. Platform technologies are configured in such a way as to exhibit algorithmic bias by race and other traits.Footnote 54 Here again, the list is almost endless.
Such inequities are not just racial, but include bias about gender, sexuality, disability, and many other identities and traits.Footnote 55 They also include economic inequalities, which have resulted in predation by platform proprietors – of lower-income consumers and workers.Footnote 56 The need for lower-income workers to access ridesharing services to reach their workplaces during the pandemic serves as a compelling example here. When such services were priced too expensively to be accessible to essential workers, the resulting inequities cried out for regulatory intervention.Footnote 57 Indeed, both the speed and extent of the proliferation of bias across sharing industries has been breathtaking. Especially given the failures of first-generation sharing economy providers to self-regulate to eliminate discrimination, it is imperative for policymakers to intervene.Footnote 58
While the creation and preservation of equity in the sharing economy will require a range of regulatory interventions, the threshold intervention that seems inescapable in this arena is the involvement of government agencies in monitoring the development and operation of sharing platforms. Simply put, it can no longer be a right of sharing economy businesses to hide behind claims of trade secrecy or other intellectual property rights as a way of avoiding scrutiny by public agencies to determine the existence or extent of differential impact by platforms on their consumers and workers.Footnote 59
Relatedly, it will be imperative for policymakers to develop a range of interventions when bias is discovered. These can and should occur at the federal and state level and should be driven by both legislatures and courts. They should include expanded rights of action for consumers to claim racial and other forms of discrimination. But especially when promulgated by legislatures, such regulations should also adopt a broad view of the imperative of equity, moving beyond the definitions of and tests for discrimination and the categories of protected classes traditionally determined by civil rights laws. Instead, lawmakers should consult the extensive literature on the benefits of equitable access to technology to define broad rights of equitable access to sharing economy systems and platforms.Footnote 60
Finally, the troubling extent to which Black, Indigenous, and People of Color (BIPOC) and other historically marginalized individuals are represented among the ranks of sharing economy workers mandates far greater regulatory attention to ensure equity in the sharing economy workplace. Such attention will require regulators to break through some of the traditional legal structures, including labels such as “independent contractor,” and rhetorical slogans such as freedom of contract, that have been used (and attenuated) by platform proprietors to avoid regulation. Just as the pandemic-induced rules allowing for gig workers to file for unemployment recognized the true nature of sharing economy work from the perspective of those workers, so too will more permanent regulations have to recognize the precarity that has resulted from the current imbalance of power between platform proprietors and their workers.
7.3.4 Principle 4: Develop Democracy
The fourth core principle that I wish to discuss here builds on the prior three principles, abstracting a crucial basis for governance of the sharing economy going forward. While the prior three principles provide foundations for regulations that shape rights and remedies for categories of participants in the sharing economy as a means of correcting the imbalance of power and providing stability, this fourth principle addresses the instability and imbalance of power by providing a foundation for governance as a form of regulatory intervention. The imperative to develop democratic institutions for governance within the sharing economy recognizes that platforms today are a powerful means of organizing and controlling social interactions and behaviors. This powerful role dictates ongoing access by the public not only to the goods and services provided but also to the right to determine how such platforms operate.
Currently, the governance of sharing economy platforms is controlled almost exclusively by their proprietors, who set the rules for participation in such platforms. The resulting governance failures are numerous. Rather than enumerating examples, the best demonstration of such failures may be simply to contrast Wikipedia, which is arguably a governance success,Footnote 61 with Uber, which has repeatedly disregarded the voices and participation of consumers, workers, and really anyone (other than its owners) who has a stake in the company’s operations.
Extreme examples such as this have generated a developing consensus that, like home-owners associationsFootnote 62 and bowling societiesFootnote 63 a generation earlier, some platforms are developing into institutions that substitute for public institutions. It is not an exaggeration to describe such platforms as forums in which private forms of government have developed. As with predecessor institutions that have developed in this manner, one of the roles of regulation is to provide scaffolding that promotes their democratic growth and development.
Thus, policymakers should investigate the regulation of home-owners associations and other similar institutions as models for developing democracy in the sharing economy. They should also draw strategies from Wikipedia and other truly “open access” platforms. Indeed, one basic assumption that may well be both an appropriate starting point for such work, as well as a basis for further investigation, is that genuinely peer-to-peer sharing platforms are a home-grown, internally generated form of governance within the sharing economy.Footnote 64 Assuming such investigations bear out the validity of this assumption, then policymakers can and should investigate ways in which to incorporate some of the operational strategies of peer-to-peer platforms more broadly into sharing economy sectors, particularly those that serve as crucial infrastructure today.
7.4 Conclusion
While regulation of the sharing economy has thus far been a reactive process, exhibiting very little attention to priorities such as consistency and the development of core regulatory principles, it need not be going forward. We now have a much greater level of knowledge about the sharing economy as well as interdisciplinary tools for regulating it. Moving forward, it is incumbent upon policymakers to use the regulatory tools available to them in support of the optimization of a more just sharing economy.