Thursday, October 25, 2012

Regulating collaborative consumption and the sharing economy

(Been three years since my last blog post. No, I haven't stopped writing, I've just been redistributing where I publish my stuff. Over the next few weeks, I'll try and consolidate and summarize some of my posts and opinions from elsewhere over here.)

I've recently gotten interested in the regulatory issues facing "sharing economy" companies like Airbnb, Uber and Coursera (and TaskRabbit, Couchsurfer, GetAround, RelayRides,..my former NYU student Erica Swallow provided a great overview of the sharing economy in Mashable earlier this year.)  The digital industries have always been fascinating sandboxes for regulatory challenges -- from AT&T to IBM to Microsoft to Google. This time around, however, it seems different, because the challenges are in industries that are decidedly non-digital. Hotels, taxis, rental cars. It harkens a new kind of permeation of digital into the physical.

Earlier this week, I argued in a Wired opinion article that the government should tread carefully when they go after the sharing economy because they risk raising the question of whether their regulators are even relevant anymore. Not that all regulation is bad or unnecessary. But the need for its rules and the manner by which these rules are applied changes as (i) digital institutions (like reputation systems) start to subsume some of the roles regulators were needed for, and (ii) digital technologies facilitate superior enforcement of the rules that remain.
(There's a fairly detailed discussion on these points on the Wired site, in the feedback following the article.)

There is an excellent follow-up in GigaOM by Mathew Ingram about the regulatory disruption that the sharing economy is inducing. He draws on a great blog post I had missed, by Chris Dixon, to argue that "startups like Airbnb and Uber are regulatory hacks  in the sense that they are designed to do an end-run around existing industry regulations — in much the same way the early disruption in telecom was driven by startups which played fast-and-loose with the rules, and eventually forced regulatory change and became the norm."

Its going to be an interesting year, the conversation has just begun. Stay tuned...

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