Sharing Economy’s European Crowd is Tougher

By Zosha Millman | LXBN | May 4, 2016

Not a day goes by without a sharing economy company staring down a lawsuit in one way or another. But over in the European Union, their fate is even less certain.

Though companies like Uber, TaskRabbit, and Airbnb have enjoyed a mammoth growth over the past few years, they’re starting to really rub up against the regulations—regulations critics argue they were built to flatten and get around. Though the EU’s 28 member states don’t agree on everything, they do seem to see the sharing economy as both a spark to fan and a blaze of regulations in place. And unlike the U.S. they seem to be more concrete about putting their foot down.

Take Berlin where, at the start of this month, citizens renting out their apartments on Airbnb can face a fine of up to €100,000. The new law (“Zweckentfremdungsverbot,” or “prohibition of improper use”) allows homeowners to rent out individual rooms on Airbnb and its ilk, but renting entire homes or apartments is banned in an effort to curb rising real estate prices. And while city officials call it a “necessary and sensible instrument” to keep housing affordable, Airbnb is, predictably, not pleased.

“Berliners want clear and simple rules for home sharing, so they can continue to share their own homes with guests,” Airbnb Germany said in a statement quoted by The Verge. “We will continue to encourage Berlin policymakers to listen to their citizens and to follow the example of other big cities such as Paris, London, Amsterdam or Hamburg and create new, clear rules for normal people who are sharing their own homes.”

But while Airbnb may be finding kinder markets in those cities, not every gig economy app is. Uber has been famously running up against taxi regulations in Belgium and France, with taxi drivers in Paris bringing the city to a halt in protest. Similar protests have taken place in Hungary, Lisbon, and London. Those protests may not do the taxi industry any favors, but they do bring to light some important issues that face any industry that overlaps with the “collaborative economy industry,” as The Register writes:

…an increasing number of European countries are concerned about the risks that the new sharing economy companies may bring. Traditional taxi drivers go through a long-defined approval process that seeks to guarantee riders’ safety: Uber’s driver selection process has been repeatedly criticized for being significantly less robust.

Likewise, hotels have to meet and maintain strict licensing requirements that ensure visitors are kept safe. Numerous examples exist of problems with insurance or general safety have appeared with services like AirBnB.

As a result of these concerns, countries have asked the EC to look into things and issues guidance on how to apply current EU law to the new companies.

Which is a universal problem for the sharing economy: If it walks and talks like a hotel or a taxi, should it be regulated similarly? An apartment building won’t be up to the same code as a hotel, but an Airbnb listing can turn it into one anyway. Taxi medallions may be scarce for those eager to drive one, but a personal car may not be up to the same code. 

But lately EU member states have seemed more ready to put their foot down on the sharing economy’s legal gray area. Belgium has proposed new rules aimed at greater tax transparency for the sharing economy, while Italy is looking to put them under the Italian Competition Authority. The UK joins the U.S. in being confused about the proper employment certification. And it certainly doesn’t help that EU countries are working with two sets of laws; national laws restricting Uber allegedly violating EU laws arewhy the ride-sharing company is bringing legal challenges against France, Germany and Spain.

And as the European Commission explores the possibilities of a digital single market, the sharing economy isn’t sure what to expect. The announcement, expected in June, will illuminate the role of online platforms in the digital single market, but later in the summer the European Commission will announce a European agenda on collaborative economy, including guidance on how to apply EU law. And it might mean a tougher life. Earlier this year, 47 collaborative economy platforms joined in signing an open letter to the presidency of the EU’s Competitiveness Council, encouraging member states to show up for the collaborative economy.

“The European Union needs to lead and not to follow, and certainly not to obfuscate and drag its feet,” Mark MacGann, Uber’s head of public policy for Europe, the Middle East and Africa, said in an interview. “The unemployed youth in places like Spain, they’re not going to forgive the European Union if it considers this new collaborative economy as a problem to be solved, rather than an opportunity to be seized.”

As the companies wait to see if their letter makes a difference, they worry over everything from legal action to being lumped into one category. With any luck, everyone wins. But more realistically, something is going to have to give a little.