A question of answers
Though sharing activities are becoming more viable in the global economic scene, they do bring with them some practical questions.
A sharing economy provides a mutually beneficial platform to the owners of physical items and their potential users, but this platform is based on one important factor — mutual trust.
“For the sharing economy to continue to expand, the players within it will need to find ways to authenticate the identity of consumers,” PricewaterhouseCoopers (PwC) said in its sharing economy report. “Identifying and upholding quality and trust metrics will be critical to success in this evolving model.”
Second, sharing economy mobile app operators have to be familiar with the regulatory, legal and tax frameworks in each market or risk landing in hot water. Uber’s experience is a case in point. The car-hiring app has been dogged by controversies and lawsuits in various European and Asian countries involving its mode of operation vis-à-vis local laws regulating the transport industry.
Hong Kong police in early August raided Uber offices in the city and arrested three Uber staff and five driver partners. The five arrested drivers were accused of illegally using vehicles for hire as well as lacking the required car permits or third-party insurance.
And it has been reported that accommodation-sharing app Airbnb may breach Hong Kong’s Hotel and Guesthouse Accommodation Ordinance (HGAO), which stipulates that any hotel or guesthouse that wishing to launch operations must first obtain the relevant licenses. Airbnb is estimated to cover 3,000 places to stay in Hong Kong.
The vacation rentals app works hard in every jurisdiction to obtain legal permission for its services. In the Netherlands, Airbnb worked with the Amsterdam local council to pass an “Airbnb-friendly law” in February 2014 that allows residents to rent out their homes for up to 60 days, provided the owners pay the relevant taxes.
Third, sharing activities may not be covered by traditional business insurance policies, as the case of Carshare.hk shows. It may be advisable for sharing economy firms to pool resources to jointly negotiate insurance coverage. They could also consider setting up a trade body to set out industry standards on issues such as user data privacy, dispute resolution, insurance coverage and impartial information exchange, as well as ensure that online reviews and ratings are unbiased.
Uber’s experience with controversies and lawsuits in various markets highlights the need for legal and regulatory savvy among sharing apps.