Over the
past year, as I wrote last month, there has been a backlash against the two
largest areas of the sharing economy, namely room rentals, mainly provided by
Airbnb, and car rides from Lyft and Uber.
Some cities, such as Barcelona and Berlin, will not tolerate Airbnb
rentals at all, and others, such as San Francisco and Santa Monica, now limit
and regulate them to the point where their supply is much reduced. Even more places have contested these unlicensed
taxi services, and some, including Spain, Romania, and the city of New Delhi,
have banned them altogether. In April,
Uber agreed to pay up to $100 million to settle a class-action lawsuit about
the company’s questionable-at-best categorizing of drivers as independent
contractors; Lyft settled a similar complaint for $27 million earlier this
week. Only three days ago, the 35,000
New York City Uber workers formed a group described in the New York Times as
“short of a union,” the Independent Drivers Guild, giving them a formal say in
much of what their employer does.
Last
weekend, though, saw the clearest and most publicized American defeat for the
unlicensed taxi companies. Austin, Texas
had a Saturday referendum proposing that Uber and Lyft be exempt from the
city’s current cab-company regulations, including fingerprinting drivers for
background checks. The two firms spent
$8 million toward convincing people to vote for the measure, which did not
succeed, as 56 percent of Austinites voted to regulate all taxi providers
equally. Uber and Lyft responded by
saying they would no longer offer their services in that city, effective almost
immediately.
Austin is large,
with a 1.25 million metropolitan population, and is hardly known as anti-technology,
with 51,000-student University of Texas and as much connected private research
and development as one might expect.
Views there on taxi regulations have no reason to be extreme. That is why, then, that many more cities will
follow. They will not allow these
companies to, as two Austin commentators put it, “arrogantly confuse a
convenience for a few as a necessity for the many” and try to “take out city
government” as if it were only another competing business. The trend will probably move on to unregulated
hotel rooms, which after all disturb local residents rather more than do unfingerprinted
cabdrivers.
So the two
largest ride-sharing companies can’t tolerate being treated the same as those
successfully offering taxis for decades?
That is telling. I wrote last
March that “the income achieved by Uber, similar Lyft, and room-renting
facilitator Airbnb service providers is inflated by a temporary lack of
regulation,” and predicted an end to the flowering of such companies by 2019 or
earlier. Indeed, the Austin outcome and the
company’s reaction show that, despite estimated values as high as $62.5 billion
for Uber, these businesses are remarkably fragile and transitory.
Not all what
these companies are doing, though, is endangered. Lyft has joined forces with General Motors on
driverless taxis, which, given the state of and effort going into that
technology, are almost certain to become the norm within 20 years or so. Uber would do well to move in the same
direction. In the meantime, though, the
idea that anyone can provide taxi or hotel services in the United States without
meeting legal standards has, as of Saturday, become obsolescent.
As for jobs
in this sharing-economy center, they are still there. Anyone wanting to make money doing these
things is welcome to try, but they would be – and many already have been –
fools for not properly assessing what it really costs them. The same goes for opportunities sharing other
resources, though none have emerged as being as widespread as Uber or
Airbnb. If it’s worthwhile to you, do it
– but don’t count on it lasting for long.
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