Rathenau Instituut A fair share Safeguarding public interests in the sharing and gig economy Report A fair share Safeguarding public interests in the sharing and gig economy Koen Frenken, Arnoud van Waes, Magda Smink & Rinie van Est Board of the Rathenau Instituut Ms. G.A. Verbeet (chair) Professor E.H.L. Aarts Professor W.E. Bijker Professor R. Cools J.H.M. Dröge E.J.F.B. van Huis Professor P.P.C.C. Verbeek Professor M.C. van der Wende M.M.C.G. Peters (secretary) A fair share Safeguarding public interests in the sharing and gig economy Koen Frenken, Arnoud van Waes, Magda Smink & Rinie van Est Rathenau Instituut Anna van Saksenlaan 51 Correspondence address: P. O. Box 95366 2509 CJ The Hague Telephone: 070-342 15 42 E-mail: [email protected] Website: www.rathenau.nl Publisher: Rathenau Instituut Editors: Claartje Doorenbos and Frank Steverink Preferred citation: Frenken, K., A. van Waes, M. Smink & R. van Est, A fair share – Safeguarding public interests in the sharing and gig economy. The Hague, Rathenau Instituut, 2017. The Rathenau Instituut has an Open Access policy. Its reports, background studies, research articles and software are all open access publications. Research data are made available pursuant to statutory provisions and ethical research standards concerning the rights of third parties, privacy and copyright. © Rathenau Instituut 2017. This work or parts of it may be reproduced and/or published for creative, personal or educational purposes, provided that no copies are made or used for commercial objectives, and subject to the condition that copies always give the full attribution above. In all other cases, no part of this publication may be reproduced and/or published by means of print, photocopy, or any other medium without prior written consent. 6 Foreword Just a few years ago no one had even heard of the sharing or gig economy. Now scarcely a day goes by without an article appearing in the newspaper about Airbnb and how that platform is transforming Amsterdam’s city centre or about the impact Uber is having on the taxi market. What is less well known is the growing number of people who are finding work through online mediation, as in the case of cleaning jobs via the Helpling app. Online platforms (including platforms for second-hand goods) have grown explosively in recent years: 6% of the Dutch population used these platforms in 2013, while in 2016 almost a quarter did. These services meet a need and force traditional markets to innovate, but newspaper headlines show that the growth of the sharing and gig economy is also raising new questions in relation to public interests. Who is responsible for fire safety and public order when a person lets their home via Airbnb? What is the legal status of cleaners who work via the Helpling platform: are they self-employed or employees? For this study the Rathenau Instituut has reviewed the academic literature in order to describe the phenomenon of the sharing and gig economy. The empirical basis for the report is formed by five case studies of popular platforms on which consumers arrange transactions with assets and personal services. We show that the new practices arising from the sharing and gig economy are having both a positive and a negative impact on some public interests. Sharing and gig platforms have positive effects in terms of wealth, employment, entrepreneurship, social cohesion and the environment. Public interests that are threatened by them include a level playing field, taxation, consumer protection, prevention of discrimination, public order, platform-independence, preventing the forming of monopolies and protection of privacy and autonomy. The Rathenau Instituut’s intention with this report is to provide guidelines for the political debate and policy formulation on the issue. The government can both stimulate the positive impacts and limit the negative impacts of the new practices. The government should give sharing platforms the room to grow in the initial stages. At the same time, the rapid growth of these platforms is putting pressure on public values. In view of the tendency of platforms to grow into monopolies, the government must adopt policies to prevent public values from being undermined. In the first place, the government should clarify the legal status of sharing and gig platforms. The government could also appoint a trusted third party to regulate a platform in such a way as to safeguard the privacy of its participants. Finally, it should promote the establishment of a system that ensures that reviews posted on platforms are reliable and that users can carry their reputation data with them to other platforms. In 2016 the Rathenau Instituut published a report on innovation and regulation, which discussed the role of regulation in relation to emerging technologies and innovation. In March 2017, the institute published the report Urgent upgrade: protect public values in our digitized society in which it discussed ways of guaranteeing fundamental rights in the digital age. This study, which is a joint publication of the Rathenau Instituut and Utrecht University, follows up that report by exploring how to properly manage the opportunities created by the process of digitisation. Dr. ir. Melanie Peters Director, Rathenau Instituut 7 Summary People have always shared. We are accustomed to lending things to one another or performing odd jobs for people we know, such as family and friends. With the rise of online sharing platforms, it is now possible to bring together people who do not know each other and connect strangers on a basis of trust. These online platforms (including platforms for second-hand assets) have enjoyed enormous growth in recent years: 23% of the Dutch population participated in the sharing economy in 2016, compared with 6% in 2013. The sudden rise and explosive growth of sharing and gig platforms raise a great many questions in relation to public interests. Should consumers who rent out their home meet the same requirements as hotels? Should incidental income earned in the gig economy be taxed? Is there a real possibility that platforms will come to form global monopolies? Is the sharing economy sustainable? Who will profit most from the sharing and gig economy? Governments at the local, national and European level recognise the opportunities that the sharing economy creates, but they also see new challenges in terms of safeguarding public interests. An important question is to what extent existing legislation, which was adopted for the traditional economy, is also reasonable, applicable and enforceable with respect to the online platforms on which the sharing and gig economy is based. The European Commission has identified four responses a government can make to digital platforms: 1. Strict enforcement of existing rules; 2. Deregulation; 3. Ad hoc regulation; and 4. No intervention, or toleration. The central question addressed in this study is how public interests that are affected by new practices arising from the sharing and gig economy can be safeguarded. That question is broken down into three separate questions: 1. What do we mean by the sharing and gig economy and what specific form does it take in practice? 2. What public interests are affected by the sharing and gig economy? 3. How can these public interests be safeguarded, how will those safeguards be established and what are the roles of public authorities and the platforms in particular in that process? The report is divided into three parts. Part I provides a definition of the sharing and gig economy based on the academic literature, and discusses its economic, social and environmental impact. Part II presents case studies of five platforms: Helpling (cleaning services), UberPop (taxi), Airdnd (home restaurants), Airbnb (accommodation) and SnappCar (cars). These cases encompass both sharing platforms (on which consumers share assets) and gig platforms (on which people offer personal services to one another). The cases selected also embrace a very diverse economic and institutional range and thus illustrate a wide spectrum of new issues that arise in connection with public interests. For each case study, the authors conducted semi-structured interviews with representatives of the platform, the government and, in some cases, the regular, or traditional, sector. Sources that reflect the political and public debate about the sharing economy, such as media and policy reports, were also consulted. Chapter 9 presents an analysis of the public interests affected in the five case studies, 8 how they can be safeguarded and how those safeguards are, or are not, being put in place. Part III presents twenty recommendations for the effective governance of the sharing and gig economy. Part I: Literature In this report the sharing economy is defined as “consumers granting each other access to under- utilised physical assets (“idle capacity”), possibly for money”. This definition has three elements. First and foremost, these are transactions between consumers themselves (“consumer-to-consumer”, also referred to as “peer-to-peer”). Secondly, the transactions involve “temporary access” to an asset and not the permanent transfer of ownership. Thirdly, they involve assets that are not being used and not services. In contrast, in the gig economy, consumers provide services for one another rather than providing access to goods. In other words, those transactions do not involve renting out a car or lending a saucepan, but providing a taxi journey or a cooked meal as a “service”. Although there is still very little empirical research into the full economic, social and environmental impact of the sharing and gig economy, it is possible to express a number of expectations on the basis of theoretical ideas and a small number of studies. First, the economic benefits are considerable, as evidenced by the rapidly expanding practices of lending, swapping and renting via platforms.