The sharing economy needs to be embraced

In October last year the Commission published its Communication on upgrading the EU’s Single Market, which promised, amongst other things, to address the sharing economy.

The Commission’s report was light on details, only committing to develop guidelines and assess regulatory gaps.

While it is a positive sign that the Commission recognises the importance of the sharing economy, it remains unclear to what extent it intends to intervene to clarify the legal status of shared services. Stronger signals have to be provided to the markets to ensure not only continued investments in Europe but also trust in the services themselves, particularly at a time when economies across Europe are struggling.

A balanced approach is needed, one that brings into the legal fold new business models but at the same time ensures healthy competition. Both existing industries and new service providers can and should be able to co-exist but some flexibility will be required on both sides.

Existing industries may feel that they face unfair competition from companies that don’t pay the same price of entry nor play by the same rules; however, they can still thrive in the face of this competition by competing based on a better assessment of their own unique selling points. Simply shutting out competing services from the market is not an option that will work, particularly as many consumers have already happily migrated to new emerging services. Analysing why that is the case and responding with a new commercial offer is better than attempting to prevent access to new services in the first place.

This is not to say that service providers in the sharing economy are perfect. They too will need to adapt, in particular in respect of their tax position and insurance coverage. However, such adaptations should not come at the expense of what makes these service offerings so successful: ease of adoption. In other words, services that consumers like because of their simplicity and ease of use should not become overly complex because of a greater burden of administrative and legal obligations.

The focus of European policymakers has to be on ensuring legal certainty but keeping red tape to a minimum. In fact finding ways to apply less red tape to everybody, new entrants and existing service providers, would be the best possible outcome.

Author

Lauren Roden

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