CASE STUDY

SHARING ECONOMY IN A DIGITAL AGE: SOME BEST EUROPEAN PRACTICES

Case study

Marko Ropret, Dejan Ravšelj, Aleksander Aristovnik Ljubljana, November 2019

/zavod14

Zavod 14, zavod za sožitje in napredek @stirinajst Cankarjeva 4 • 1000 Ljubljana Marko ROPRET Marko Ropret received his PhD from the Faculty of Management Koper, Slovenia. Currently, he is employed at the Faculty of Administration, University of Ljubljana. He has had over ten years of experience in teaching at various faculties and possesses a habilitation as an Assistant Professor. His research fields encompass innovative public governance models, R&D, technology, human resources and business performance. He presented the internationally relevant results of his work in multiple original scientific articles, conferences, and radio shows. He also received awards for his work from University of Maribor (Rector’s Award) and University of Primorska (Dean’s Award).

Dejan RAVŠELJ Dejan Ravšelj, PhD is a researcher at the Chair of Economics and Public Sector Management, Faculty of Public Administration, University of Ljubljana, Slovenia. His research areas are mainly associated with Business Economics, with a focus on the state-to-business relationship and consideration of economic and accounting issues. He is regularly involved in various domestic and international research projects that cover different research areas. He publishes professional and scientific articles and presents them at a range of domestic and international professional and scientific conferences.

Aleksander ARISTOVNIK Aleksander Aristovnik, PhD, is an executive director of Zavod 14 and an Associate Professor in the Department of Economics and Public Sector Management at the Faculty of Public Administration, University of Ljubljana, Slovenia. His research interests primarily encompass public sector economics and management, public finance, macroeconomics and economics of the EU. He has actively participated in around seventy international conferences and recently participated as the head or a member of numerous research projects financed by the Slovenian Research Agency (SRA). He has also published and reviewed many professional and scientific articles in domestic and international (ISI-cited) journals. He recently became a member of various international associations and organizations (e.g. EEA, INFER etc.) and serves as a member of the Slovenian Officials’ Council.

Supported by Friedrich Naumann Foundation for Freedom CASE STUDY 3 Table of Contents

1 Introduction 4

2 Defining the 6

3 Digital and socioeconomic implications 9 3.1 Evidence on workplace impacts 12 3.2 Evidence on economic impacts 13 3.3 Barriers to the sharing economy 19

4 Towards the future: best-practice sharing examples in selected EU economies 25 4.1 Kleiderkreisel – Online Market for Second Hand Clothing 25 4.2 DRIVY: Car rentals between you and me 26 4.3 Polygon.SI: The workspace shared by dozens of people a day 26 4.4 BlaBlaCar: a long-distance ridesharing service 27 4.5 Share Your Meal: a non-profit food-sharing platform 27

5 Implications for policy makers 29

6 Conclusion 31

References 33 4 CASE STUDY 1. Introduction

he incessant urge of people 2015). was able to offer its users more for material property and than two million overnight stays in more possessions is growing than 190 countries in January 2016, seven stronger and endangers the years after it was founded, without owning sensitive ecosystem on earth. a single room (Land, 2016). Since 2008, TA contemporary alternative approach is the term has also increasingly appeared represented by the Sharing economy model, in the scientific and popular scientific which operates on the core principle of discussion. It translates as much as “sharing “sharing rather than owning” to conserve economy”. Also terms like “community important resources and enable a more consumption”, “use instead of owning” or sustainable lifestyle (Baier, 2017). “collaborative economy” are used. Sharing in itself represents a social exchange that With the spread of the Internet and mobile does not yield profit (Stokar et al., 2018). devices, as well as the emergence of various Already in 1984, the term sharing economy online platforms, the foundation of the appeared for the first time in the literature. sharing economy was laid. Ever since the Martin Weitzman, a US economist, coined international success of companies such the term in his book “The Share Economy: as Airbnb in the accommodation industry Conquering Stagflation.” In terms of and in the transport industry, the content, the book discusses solutions to relevance of the sharing economy can no inflation in the US Weitzman hypothesizes longer be denied. Meanwhile, the majority that incentive systems constitute employee of European driver’s license holders know profit sharing in order to get the domestic about at least one car-sharing service economy going. This collective consumption provider and already about one million (also called collaborative consumption) customers use the service of a car-sharing involves organized sharing of property organization (Land, 2016). The potential and housing. Private individuals as well as of the sharing economy becomes even companies participate in this thoroughly clearer when considering the daily usage successful business model. You benefit from figures. Airbnb, a company focused solely the advantages. The big difference between on providing overnight accommodation, collaborative consumption and traditional had 375,000 users a day in August 2014. forms of consumption is that consumers By comparison, Hilton Hotels, one of the only acquire ownership for a certain period largest hotel chains in the world, offers its of time (Land et al. 2015). Alex Stephany customers approximately 745,000 over- defines the term as follows: “The sharing night stays in 97 countries and employs economy is the value in taking assets under approximately 130,000 people for the the protection of those assets.” (Stephany management of hotels (Hilton Worldwide, 2015, Müller, 2019) CASE STUDY 5

The Sharing Economy can be seen as a However, the sharing economy has still product of the digital transformation, which not fully arrived in Europe, so the question has meanwhile found its way into almost arises as to why this business model, every part of our everyday lives (Müller, despite the obvious advantages, has not 2019). Digitization not only brings about yet established itself better. By studying a fundamental change in interpersonal various sources, we try to come closer to communication, but also forms new ways answering the following research question: of doing business and of behaving in a new What are the success factors and barriers to way. One of these new manifestations can sharing practices? To answer this complex be seen in the form of the Sharing Economy, question, however, it is necessary to discuss which can be seen as a revolutionary change further questions (Baier, 2017). On the in our social and economic life, as it calls one hand, the question arises as to how for a more conscious use of resources and high the awareness and use of the sharing products and thus questions the current economy in Europe is. On the other hand, prevailing forms of consumption. Whether why consumers use the sharing economy it’s sharing infrequently used items such or do not use it and which consumption as drills, organizing carpooling, or booking motives prevail. The need to answers on a vacation rental - the Share Economy the provider side is great. Because it is of offerings open up new possibilities for enormous importance for the providers, companies and individuals (Müller, 2019). on the one hand, to better understand the The fact that this type of economy can also participants of the sharing economy and, be successful is shown, among other things, on the other hand, to fathom the concerns by one of the most well-known examples of of those who are not yet involved. Only in the Share Economy: the housing exchange this way will it be possible to fully establish Airbnb. On the platform, private individuals the sharing economy in Europe and thereby can offer their apartments for rent, making make a significant contribution to tackling it a low-cost alternative to traditional hotels the environmental problem (Baier, 2017). or holiday apartments. Airbnb also promotes the roosters as friends rather than landlords, providing an authentic look into the life of the city. The company now has a market value of $ 24 billion (Slee, 2016). Pricewater- houseCoopers (2015), the global consulting firm, forecasts global sales of $ 335 billion by 2025 (Müller, 2019). 6 CASE STUDY 2. Defining the sharing economy

t the heart of the sharing in the literature is not yet clarified. Basically, economy is community the Share Economy describes the trend consumption. This commu- not to own assets, but to secure the use of nity consumption, also called contractual agreements (Brühl 2015). The collaborative consumption, essential core of this new trend, therefore, Ainvolves the systematic sharing of is that “access is more important than housing and objects. In addition to private property”. The Share Economy encompasses individuals, now also sporadic companies not only the sharing of material but also take part in this new business model and intangible resources, as well as skills and benefit from the advantages (Baier, 2017). know-how. Basically, there are numerous The main difference in collaborative forms subcategories under the generic term “Share of consumption compared to traditional Economy”. So it’s not just about borrowing, forms of consumption is that the consumer but also exchanging, giving or renting acquires ownership for a limited period only. tangible and intangible goods. (Bartel 2019; The English term sharing economy means Baier, 2017) economics of sharing, but there is debate among experts about whether the concept The idea behind the sharing economy is of sharing economy is adequate for this quite trivial and probably exists as long as business model. In 2013, the world’s largest humanity itself. Instead of acquiring a good, trade fair for information technology, CeBIT, the consumer obtains the right to use the created a series of other synonyms such as good for a limited period of time. Thus, the Share Trading, Share Market, Access Market, basic requirement for a functioning sharing Collaborative Consumption, Shared Value economy is still an owner or supplier, but or Share Paradox. However, it should be this is moved into the background by the noted here that the term sharing economy shared use of resources. One of the most and the term collaborative consumption are well-known definitions was formulated still among the most common names for this by Botsman and Rogers, who within their business model (Baier, 2017). book “What’s mine is yours” form an instance of basic literature for the new The cornerstone of the term ‘share topic. The two authors define the sharing economy’ was set by Harvard economist economy as follows: “The sharing economy Martin Weitzman back in the 1980s. His is an economic system based on sharing thesis was that prosperity for all increases underfunded assets or services, for free or the more the market participants share for a fee, directly from individuals.” Although (Baumgärtel 2014). To date, the terminology the definition is acknowledged and accepted CASE STUDY 7

by professionals (Baier, 2017), nevertheless, The term underutilized assets concerns they go too far and do not focus on the the low utilization of certain goods. These actual core features that have paved the way goods range from yachts, to baby clothes, for the sharing economy. A very good and to pets in the sharing economy. Stephany more detailed definition was formulated by uses the term idling capacity in this context. Alex Stephany (2015). He defines the term By that he means the time in which a good according to five important characteristics: is not used, whereby the utilization is very low and inefficient. The Sharing Economy • Value seeks to make the use of these goods more • Underutilized assets efficient and thereby create benefits for all • Online accessibility concerned (Stephany, 2015). In order to • Community increase the utilization, the goods have to • Reduced need of ownership be made available to the customer. For this Stephany uses the term online accessibility. Under Value, he describes that platforms in In the context of the Sharing economy, he the sharing economy are mutually beneficial defines the term sharing simply as “making (Müller, 2019). Although the majority of accessible”, i.e. the provision and accessibility platforms have the main goal of generating of the various goods. A good can be reached profits, or the potential to generate profits, as soon as it is listed online. This can be done there are some exceptions where profit via a peer-to-peer e-commerce providers plays a minor role and sustainable service such as eBay, but also via overnight portals becomes more prominent. For example, the such as Airbnb or ultimately via transport book exchange platform BookMooch allows solutions such as Uber (Land, 2016) you to exchange books for free. The only requirement for the user is the provision of Since the goods need a community in which his old books. The consumer receives points supply and demand need to come together, for uploading his books, which he can use to the provision alone is not enough. In these read the books of other users. Although the sharing economy communities, trust plays platform operator initially does not generate a crucial role, as no one hands over his any financial profit from this service, itis dwelling, his dog, or anything like that to nevertheless able to generate revenue someone he does not fully trust (Stephany, through website visitors and Amazon 2015). Through the systematic construction affiliate links (Stephany, 2015). of reputations, the various providers and customers receive a reputation that is of great importance in these communities. 8 CASE STUDY

Not least because of the anonymity of communities are the decisive difference to individual relationships. This confidence conventional rental providers such as the car is achieved through an evaluation system rental Sixt or the furniture rental CORT. The for suppliers and buyers (Stephany, 2015). communities of the Sharing economy create These valuation mechanisms not only trust through their own user profiles, which create mutual trust, but also have the effect can be evaluated, evaluated themselves and that black sheep, in the sense of bad or can communicate with each other. With fraudulent providers and consumers, have the last point reduced need for ownership, little chance of acting in these communities he refers to the fact that as soon as the over the long term. In addition, it is also user has access to these communities, the important to build trust from the corporate need for acquiring something in the sense side. Technological progress and the World of becoming a property decreases. As a Wide Web are the driving forces behind this consequence, the goods offered become development. Against this background, trust a service that the consumer always uses is turning into a kind of currency in marketing when there is an acute need (Land, 2016; and management (Land, 2016). These Stephany, 2015) CASE STUDY 9 3. Digital and socioeconomic implications

he collaborative economy possibly have had on the results discovered emerged recently in a period, in 2016 in the preceding Eurobarometer where economic growth could survey on this topic, the present survey be detected. Some points of the shows a growth in the share of those who current financial surroundings used offerings supplied via collaborative Tmight also have helped pressure both solutions (23% now compared to 17% supply and demand in the collaborative in 2016). Among those who have used economy (Figure 1). The situation, related collaborative structures to get admission to to the economic crisis, low wages and services, over half have accessed offerings unemployment may also have created a in the accommodation (57%) and transport supply-side push from people searching (51%) sectors, however few have accessed for work opportunities and a demand-side professional offerings (9%) or collaborative pull from customers in search of cheaper finance (8%) (Eurobarometer, 2018). alternative services. In addition, the vulnerable funding and financing climate that has persevered given that 2008 may have made collaboration extra eye-catching to enterprises. Namely, by means of unlocking the cost of current sources located in the consumer area they obviate the need for large capital expenditure (European Commission, 2016).

According to the Eurobarometer study (2018), made on behalf of The European Commission in 2018, nearly a quarter (23%) of Europeans have used offerings provided via collaborative platforms (Figure 2). Apart from the plausible affect that the one-of- a-kind wording of the query used would 10 CASE STUDY

Figure 1: Growth predictions (Compound annual growth rate - CAGR) for the sharing economy and traditional rental sectors (2013 - 2025). Growth predic>ons for the sharing economy and tradi>onal rental sectors (2013 - 2025)

70% 63% 60% 50% 37% 40% 31% 30% 23% 17% 20% 10% 2% 0% P2P lending and Online staffing P2P Car sharing Music and video Tradi>onal accomoda>on streaming sectors

Source: Adapted from PwC (2014).

Figure 2: Use of collabora3ve pla6orm services Use of collaborative platform services in the European Union (EU).

Use of collabora3ve pla6orm services 4% 1% 4% 1% 10% 9% 10% 9%

76% 76%

Never Rarely Occasionally Regularly Unknown Never Rarely Occasionally Regularly Unknown Source: Adapted from Eurobarometer (2018). CASE STUDY 11

The money saving factor strongly influences all 15 countries surveyed by ING (2015). participation in the sharing economy Across all countries, the view that it is throughout Europe, the United States and good for the environment is influential, an Australia (Figure 3). Of 4 main statements element that is explored further in the ING’s about the sharing economy, “it saves circular economy report released by using money” has the largest variety of people Economics Department in June pronouncing it is an influential element in 2015.

Figure 3: Factors, influencing participation in the sharing economy (% of respondents)

Factors, influencing par?cipa?on in the sharing economy

USA 55% 51% 48% 41%

Australia 45% 38% 40% 33%

Europe 58% 53% 52% 47%

Financial savings Extra money Environmental friendliness Building/strengthening communi?es

Source: Adapted from ING Economics Department Netherlands (2015). 12 CASE STUDY

3.1 Evidence on workplace impacts are disappearing. Problematic is that these inefficient companies can be relying on Sharing economy models can have different the traditional economy. The reason that effects on the workplace ecosystem. One is innovative companies win in competition, on the one hand about the easy access to the is that consumer protection rules are often job market and the flexibility in performing softened, because the specific types of the services, one fears on the other side that the sharing economy are not subject matters various benefits (insurance, employment subsumed under these existing rules protection, etc.), the workers usually enjoy, (Bundestag, 2016). dwindle. This could be experienced by the individual service providers brokered Yet, the nature of the sharing economy is through the platforms, who are not probably to change over time as it grows in employed, but are self-employed in the scope and matures. Consumers are likely to framework of work contracts. This implies gain from decrease fees and an improvement new needs for regulators in order to tackle of services. Providers will enjoy new economic such and different insurance issues. There opportunities, however may additionally no is also the possibility that the variety of longer gain from the different blessings related providers of services leads to low wages with ordinary employment. Manufacturers (Bundestag, 2016). can also need to adapt to a market, in which fewer goods, however of higher value, are Starting a business and above all establishing consumed. Moreover, other policy priorities itself in the traditional way represents a are also probably to be affected by using the big challenge for everyone, requiring a big sharing economy: its boom should sooner or financial and time effort for a business later lead to a discount in earnings and wealth creation. But not necessarily in the area of inequality. At the equal time, however, its the Share Economy (especially in the P2P improvement may want to potentially set off model). The initial investment is limited to the advent of new varieties of ‘social exclusion’, the creation of the switching platform, ie. such as the exclusion of an individual/provider the website or a smartphone app, as well from the sharing economic system enterprise as on the associated infrastructure and due to e.g. terrible ratings (European marketing. In addition, the variable costs of Parliament, 2016). organization are close to zero. These low overall costs allow innovative start-ups to Social networks and platforms greatly quickly establish themselves in the market. facilitate peer-to-peer transactions. On At least that makes market access easier the one hand, supply and demand can be for the P2P model of sharing economy adjusted very easily and quickly and, on companies. the other, they help to build trust between the two parties (Baier, 2017). So it is not Especially in the mobility and accommoda- surprising that, according to Owyang, Tran tion sectors, companies within the sharing and Silva, nearly 75 percent of the 30 most economy have a significant impact on respected start-ups in the sharing economy competition. By the multiplication of offers on have links to profiles in social networks. the market (innovation) pressure is increasing Even Airbnb, one of the heavyweights in and companies are working more efficiently. the sharing economy, uses Facebook for For the consumer’s prices are falling, there is its Open Graph application. Open Graph a more varied supply, inefficient companies allows members of Airbnb to log in via their CASE STUDY 13

Facebook profile and view reviews of their According to Antonin Leonard, founder of friends. Another development that has OuiShare, there is currently a cultural shift been driven by the sharing economy is the in which people want to trust in people, not use of mobile devices such as smartphones, just in companies. For example, consumers tablets, etc. The users of these devices in the sharing economy are able to put their have the opportunity almost everywhere trust in companies rather than in companies and at any time to take advantage of the to satisfy their wishes and needs. The various offers of the sharing economy or ongoing change of values in society since to offer personal goods and services. So it the 1970s is also developing more and is not surprising that the sharing economy more from materialistic to post-materialistic platforms are heavily focused on mobile values. Based on this, it can be deduced services and devices. According to Owyang, that for younger generations the possession Tran and Silva, more than 50 percent of the of a good plays a subordinate role and only top 30 start-ups in the sharing economy access to a good is sufficient (Baier, 2017). offer their services via mobile applications. One example is car2go GmbH, which is one of the largest providers in the Car 3.2 Evidence on economic impacts Sharing segment in . At car2go, the temporary use of the vehicles runs If we look at the “sharing economy” from an exclusively via their own application, which economic point of view, we can see that the makes a mobile terminal essential for the business models of companies like Airbnb use of this service. The development of new or Uber are based on the transaction cost payment systems is the last major driver of theory. The companies are a middleman technological developments. An important in a relationship between the supplier of part of the change in the number of payment a good and the customer of the good or systems has the company PayPal, which service. Companies are interested in having have made the monetary transactions this transaction successfully completed, secure and trustworthy on the Internet and as they will then receive their agency have thus laid the foundation for a simple fee. Transaction costs comprise search, payment via smartphone, laptop, etc. For information, negotiation and adjustment example, according to Owyang, Tran and costs. These must be internalized in the best Silva, 27 of the top 30 most popular sharing possible way to reduce transaction costs economy companies use online or mobile (Reichelt, 2017). payment systems. These new payment systems are an important cornerstone in The largest sharing platforms in the EU in the sharing economy, as payment traffic general originated in the US and stay US between buyers and suppliers is considered based, e.g. Airbnb and Uber. In addition, secure. This requirement is very confidence with the exception of BlaBlaCar, EU building for the participants in the sharing based collaborative structures fall into economy and thus enormously supports the category of small enterprises, based relations with the various provider platforms mainly on statistics gathered on staffing and (Baier, 2017). revenues. This suggests that EU collabora- tive platforms are not highly successful in The revived desire for fellowship among the start-up phase and even later phases people is also a development that promotes of business development (European the use of sharing economy offerings. Commission, 2016). 14 CASE STUDY

Figure 4: Use of collaborative platform services in EU member states (% of all respondents). Use of collaboraLve plaOorms in EU member states

0 5 10 15 20 25 30 35 40 45 LV 40 MT 35 IE 34 HU 33 FR 33 EE 31 SK 31 UK 30 SI 30 NL 30 HR 27 DK 26 ES 24 EU-28 23 RO 23 LU 23 EL 22 FI 21 SE 21 PL 20 AT 19 CZ 19 DE 19 CY 19 LT 18 IT 18 BE 18 PT 17 BG 17

Source: Adapted from Eurobarometer (2018).

The renowned consulting firm PwC estimates in the countrywide financial system that the collaborative economy in Europe in the share of collaborative economy generated revenues of nearly €4 billion in in GDP (0.88%), followed by Europe in 2015 and facilitated around €28 (0.64%), Latvia (0.63%), billion of transactions (PwC, 2016). The (0.44%), (0.44%) and main findings of the quantitative study, Sweden (0.29%). In these countries, prepared for the European Commission, can the collaborative economy plays a vast be summarised as follows (PwC, 2016): function in the standard economy. Similarly, to absolute revenue volumes, • The EU-28 average share of the the collaborative platforms have the collaborative economy in the ordinary lowest impact in the economies of economy is only 0.2%. The increase of Romania (0.05%), Slovenia (0.04%) and collaborative economy has substantially (0.04%). exceeded expectations from 2013. At the same time, the degree of development • The largest collaborative economy sector of the collaborative economy in the by way of income is the peer-to-peer EU varies significantly. Estonia has the transporta-tion sector, which includes easiest share of collaborative economy ridesharing, vehicle sharing networks and CASE STUDY 15

driveway sharing models. However, the According to EU’s Eurobarometer survey biggest sector through whole transaction (2018), nearly three quarters (73%) of these cost is the peer-to-peer accommodation. who have used offerings supplied via a collaborative platform say that a handier • On average, over 85% of the cost of access to offerings is an benefit of such transactions facilitated via collaborative platforms compared with typical channels. economy platforms is received by Smaller majorities of respondents point means of the provider rather than the out as advantages the availability of ratings platform. The income models fluctuate and critiques with the aid of customers notably between and even within (60%), the reality that services are cheaper sectors. Most undertake a constant or or free (59%), or that there is a wider variable commission based approach, desire of offerings which are unavailable with commissions charged ranging from via traditional channels (56%) (Figure 5). 1-2% inside peer-to-peer lending, to up Significantly fewer respondents say the fact to 20% for ride-sharing services. that they offer opportunities to interact with other humans (34%) or to alternate • As concerns the rate of development offerings alternatively than pay for them of the collaborative economy over the (31%) are an gain of collaborative platforms. ultimate few years, it is estimated that Only 2% say that there are no advantages increase in both revenues and transaction of collaborative structures over typical values has been very sturdy considering channels. Small proportions spontaneously 2013, and accelerated in 2015, as point out other benefits or say they don’t large platforms invested significantly in recognize (both 1%) (Eurobarometer, 2018). increasing their European operations. European revenues generated by means Also, greater resource efficiency can be of these platforms nearly doubled final expected through improved allocative year. efficiency. For example, through the use of digital platform technology, ridesharing • Peer-to-peer transportation, collabora- services may allow extra environment tive finance and on demand household friendly utilization of cars through matching services multiplied revenues by several supply and demand quickly. This reduces times in 2015. The fastest developing the idle time between journeys and sector used to be on demand household may additionally provide opportunities services, especially pushed by the for environmental benefits. Improved growing recognition of freelancer allocative efficiency may additionally platforms and crowd-sourced networks improve competency development because imparting offerings such as ready made environmentally friendly matching of supply food delivery or DIY tasks. and demand implies that workers are in a position to market their skills particularly The achievable financial impact linked effectively. Most of the expected with a higher use of capacities (otherwise efficiencies in the P2P housing commercial underused) as a end result of the sharing model are derived from the positive market economic system is estimated at €572 (network) effects of the P2P model and billion. This amount is theoretical, as barriers decreased capital inputs. Lower capital input presently prevent the full advantages from is typically a outcome of using non-public being realised (European Parliament, 2016). capital for commercial purposes, i.e. spare 16 CASE STUDY

Figure 5: Advantages in using sharing platforms (% of users). 0% 1% 41% 3% 0% 1% 1% 45% 31% 35% 46% 0% 46% 1% 1% 1% 50% 33% 3% 42% 1% 2% 40% 38% 29% 42% 2% 30% 53% 40% 28% 1% 54% 3% 39% 31% 44% 34% 41% 32% 2% 30% 33% 40% 30% 74% 34% 75% 27% 39% 73% 24% 1% 72% 36% 1% 73% 4% 1% A wider choice of services unavailable via tradiSonal channels The availability of raSngs and reviews by users Possibility of exchanging services instead of paying for them None, there are no advantages 64% 63% 19% 68% 12% 13% 64% 68% 63% 2% 72% 38% 2% 18% 12% 0% 60% 17% 4% 50% 2% 28% 60% 11% 2% 15% 53% 15% 12% 20% 1% 9% 19% 87% 39% 0% 11% 11% 71% 44% 81% 50% 20% 14% 43% 18% 19% 30% 76% 14% 50% 77% 77% 35% 83% 75% 1% Advantages of using collaboraSve plaUorms 14% 74% 63% 29% 4% 78% 84% 74% 32% 32% 73% 65% 8% 36% 72% 63% 13% 37% 50% 71% 65% 75% 40% 65% 62% 67% 60% 72% 69% 61% 66% 65% 57% 69% 61% 68% 44% 77% 64% 62% 55% 55% 60% 56% 58% 49% 36% 49% 58% 36% 49% 50% 42% 39% Cheaper or free services offered via collaboraSve plaUorms A more convenient access to services The opportuniSes they offer to interact with interesSng people Other 41% 32% 35% 32% 21% 87% 77% 75% 73% 71% 68% 67% 64% 64% 63% 63% 62% 61% 59% 59% 59% 57% 56% 52% 51% 46% 46% 45% 44% 43% 41% 40% 35% 32% SI FI IE IT SE LT EL EE PL ES SK CZ FR BE LU NL DE LV PT CY AT BG DK UK RO HR HU MT EU28

Source: Adapted from Eurobarometer (2018). CASE STUDY 17 accommodation which has already been venture capital companies, according to purchased and for which the overheads Michael A. Cusumano, a professor at Sloan are partly included by overheads on a non- School of Management at MIT, is the only public property. The comparative efficiency exception to Airbnb, which, according to its of labour inputs as a whole is less clear. own claims, already made a profit recently Whereas even the largest collaborative (Suhadolnik, 2018). Uber, estimated at platforms typically rent comparatively small around € 60 billion, is a long way off, and workforces when in contrast to the massive scandals and management disputes have quantity of accommodation available, the led to the replacement of founder and CEO labour concerned on the part of hosts is a Travis Kalanick (Suhadolnik, 2018). substantial input (European Commission, 2016). The professor points out that, as a rule, start-ups have huge costs in terms of sales PricewaterhouseCoopers found in a 2017 and marketing, and they also add to their sharing economy survey conducted in costs because of all current regulation Turkey, Switzerland, Germany, Belgium, problems. Uber received a “conditional” and the Netherlands that 44 percent 15-month license to operate in London of surveyed companies used sharing at the end of June (after being revoked economy services (Suhadolnik, 2018). In last year for operating improbability). It is Germany, the user spent on average € 884, difficult to operate in Japan; in the spring it in Switzerland 939, and in Turkey as much sold its business in Southeast Asia to ; as € 1,031. The European Commission and in China by Didi Chuxing and in Russia estimates that the European market for the by Yandex (Suhadolnik, 2018). sharing economy was worth € 28 billion in 2015, and by 2025 it is expected to reach The potential exponential growth of € 600 billion. In Europe, is a leader commercial sharing economy models leads in the sharing economy, with 36 percent of to high business start-up investments. the population using it last year, just ahead For example, Airbnb attracted $ 2.3 billion of Ireland with 35 percent of the population. in start-up capital and Uber received $ 6 Among more than 50 companies operating billion (Economist, 2015). The involvement in this model in France, one of the more of investors reflects the expectations for interesting start-ups is NightSwapping future market development. According with an innovative concept: in return for to PricewaterhouseCoopers, Sharing renting a room, the user earns an overnight Economy revenues in the UK could rise stay when traveling alone and can redeem from the current $ 0.5 billion to $ 9 billion it. About 200,000 users from the previous by 2025. Worldwide, sales in these areas year are trying to increase it to one million could rise from the current $ 15 billion to this year (Suhadolnik, 2018). With the rapid approximately $ 335 billion (Figure 6) by growth of the largest companies with this 2025 (Randstad, 2015). business model, doubts are raised about the sustainability of the business model, as many of these businesses are unprofitable, which raises the fear that the economy is ballooning with volatile companies that are invested by investors with huge sums of money. The predominance of unprofitable 18 CASE STUDY

Figure 6: Predicted revenue growth of the main sharing economy sectors worldwide (in billion $). Revenues from sharing economy - global data (2015 - 2025)

400 350 300 250 200 150 100 50 0 Year 2015 Year 2025

Source: Adapted from Randstad (2015).

In addition to the role of internet technology, in the US, EU platforms operating in the EU societal drivers such as population density face several barriers to their development. also appear to play an important role in the These can be categorised in three groups. development of the collaborative economy. Firstly, there is a more fragmented Increasing population density within cities regulatory environment in the EU than in has provided the basis for a critical mass the US, although differences in regulatory of resources and suppliers to support responses also occur between US cities. online markets for localised services. This is examined in the following sections. Between 2007 and 2013 urban populations Secondly, the venture capital environment increased more than the total population in is less favourable in the EU28 than in the the majority of EU Member States for which US. Thirdly, there are cultural differences data were available. This trend may provide in the EU, which inevitably have an impact a greater potential for the development of on content-rich enterprises such as those in collaborative services. the collaborative economy.

Since its foundation in 2008, Airbnb has However, balanced against these hurdles grown tremendously. Nearly 16 million there are structural features of the EU guests used the platform in 2015 compared economy that may also promote the to 45 000 in 2010. Compared to EU-based development of the collaborative economy. competitors such as , 9flats or For example, the collaborative economy has Gloveler, Airbnb offers a far greater number pushed e-commerce into services, many of of rental listings, exceeding the largest which are provided offline. As noted above, competitor Wimdu by a factor of seven. these require a critical mass of suppliers Although this may be accounted for by and users who typically reside in urban the specifics of each platform, it is fair to areas. In this respect, the EU has structural assume that the national and EU contexts advantages over the US in that it is more of Airbnb and Wimdu may also have played densely populated and urbanised. a role. Compared to US platforms operating CASE STUDY 19

3.3 Barriers to the sharing economy Also, many homeowners have decided that they would prefer to rent them out for tourism The concept of collaborative consumption or Airbnb and Booking, for better financial has often been criticized since its creation. release (Pušnik, 2019). “We estimate that On the one hand, it is criticized that the as many as 2,300 apartments are rented in idealistic economic predictions listed cannot the short term in Ljubljana, Slovenia”, says be found in all Share Economy offers. It Roman Prskalo of the Metropola In real is often like that at Airbnb and similar in estate company (Figure 7). Since demand only for return-oriented business models for rental apartments in Ljubljana has been that pursue commercial interests (Dörr, significantly higher than supply for years, Goldschmidt 2016). The marketing as a rental prices have been rising steadily sharing provider is interpreted by the critics since mid-2014. According to him, rents as a clever marketing strategy (Haese, 2015). in Ljubljana have been rising by about ten The contradiction should already lie here percent a year for four consecutive years. in the term ‘sharing economy’ itself (Slee “This means that rents have again reached 2016). Thus, the word ‘sharing’ suggests that levels before the crisis, or even exceeded there is no money at stake here or that the them in some places,” Prskalo estimates. The exchange is at least motivated by generosity, upward trend, however, is still continuing in the desire to give and help. Also, the thesis the case of smaller dwellings, mainly due to that property in principle loses importance, market shortages. The highest demand is for is wrong, “because above all those who own apartments in the inner city center (Pušnik, property and could offer for use” (Haese, 2019). 2015). Furthermore, the sharing platforms are accused that they can undercut the Furthermore, it is pointed out that sharing prices of traditional companies only at the economy platforms pose a considerable expense of their employees. Here is talk of threat for privacy, as the data available there low wages, moonlighting, tax evasion and (especially on the part of the providers) can lack of safety and hygiene rules. Especially be very informative with regard to personal as the area of private accommodation aspects (whereabouts, preferences, mediation is already proceeding in some interests, etc.). This includes data provided cities. Especially in large cities, where there by the users themselves (e.g. name, place of is already an immense demand for affordable residence, profile pictures, interior photos apartments, the sharing offers have a of the apartment on Airbnb, travel plans negative effect, as the accommodations for on BlaBlaCar) as well as third generated tourists displace the rental apartments for information (Teubner and Flath, 2019). city residents. For these reasons, the critics Another issue is discrimination, e.g. based demand appropriate regulations from the on skin color or origin. Airbnb studies show politicians. It is also questionable whether that white apartment providers can earn the environment is actually better spared in 12% higher prices than African-American all cases. A study by the Research Institute providers (Edelman and Luca, 2014; Harvard for the Future of Work found that it was e.g. Business School, 2014). Similarly, requests in New York due to the taxi-like platform from users with typical African-American Uber rebound effects come in place. As names are accepted 16% less frequently a result, the demand for taxi rides has than identical requests from users with increased in recent years just because of the typically Caucasian names (Edelman et al., sharing competition (Ratzesberger 2015). 2016). It is also criticized that the sharing 20 CASE STUDY

Figure 7: Number of rented rooms in Ljubljana (2016-2019)

Number of rented rooms in Ljubljana

3000

2500

2000

1500

1000

500

0

Q3/2016 Q4/2016 Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018 Q3/2018 Q4/2018 Q1/2019 Q2/2019 Q3/2019

Source: Adapted from Pušnik, 2019.

economy formerly turned into marketable income under the Income Tax Act (EStG) goods, rather out of friendship or on the (Krämer, 2019). As a rule, revenues are basis of social norms, and thus - contrary not declared and taxed (Jahn, 2014). With to its otherwise stated objective - for the regard to taxes and levies, it is criticized increasing commercialization. The criticism that the respective authorities cannot carry is also directed to the fact that the sharing out their control activities to the full extent economy - as well as other Internet-based due to data protection barriers (Schumich, business models - is subject to the laws 2016). The policy therefore calls for proper of the free market. The sociologist Harald taxation of revenue (Spiegel, 2014). In the Welzer calls it “platform capitalism”. The Netherlands, for example, Airbnb is taxed tendency for large providers to prevail, while directly. small suppliers do not reach the critical mass and are displaced by the market, can In addition, platform operators such also be observed in this case (Frenken et al., as Uber are accused of contributing to 2015). This can be attributed to network agency fees (20%) and thereby unduly effects leading to so-called winner-takes-all enriching the services provided by others, markets in platforms (Weber, 2017). while refusing to accept any responsibility for their drivers by arguing that they are It is also argued that providers of private merely mediators (Schröder, 2014; Zeit, services and products are taxable even if 2014). Important aspects in this context leases happen only occasionally. So the are protection against dismissal, minimum rental through Airbnb always to taxable wages, occupational safety and working CASE STUDY 21 time rules. Thus, providers such as Uber are fairly to new sharing economy suppliers accused of promoting the emergence of new or platforms. For instance, many ‘hosts’ forms of self-employment, which could also on lodging sharing systems are no longer be described as “modern slavery” (Spiegel, formally registered enterprise operators 2014; Wadhavan, 2016). In 2016, a McKinsey and for this reason are no longer difficulty Global Institute survey of 8,000 participants to security and tax-related regulations, from the United States, , unlike present lodging suppliers. Germany, Sweden, France and found in relation to this that 30% of respondents According to the EU’s Eurobarometer study had some form of self-employment that they in 2018, in all 28 Member States, only a did not choose voluntarily. minority of respondents have used services offered via a collaborative platform. Just One of the most marked problems at beneath a quarter (23%) of respondents some point of the process of introducing say that they have used services offered the sharing economy is the combat via collaborative platforms. Around one with existing commercial enterprise in ten have used such offerings once or a sectors (Kim, 2019). As sharing economy few times (9%) or occasionally (10%), and transactions replace certain current 4% use such platforms in many instances. transactions offering comparable services, The majority of those who have used this will probably gnaw at the earnings of collaborative platforms perceive at least one incumbent businesses (Kim, 2019). Out of disadvantage (Figure 8). The most regularly this concern, the present accommodation stated downside is the lack of readability and taxi industries are strongly adverse to about who is responsible in the event of lodging and auto sharing services. Several a hassle (49%), followed via deceptive tries have been made to analyze the ratings and evaluations (38%), misuse of influence of lodging sharing quantitatively personal information (37%), and much less on the existing inn industry, centering trust in the providers of offerings offered on the prominent Airbnb service by collaborative structures (34%). More (Zervas et al., 2017; Lee and Kim, 2016). than one fifth of the customers point out When requested which kind of current as a disadvantage the two following issues: transactions they have decreased normally services offered via collaborative platforms via the use of sharing services, nearly 90% are not as predicted (24%), or that there are of accommodation and vehicle sharing issues with the online reserving procedure consumers, respectively, pronounced that or payments (22%). In only one country, they reduced sure current transactions (Lee Latvia (51%), greater than half of the users of and Kim, 2016). These were, for example, collaborative offerings mention misleading inns at 33.6% for lodging sharing consumers rankings and critiques as a disadvantage and taxis at 23.2% for automobile sharing of these platforms. Nevertheless, there are consumers. The fact that solely 11-12% did significant variations among the remaining not decrease their use of existing offerings countries. In Germany (49%), Bulgaria and suggests that lodging and car sharing may Ireland (both 48%), almost half of the users virtually be putting opposition pressure of collaborative platforms share this view. on existing businesses. The bad effect Also interestingly, in all EU member states on existing industries can devolve into solely a minority of customers suppose quintessential problems when regulations that the misuse of private information is a on present businesses are not utilized disadvantage of collaborative platforms. 22 CASE STUDY

Also, there are vital socio-demographic the service legally (22%), observed through differences. There are few robust differences difficulties with customers the usage of between differently educated groups. Those the services and complicated systems for with the lowest stage of education are the paying tax (both 19%). Fewer say that it is least possibly to point out as a downside the complicated or tough to provide the service two following statements:lack of readability legally (13%) or that doing so has an uncertain about who is responsible in case of a have an impact on on their employment hassle (35% vs 47%-49%) and misleading status (9%). Based on the above, it comes scores and critiques (29% vs. 38%-41%). as no surprise that various interest groups Conversely, those with the upper levels are calling for greater regulation of the of education are more possibly to see no sharing economy by national legislators and disadvantages (22% vs. 16%) in contrast the European Union. Numerous points of with the least educated. The self-employed criticism, such as the complete abrogation are extra likely than manual workers to point of employee protection, lack of insurance out all of the disadvantages, and especially and liability regulation, as well as distortion lack of readability about who is accountable of competition and tax loopholes (McKinsey, in case of issues (53% vs. 32%), services 2016) are cited as reasons to enforce not being as predicted (28% vs. 13%), less regulation or even a ban on such offers. trust in provider carriers (35% vs 26%), (Lamparter and Hamann, 2014, Spiegel, misleading scores and opinions by way of 2015). other customers (45% vs. 31%). On the other hand, manual workers are more probably For example, in March 2015, the Frankfurt than the self-employed to say that there are district court banned UberPop from no disadvantages to collaborative platforms operating in Germany (Russell, 2014). The (32% vs. 11%). Also, the older respondents private drivers lack the necessary license are more likely to point out misuse of non- for commercial passenger transport. The public records (37% vs. 30%). driving platforms breach law by enabling individuals to offer driving without the need The most regularly expressed motives for not for a taxi or chauffeur’s license. The German using collaborative platforms are not know- taxi business had sued in Frankfurt. In other ing what such platforms are (36%) and the de- countries such as Spain, the Netherlands, sire for offerings offered through traditional Belgium, Thailand and France Uber was channels (34%). In all but one country, less banned completely or in parts (BBC, 2016; than a quarter of non-users point out lack Russell, 2014; Lunden, 2014). of trust in services offered via collaborative structures as a cause for no longer using Providers of accommodation such as them. The exception is Spain (27%), where Airbnb, Wimdu and 9Flats are in conflict just over a quarter point out this reason. In with the authorities in Berlin, for example. the majority of the countries, the proportions For example, in June 2016 the Berlin of nonusers giving this answer ranges from Administrative Court prohibited the rental one in ten to approximately a quarter. When of normal apartments to tourists. Some asking the platform providers about the landlords and the platform Wimdu have main problems they had encountered when failed with their complaints against the executing services by way of a collaborative verdict (Wimdu, 2016; Spiegel, 2016). In platform, the hassle most frequently cited is New York City, a law is prohibiting rental the lack of readability about how to supply of apartments for less than 30 days since Source: Adapted from Eurobarometer (2018). Barriers in using sharing plaNorms

UK 32% 38% 27% 37% 52% 40% 2% 15%

SE 15% 36% 13% 22% 44% 19% 2% 16%

FI 7% 25% 15% 14% 25% 19% 6% 42%

SK 16% 23% 17% 29% 36% 29% 4% 16%

SI 18% 26% 22% 41% 53% 39% 3% 17%

RO 27% 29% 25% 36% 37% 30% 6% 14%

PT 26% 29% 24% 44% 55% 37% 4% 17%

PL 21% 31% 19% 41% 52% 45% 2% 12% Barriers inusingsharingplatforms (% of users).

AT 22% 40% 33% 40% 59% 36% 3% 16%

NL 18% 31% 20% 29% 38% 32% 5% 17%

MT 12% 13% 19% 13% 30% 25% 6% 16%

HU 8% 14% 9% 17% 24% 21% 2% 41%

LU 22% 36% 29% 40% 54% 40% 3% 14%

LT 13% 17% 12% 21% 29% 19% 3% 21% Figure 8: LV 23% 41% 48% 51% 59% 35% 1% 8%

CY 22% 20% 16% 36% 35% 34% 4% 8%

IT 17% 17% 17% 20% 19% 24% 4% 21%

HR 8% 17% 13% 17% 28% 26% 8% 29%

FR 19% 35% 23% 46% 49% 44% 2% 16%

ES 22% 40% 32% 44% 66% 44% 2% 11%

EL 20% 37% 17% 44% 48% 39% 0% 9%

IE 30% 41% 35% 48% 57% 47% 5% 11%

15% EE 13% 14% 13% 29% 14% 4% 40% CASE STUDY

DE 25% 44% 27% 49% 65% 40% 3% 8%

DK 7% 27% 14% 14% 28% 7% 9% 35%

CZ 21% 44% 22% 38% 55% 35% 1% 15%

BG 18% 35% 33% 48% 57% 40% 3% 6%

BE 23% 35% 30% 40% 59% 30% 2% 8%

EU28 22% 34% 24% 38% 49% 37% 3% 15% 23 Problems with the online booking process or payments Less trust in the providers of services offered via collabora[ve plaNorms Services offered via collabora[ve plaNorms are not as expected Misleading ra[ngs and reviews from users Lack of clarity about who is responsible in the event of a problem Misuse of your personal data Other None, there are no significant issues 24 CASE STUDY

2010. A concretization of the facts (the private drivers lack the necessary license advertising is already forbidden) as well as for commercial passenger transport. The an intensification of the punishments up driving platforms breach law by enabling to 7,500 US $ per offense are to improve individuals to offer driving without the need the so far moderate enforcement success for a taxi or chauffeur’s license. The German now. For the largest local supplier, Airbnb, taxi business had sued in Frankfurt. In other New York City is one of the most important countries such as Spain, the Netherlands, markets in the US with more than 40,000 Belgium, Thailand and France Uber was advertisements (Röper, 2016). The passing banned completely or in parts (BBC, 2016; of the law has been delayed several times by Russell, 2014; Lunden, 2014). appeals and complaints. Providers of accommodation such as Additional information on the trial can be Airbnb, Wimdu and 9Flats are in conflict obtained within other publicly available with the authorities in Berlin, for example. sources (Barbanel, 2016). Due to the For example, in June 2016 the Berlin different legal situation in different countries Administrative Court prohibited the rental or cities, many consumers are not clear of normal apartments to tourists. Some which service is permitted or prohibited in landlords and the platform Wimdu have what form. The European Union therefore failed with their complaints against the seeks to provide clarity with new, consistent verdict (Wimdu, 2016; Spiegel, 2016). In guidelines and to contribute to the balanced New York City, a law is prohibiting rental development of the economy (Legal tribune of apartments for less than 30 days since online, 2016). The European Sharing Eco- 2010. A concretization of the facts (the nomy Coalition (EURO-SHE), founded in advertising is already forbidden) as well as September 2013, is committed to giving the an intensification of the punishments up sharing economy a unified voice. In June to 7,500 US $ per offense are to improve 2016, the EU Commission warned national the so far moderate enforcement success governments against blanket prohibitions now. For the largest local supplier, Airbnb, on sharing offers. New York City is one of the most important markets in the US with more than 40,000 For example, in March 2015, the Frankfurt advertisements (Röper, 2016). The passing district court banned UberPop from of the law has been delayed several times by operating in Germany (Russell, 2014). The appeals and complaints. CASE STUDY 25 4. Towards the future: best-practice sharing examples in selected EU economies

n spite of the obstacles there are (Scholl et al. 2015). Later, all platforms were structural aspects of the EU economy integrated into the UK holding “Friendly that can also promote the development Fashion”, which today is called “Vinted of the collaborative economy. For Limited”. The domicile of the company example, the collaborative platforms is . Subsidiaries exist in Germany, Ihave pushed e-commerce into services, many Austria, Poland, the Czech Republic, France, of which are supplied offline. These require Great Britain and the USA. Germany is a crucial mass of suppliers and users who the largest platform. Kleiderkreisel is typically reside in city areas. In this respect, also the operator of www.mamikreisel. the EU has structural advantages over the de. There are 20 permanent employees US in that it is extra densely populated and at the German location in Munich, more urbanised. Moreover, as introduced in the than 200 worldwide. With 100 employees, continuation, there are various European best developers and programmers of the practices which can be considered as proof platform are mainly concentrated in Vilnius. and a way in the direction of overcoming the Initially, the company was a side project obstacles of the sharing economy. of the founders. Since 2011, a dynamic development is taking place. Two rounds of investment (€ 25 million) initially allowed 4.1 Kleiderkreisel – Online Market the consolidation of the project, followed by for Second Hand Clothing the development of an app in 2012, which enabled a large growth spurt. In addition, Kleiderkreisel was founded in 2008 in the company was able to expand into other and is now Germany’s largest countries. At the same time, the company online market for second-hand clothing that professionalized itself with the help of can be resold, exchanged or given away the investments, which is reflected in the 26 CASE STUDY expansion and further development of the weekend getaway, a move or the transport platform. In October 2014, a new payment of larger items. The company was funded system was introduced. This provides by venture capitalists Index Ventures and that ten percent of the item price plus 50 Alven Capital in 2012 with just under EUR 2 cents per transaction will be payable as a million and received further EUR 14 million fee to Kleiderkreisel. However, the use of in venture capital in two further rounds of the payment system is currently optional financing in May 2014 and April 2015. As for both buyers and sellers. Through a result, Drivy began internationalization. transactional revenues, the company seeks In Europe, the market entry was first in to become less dependent on investors. The Germany, and the market entry into Spain is long-term goal is to refinance the cost of the planned for 2015. Other European countries platform. The payment system should also should follow, i.a. Great Britain and . help to improve the security against fraud. Drivy acts as a brokerage platform between The “gyro-safe-service” offers among other private car owners offering their car (max things a shipping protection and a secure 3.5t) for a shortterm rental at an individual payment system. The service has already price and private tenants needing a car for been launched in the US, UK and France. a limited period of time. Registering via the There was a decline in cases of fraud as a website or app, as well as hiring a car, are result. The dynamic development of the free of charge for the users (Scholl et al. company is reflected in the number of users: 2015). In 2010, around 1,000 users were registered in Germany, and three years later, there were already 1 million (Scholl et al. 2015) 4.3 Polygon.SI: The workspace shared by dozens of people a day

4.2 DRIVY: Car rentals between Poligon, institute for development of creative you and me industries has been founded in 2012 as a response to the lack of governmental policies Drivy was founded in 2010 as Voiturelib in to support creative industries in Slovenia France by Paulin Dementhon and has its (Suhadolnik, 2018). Since it’s founding it head office in Paris. Drivy currently has 42 has supported Slovenia Coworking and employees there. “Car rentals between you Slovenia Crowd-funding initiatives that and me” - that’s the idea behind Drivy (Scholl successfully introduced and promoted et al. 2015). The central motivation lies in concepts of coworking and crowd-funding the more efficient use of existing resources. in Slovenia to tackle the challenges faced In addition, Drivy wants to give private car by stakeholders in the creative and cultural owners the ability to reduce the cost of fields due to changing social and economic running private cars on a daily basis. With an circumstances. The polygon operates in the average rental period of three to four days, former premises of the Tobacco Factory Drivy sees itself primarily as a supplement Ljubljana and today, in a time of increasing to existing alternatives to motorized private obscurity, continues the story of workers’ transport in an intermodal mobility system. social security, which Tobačna outlined Drivy addresses usage scenarios in which the almost a century ago (Suhadolnik, 2018). flexible and multi-day rental of a car - in place Tobacco workers were the only ones who of or in addition to owning a car - is the most had a pension in addition to postmen, cops suitable mobility option, for example for a and firefighters at the beginning of the last CASE STUDY 27 century. The employment in Tobačna was EU. Most recently, the platform launched an opportunity for Ljubljana’s citizens to in Eastern European locations along with become more emancipated because it was Czech Republic, Hungary and Slovakia. the only factory that had a kindergarten. The BlaBlaCar drivers normally use the platform purpose of the Polygon today is to empower to share prices of lengthy journeys, however all young people whose self-employment additionally to meet new people and to have is their only chance of survival. Sitting at some company. The platform estimates home alone is far more difficult to obtain that its drivers have saved GBP 216 million and perform well in projects than if you are annually, decreasing carbon emissions by part of a larger community of different profile means of an estimated 1 million tonnes creators who can help each other. Polygon of CO2. BlaBlaCar’s income model works Supporters are organizations and companies by charging a price on every transaction that provide material and / or financial facilitated with the aid of the platform support for the existence of Polygon. The (European Commission, 2016). Currently, Creative Center platform is being established BlaBlaCar offers payment services in about by 4 autonomous creative communities: 50% of the locations in which it operates Slovenia Coworking, Slovenia Crowd- in the EU. BlaBlaCar prevents drivers from funding, Šiška Creative Zone (Rompom) the usage of the platform for profit making and Ljudje.si without (at least for the time functions by setting a cap on costs andon being) the support of state institutions and the number of seats available. BlaBlaCar MOL. The team (including all self-employed recommends a charge to drivers and does creatives), who has been running Polygon no longer enable them to adjust it through for two years, has been volunteering to more than 50 %. BlaBlaCar sets the highest research new economic models (coworking, charge for each journey to make certain crowd-funding) and educating self-employed that peer providers respect cost-sharing and people to gain the skills to effectively break do not function mainly for profit (European into the market. Poligon works with minimal Commission, 2016). resources.

4.5 Share Your Meal: a non-profit 4.4 BlaBlaCar: a long-distance food-sharing platform ridesharing service ShareYourMeal is a non-profit food-sharing BlaBlaCar is a long-distance ridesharing platform established in the Netherlands service, established in 2006 in France in 2011 (European Commission, 2016). (European Commission, 2016). The platform The platform allows home cooks to share connects drivers journeying between cities their cooking with persons in their local with empty seats to humans looking to tour neighbourhood. ShareYourMeal has grown the identical way (European Commission, to 10 000 domestic cooks and 75 000 users 2016). The company has grown from 1 million on its platform. Since its inception in 2014, individuals in 2011 to 25 million in 2015 and the platform has paired over 360 people, now allows over 2.5 million journeys per generated over 14 800 conferences and 19 month, a greater number of journeys than 200 foods shared (European Commission, are taken on the Eurostar. BlaBlaCar has 2016). Over ninety-one percent of prone grown from covering its domestic market people linked experience that the journey to over 22 countries, along with 15 in the helped to improve their satisfactory of life 28 CASE STUDY significantly, and fifty-one percent of the The Netherlands has chosen to treat home cooks help with other household ShareYourMeal’s endeavor as non-profit tasks outside of cooking. Its objective is making, whereas in many other European to have a strong social effect by way of countries the tax authorities proposed connecting neighbours and growing more that VAT should be utilized to foodsharing suitable nearby communities via the act offerings and that home cooks should of sharing food. Namely, it has worked be subject to profits tax. The use of the with nearby communities to establish a platform indicates that home cooks use the exceptional programme that matched platform to share grocery costs, charge a humans with domestic cooks so they can common fee per meal of beneath 4.50 EUR devour healthier and get to know their and receive an average annual turnover of neighbours. Also, in line with this project, 120 EUR (European Commission, 2016). CASE STUDY 29 5. Implications for policy makers

he evolution of the sharing traditional, regulated offers (Frenken et al., economy raises a host of 2015). The increasing professionalization, questions about workers’ however, raises the question of whether rights, benefits, exploitation, the occasional resources may be considered regulation and standards, which to be a commercial competitor to local Tare increasingly intensified in developed hotels or rather a private business (Dörr and markets from the EU to the US. It is a Goldschmidt, 2016). Although Airbnb, for controversial topic, which causes criticism example, emphasizes that most providers on several levels (Malhotra and Van Alstyne, advertise only one apartment, about 40 2014). As the sharing economy becomes percent of its revenue in Berlin comes from more prominent among business travelers, offers from providers with more than one and millennials in particular, it is important listing. It can therefore be assumed that in for policy makers to design and implement many cases there is a commercial activity clear policies for using Uber and Airbnb. (Slee, 2016). As a slogan of this criticism, International SOS found that more than 70 the term “greenwashing” increasingly refers percent of companies lack such procedures, to the so-called “sharewashing”, which leaving many employees unsure of whether describes the misuse of “sharing” for the or not they’re allowed to use them (European economic benefit of individual actors. Commission, 2016). Although these services can offer cost savings, convenience and On the other hand, due to sharing, there may increased options for business travelers, be legal needs for change. For Airbnb, these organizations should consider the unique changes affect, for example, tenancy law, the risks, benefits and legal considerations of reporting law, insurance law, the industrial these services in comparison with traditional code or safety standards. In addition to the hotel and resort accommodations. An regulatory aspects, it is criticized that the important point here is that different views sharing economy often leads to unsustainable or variants of a “sharing economy” exist and solutions, contrary to the actual objectives. some business models or concepts are often It is reported that concepts such as that of incorrectly assigned (Botsman, 2015). One Airbnb are exacerbating the housing market of the main criticisms frequently mentioned delays in urban areas by offering housing is that sharing economy providers can offer to tourists (Jericho, 2016; Zeit, 2019). their products and services without any In rural areas, however, lettings through regulatory requirements and control and Airbnb should contribute positively to the thus have an unjustified advantage over preservation of rural structures by attracting 30 CASE STUDY additional guests to the region (Frey et al., of the scope of the sharing economy. 2018). Likewise, the potential negative Establishing the latter would be the first step influences on the environment are discussed. in dealing with the taxation challenges. For example, for the New York taxi market, it has been determined that the number of In many cases platform users are specialists registered taxi rides has risen sharply since who are accountable for offering such Uber’s market entry, resulting in increased a service, although acting as if they are CO2 emissions. individuals. There are also cases where persons use collaborative solutions for cost- The dangers for existing companies and sharing purposes or with the intention of employees, but also for users of the supporting humans in need. Finally, there services offered and the state, are to be are cases where the platform acts merely taken seriously. Those dangers have to be as an intermediary. The EU VAT Directive controlled properly for the sharing economy applies both to the services supplied by to contribute to the enhancement of social means of the sharing platforms and to the welfare with its extensive array of benefits services furnished through the platforms (Kim, 2019). The distinction between a peer by the users. The Commission is working providing services on an occasional basis with the VAT Committee to set out main and a professional provider of a service is principles of VAT assessment. The most decisive for a range of areas of law, ranging important challenge is how to verify bartering from authorisations to consumer protection transactions and situations where persons or taxation. Many regulatory obligations make a contribution of goods or services to will only apply to one of these categories, a common pool in trade for the right to gain e.g. as regards authorisations and licensing from other items or services in the pool. In requirements, the taxation of the activities conditions where there is a change of items and the establishment of an employment doubts may occur as to the qualification of relationship. Member States have humans as taxable persons and as to the approached these issues very differently. existence of a direct connection between the Many have established thresholds which substances and the remuneration in kind. The set the line for characterising a provider as a assessment should be carried out on a case- peer offering services on an occasional basis by-case basis (European Commission, 2016). or as a professional (European Commission, One of the many problems of the European 2016). Although every sector differs in terms Commission is also the transparency of the of key issues, and each therefore requires service price information. It is also disputed specific policymaker attention (Kim, 2019). that the application does not indicate However, to reply to the worries of conflicts whether it is accommodation with a private with current corporations properly, the person (i.e. whether someone rents their governments have to guarantee regulatory own apartment, for residential use) or with equity so that existing and sharing economy a professional provider (such as renting suppliers can compete on comparable tourist apartments). The former is subject terms. When regulatory equity is viewed in to different rules than the latter (Vanek and tandem with the unique traits of the sharing Smrekar, 2018). According to the Commission economy, rules must be linked to the extent and the consumer authorities, the conditions of transactions, as proposed in Kim et al. should not confer on the company unlimited (2016). It is vital to notice that EU member and discretionary content removal rights. states do now not have a uniform definition The termination or suspension of the CASE STUDY 31

performance of the contract by the company act as key drivers of growth. As such, the should be justified and governed by clear Commission encourages the responsible rules to consumers, and consumers should behavior of all types of online platforms be entitled to adequate compensation or in the form of voluntary measures, for the right to complain. Airbnb and other example to help address the important issue providers should also clearly define a policy of fraudulent and misleading checks. Such on reimbursement, compensation and voluntary actions increase confidence and recovery of claims, and consumers should offer a more competitive service, which not be deprived of the right to use available should not automatically mean that the legal remedies. They should also provide on cooperation platform’s conduct can be purely its website an easily accessible online link technical, automatic and passive (European (Vanek and Smrekar, 2018). Commission, 2016). Yet, to this end, the authorities need to lay the institutional Maintaining the existing brokerage liability foundations to assist the stable growth of regime is key to further developing the the Sharing economy, which will entail a digital economy in the EU. This involves a new approach that takes into account its collaborative economy as online platforms uniqueness (Kim, 2019).

6. Conclusions

he sharing economic system the intermediary for massive opportunities consists of mainly social for scale and scope of such activities. All ventures at one side of the these components of the sharing economy, scale and intensely industrial and others not described in detail here, are ventures at the other. Sharing presently considered as alternatively marginal Tworks within closed communities and across to the economy considering revenues, open ones, within B2B, B2C, C2C and P2P customers and employment. However, some settings. Crowd-funding of shared economy of the early start-ups already appear destined start-ups is nicely placed for social ventures, to be the next wave of internet companies. but many business start-ups want to intensify their activities with greater financial Numerous points of criticism, such as assets to invest (International institute of the complete abrogation of employee communications, 2016). The web offers protection, lack of insurance and liability 32 CASE STUDY regulation, as well as distortion of free trade agreements are important for competition and tax loopholes are cited increasing growth and employment. They as reasons to enforce regulation or even a are the only way to ensure lasting social, ban collaborative platforms. On the other economic and production standards. In a side, as far as the protection of workers is united Europe, we can benefit from change concerned, many fears are not empirically and face the challenges of globalization. By proven (Randstad, 2015). A strong expansion opening up new economic opportunities, of precarious solo self-employment is we can ensure that everyone enjoys the currently not recognizable. Similar worries benefits of globalization. Prohibitions of new appear unjustified in terms of harming online economy based business models of the traditional service sectors. Namely, in the sharing economy, as practiced by some 15 of the 28 Member States, the largest European countries, ultimately only harm percentage of sharing platform users report consumers and employees because they using traditional services to approximately counteract new market and job opportunities the same extent as before (Eurobarometer, in an attempt to hedge existing business 2018). models and employment relationships.

It is clear that the phenomenon of the sharing The growing number of social enterprises economy necessitates the adaptation of around the world is making the realization regulations in economic as well as social that in the future entrepreneurship will only terms. It is currently not foreseeable whether be possible to realize not just by generating the will rather lead to an profits, but also by sharing benefits with adaptation of the rules in the sense of an the wider society (Suhadolnik, 2018). extension of the scope of established rules, Increasingly aware consumers will also help to creeping liberalization or to an adaptation with their influence on the creation, growth of the new players in the market to existing and success of business organizations. rules. It is clear, however, that even in times of platform economics there are possibilities for design at national level, but also in an international context, but they must also be used to keep the rules up to date and make them enforceable on the market.

On the basis of an analysis of the opportunities and risks of the sharing economy, we advocate an open-minded regulation, which on the one hand enables opportunities for growth and employment and on the other complies with justifiable protection interests of employees and consumers (Randstad, 2015). In order to harness the sharing economy and other global trends, to foster growth and employment, we must continue to strive for a liberal Europe anchored in the four freedoms of free movement of persons, goods, services and capital (ALDE, 2018). Modern, progressive CASE STUDY 33 7. References

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