Ted S. Warren / AP

Federal Trade Commission to hold workshop on the 'sharing economy'

FTC to examine competition, consumer protection among new class of mobile and peer-to-peer companies

The Federal Trade Commission, the government body whose aim is to protect consumers from unfair or anticompetitive business practices, has announced it will hold a workshop on June 9 to examine the so-called sharing economy.

The FTC is asking the public to weigh in before the workshop, where it will “examine competition, consumer protection, and economic issues raised by the proliferation of online and mobile peer-to peer business platforms in certain sectors,” according to a release on the commission’s website.

The burgeoning marketplace of these platforms offering easy access to everything from rides to rooms has exploded in recent years. Ride-hailing companies like Uber and Lyft, and room-rental services like Airbnb racked up an estimated $26 billion in 2013, mostly from smartphone-based transactions, according to the FTC, and could soon balloon up to $110 billion annually.

“The resulting business models have great potential to benefit our economy and consumers,” FTC Chairwoman Edith Ramirez said on Friday in a release. “Through our workshop, we want to better understand the competitive impact of these new business models, as well as their interactions with existing regulatory frameworks.”

Among the questions the FTC will pose is whether and how state and local regulators ought to approach oversight of some of these companies “without also restraining competition or hindering innovation.”

Taxicab companies, for example, are experiencing huge blows to their market share as riders flock to use ride-hailing apps that use smartphone GPS devices and pay via stored credit card information. Those consumers cite Uber and Lyft’s ease and convenience, while taxi drivers have been wooed by flexible schedules and higher pay at least for now.

But taxi companies have loudly denounced these apps in some cities, with European drivers holding repeated demonstrations against Uber and other ridesharing companies, arguing that they are violating the licensing laws that regulate taxi drivers and clogging the streets with thousands of extra cars. In Paris, taxi drivers were able to successfully lobby the government to help their competitive advantage by making Uber drivers wait 15 minutes before picking up new passengers, though that rule was recently repealed. In March, Germany barred Uber from operating in the country altogether, following bans enacted by Thailand and Spain last year.

In the United States, New York City regulators barred Lyft from setting up its popular ride-sharing service until it caved to demands to limit service to Taxi and Limousine Commission-approved drivers-for-hire. But California, on the other hand, became the first state in September of 2013 to create a special designation for ridesharing apps in like Uber and Sidecar, dubbing them Transportation Network Companies (TNC). The companies are required (PDF) to apply for TNC permits through the state’s Public Utilities Commission, and to carry at least $1 million in insurance coverage, and do background checks on drivers who use the company's platform. 

The FTC will also consider whether the apps are adequately vetting sellers or drivers as well as a multitude of other consumer protection issues — from concerns about data breaches and privacy to whether new apps are adequately handling customer complaints.

For companies that contract workers to perform services like drive passengers or clean homes, safety can play a particularly important role. Airbnb, the website that helps users to rent rooms in people’s homes for short stays, has seen at least one incident in which the owner’s dwelling was completely destroyed: One New York City user reported last year that his apartment had suffered $86,000 in damages when Airbnb renters tried to hold an orgy there. And Uber has weathered a storm of complaints about driver screenings, following several allegations that driver attacked riders. Some have accused drivers of rape in Houston and Delhi, the latter opting to ban the company from operating there as a result.

There are also questions surrounding how the new sharing economy treats its employees. Drivers have filed class action lawsuits against Uber and Lyft, alleging that while the company calls them independent contractors and requires them to buy their own insurance and gas, they ought to be classified as employees and be reimbursed.

Based on the FTC’s own public comments, it would appear the agency is in favor of the so-called sharing economy, though a representative at the commission’s Washington, D.C. offices told Al Jazeera on Friday that the upcoming workshop is just part of its ongoing mission to study emerging issues in the economy.

Previous FTC comments on the sharing economy indicate that it may rule in favor of growing companies like Uber and Airbnb. In 2013, the FTC told the District of Columbia Taxicab Commission that it ought to “avoid unwarranted regulatory restrictions on competition,” and in 2014, in response to Chicago’s proposed ordinance about “transportation network providers,” the FTC said that “applications for arranging transportation using personal vehicles may expand transportation options, better satisfy consumer demand, increase competition, and promote a more economically efficient use of personal vehicles.”

The FTC will be accepting comments from the public until May 26 for consideration before the June 9 workshop. 

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