January 6, 2017
In 2017, collaborative economy companies are expected to both strengthen their market position, by for instance extending into other sectors, but also deal with existing and growing regulatory problems.
One area where we will see more regulatory oversight is misclassification (employee vs self-employed) and an increase in health, safety and tax collection enforcement.
It’s important to note upfront that regulation is not necessarily negative for the collaborative economy. Operating within a licensing framework, provides a certain level of comfort and may not result in just a bunch of restrictive laws.
“While regulation will take time to settle in, eventually, it will create a number of standards to encourage more people to try the collaborative economy and the whole sector to develop”.
Much regulatory engagement in 2017 is likely to be in the form of guiding principles, clarifications to avoid grey areas and other rulings as to how certain instances fit within existing legal landscapes. This has been the approach of the European Commission in 2016.
Policymakers and elected representatives will realize that voters and tax payers love the convenience of the collaborative economy, and they will have to simplify the rules to make it more accessible.
Public-Private Partnerships on the Rise
In 2017 I expect businesses and local authorities to co-create innovation zones as safe harbours or laboratories to experiment with the collaborative economy. These may take the form of local platforms where companies can use independent contractors without fear of liabilities if they might later be reclassified as employees and use big data to monitor trends. The current EU Cluster Policies may provide a suitable framework to develop this.
An example of this is a pilot in the UK called CEDAH: “Central Database of Available Hours”. This is a model created via public procurement where providers across collaborative economy platforms share their pricing system and availability on a sort of “platform of platforms” which is run by local authorities and where local authorities can more easily enforce tax collections, health and safety requirements and provide quality control. This can also help providers to carry over their reputation ratings and perhaps one day some portable benefits from platform to platform.
It’s the Data, Stupid
Another area where the collaborative economy may evolve in 2017 is into companies sharing more data for regulatory purposes. Tons of data is generated in the collaborative economy, by our phones, our homes, our computers, our cars etc. Platforms have been mining large sets of data trails, which users provide with their digital interactions, to generate insights of business and social importance. Governments need data to regulate effectively and ensure public safety. Platforms will systematically hand over anonymized (but audited!) data to governments, who can use it to regulate. In this way platforms will build credibility with regulators, ensure compliance with a set of laws and enact transparency with users.
As Nick Grossman said above, lawmakers need to make it less hard for platforms to get started (e.g. lower barriers to entry, relax licensing requirements, increase the freedom to operate). This is crucial for experimentation and innovation. In exchange for that freedom, platforms need to share more data with regulators and in real time, just like their users do with them. However, they will also need to accept that data may result in forms of accountability (e.g. Uber could be making NYC traffic worse and Airbnb could be making San Francisco housing affordability worse).
Businesses: Adapt or Die
Regulations are in a state of flux around the collaborative economy and the moment they are enacted they may also begin being outdated. It has become a policy battle, one that places collaborative economy companies against incumbent businesses who are being disrupted and who are pushing for a level playing field.
However, besides fighting in the law courts, the future of the collaborative economy will require joint efforts and partnerships to realise change. As such, it will be interesting to see how established businesses will take a chance to enter this space by adapting their own business models.
For instance, large companies are already beginning to create their own subset version of Uber, e.g. a dedicated marketplace for certain goods or transforming the sale of goods into providing services. On the other hand, expect to see a move towards small businesses, rather than consumers, being a focus of new collaborative economy service offerings.
Collaborative Economy Entering the Age of Maturity
In the grand scheme of things, the collaborative economy has not been around for long – less than a decade – and for most of this period, it has flown beneath the radar of the various regulators around the world. That clearly changed in 2016 and in 2017 the collaborative economy will begin to impact more businesses and affect more people.
This means that more businesses and more people will have something (whether it be money, privacy, data or else) to lose if something goes wrong. Regulators are unlikely to sit and wait, expect them to be more and more engaged. In turn, companies in most industries will benefit from the certainty that will be brought when regulation comes in.
This post originally appeared on the Euro Freelancers blog here.Author : Marco Torregrossa