The Federal Trade
Commission (FTC) hosted a stimulating workshop on the “sharing economy” on
Tuesday, June 9, 2015. The workshop offered a variety of perspectives from
regulators, academics, and industry executives on the sharing economy’s
emerging and innovative business models.
I found the third
panel particularly interesting because its participants included industry executives
associated with emerging sharing applications and incumbent business models.
Specifically, the back-and-forth conversation between David Hantman, Head of
Global Public Policy for Airbnb, and Vanessa Sinders, Senior Vice President and
Head of Government Affairs for the American Hotel and Lodging Association, was
very informative.
Ms. Sinders argued
that Airbnb should abide by the same set of rules and regulations that hotels abide
by. She said that without these regulations there is a possibility that Airbnb consumers
could experience unsafe and/or unhealthy conditions. She claimed that hotel consumers
have a consistent expectation about what they will experience when they walk into
their rooms while Airbnb users do not. But Mr. Hantman stressed that the
reputation feedback mechanism within Airbnb’s application has created
transparency and accountability for every transaction, which enables trust
between the hosts and the guests. He also mentioned that Airbnb has a $1
million insurance policy that protects users in case any unforeseeable
incidents arise.
Among her
concerns, Ms. Sinders stated that many hosts are using Airbnb as a business
enterprise and renting out entire apartment buildings. She said: “If it looks
like a hotel and acts like a hotel, it should be treated like a hotel.” But Mr.
Hantman agreed with her that the hosts who use the Airbnb platform to
essentially run a hotel operation should be required to get business licenses
just like hotels. He stated, however, that the overwhelming majority of Airbnb hosts
only share their homes a couple times a year, and many do it in order to make
ends meet. Mr. Hantman said these are the people that the Airbnb online
platform targets as hosts.
Interestingly, Mr.
Hantman declared that, in his view, he and Ms. Sinders are actually in agreement
on most things, even though Ms. Sinders refuses to acknowledge it. They both do
not want consumers to experience unsafe or unhealthy conditions, and they both
think hosts who rent out their spaces in the same fashion as a traditional
hotel should obtain a license.
In response to Ms.
Sinders’ claim that Airbnb listings are “illegal hotels,” Mr. Hantman reported
that Airbnb has tried on many occasions to pay lodging taxes in New York (where
it has received a substantial pushback from Attorney General Eric Schneiderman),
but, curiously perhaps, the lobbying efforts of the American Hotel and Lodging
Association, thus far, have helped prevent Airbnb from doing so.
In an FSF blog from
October 2014,
Randolph May and I analyzed the New York Attorney General Eric Schneiderman’s report in which he
characterized Airbnb listings as “illegal hotels.” We argued that, aside from
disputable legal characterizations, all the data in the report shows that these
so-called “illegal hotels” benefit consumers and New York’s economy. If they
were not meeting the demands of consumers, then Airbnb’s economic activity in
New York would not be increasing annually.
As Mr. Hantman
stated at the FTC’s workshop, if the lack of tax payments was the only reason
for questions about the legality of Airbnb listings in many cities, then these concerns
would have been worked out because Airbnb is willing to comply. Instead, lobbying
pressure from the hotel industry to local governments (presumably based on fear
of competition) has resulted in legal or regulatory threats to Airbnb listings
in many cities around the world.
If the laws or regulations applicable to the existing incumbent
businesses no longer make sense today, they should be changed. It always harms
consumers when public policymakers attempt to “level the playing field” by
subjecting entities to regulatory restrictions that are not needed. The proper
way to respond to “level the playing field” claims is to remove unnecessary
regulations wherever they apply, not to expand them to new entities.
In Mr. Hantman’s
concluding remarks, he stressed that he is optimistic that mutually
satisfactory agreements will be reached in the cities where Airbnb’s compliance
with legal requirements is called into question so that it can continue to
serve consumers. He said Airbnb wants to work with local governments around the
world to provide them with anonymized data so they can monitor the activity
that is occurring in their jurisdictions, while also protecting the privacy of
Airbnb users.
This was just one
of the many informative topics discussed at the FTC’s workshop on the sharing
economy. I anticipate posting a blog in coming days about the key takeaways
from the discussions at the workshop.
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