‘Shar­ing econ­omy’ un­nerves reg­u­la­tors

Star­tups ar­gue they cre­ate jobs with new models; in­dus­tries say star­tups side­step rules.

Austin American-Statesman - - BUSINESS - By Dana Hull San Jose Mer­cury News

Phillip Zakhour is a pioneer of the “shar­ing econ­omy.” He makes his liv­ing by rent­ing out the in-law unit of his San Fran­cisco house on Airbnb, per­form­ing er­rands and odd jobs as a TaskRab­bit, and fer­ry­ing peo­ple across the city as a driver for Side­car.

“I do this now be­cause it pays,” said the 49-year-old former soft­ware en­gi­neer, who said he can earn about $4,000 a month be­fore taxes. “I’m a sin­gle dad with two kids and a mort­gage. I’m not sav­ing any money, but I’m sur­viv­ing.”

But the Web- and ap­pli­ca­tion-based star­tups that have kept Zakhour afloat now face a thicket of reg­u­la­tory, tax and la­bor is­sues in many of the cities where they op­er­ate.

While the new com­pa­nies say they are cre­at­ing jobs by dis­rupt­ing legacy in­dus­tries that have fallen be­hind the curve, es­tab­lished in­dus­tries say the new­com­ers are tak­ing un­fair com­pet­i­tive ad­van­tage and in some cases en­dan­ger­ing the pub­lic by sidestep­ping safety, tax and la­bor rules.

Government agen­cies are un­der pres­sure both to en­force ex­ist­ing rules and to up­date them for new busi­ness models.

“The shar­ing econ­omy of­ten strad­dles the line be­tween pure shar­ing and com­merce,” said Oak­land, Calif., at­tor­ney Janelle Orsi, co-founder of the Sus­tain­able Economies Law Cen­ter. “Our laws should also make rea­son­able space for ‘nano-en­ter­prise’ — all the small things peo­ple do to sup­ple­ment their in­comes. Why not al­low peo­ple to make money giv­ing rides to oth­ers?”

State reg­u­la­tors with the Cal­i­for­nia Pub­lic Util­i­ties Com­mis­sion in Novem­ber came down on the side of tra­di­tional cab com­pa­nies, slap­ping star­tups Lyft, Side­Car and Uber with a $20,000 fine af­ter ac­cus­ing them of op­er­at­ing as pas­sen­ger car­ri­ers with­out ev­i­dence of com­mer­cial in­surance. There is also ten­sion be­tween the new com­pa­nies and reg­u­la­tory au­thor­i­ties in New York, where of­fi­cials are crack­ing down on Airbnb hosts, ar­gu­ing short-term rentals vi­o­late laws against rent­ing for less than 30 days.

The new com­pa­nies say reg­u­la­tors don’t un­der­stand the pace of in­no­va­tion or the con­tri­bu­tion they make to­ward eas­ing con­ges­tion and en­vi­ron­men­tal degra­da­tion.

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