The European Union issued a guidance today to its member states encouraging them to engage “confidently” with the sharing economy. Absolute bans on services like Uber and Airbnb should be considered a last resort, the European Commission advised, cautioning European nations against creating a patchwork regulatory environment that squelches new business models.
“A competitive European economy requires innovation, be it in the area of products or services,” Commission Vice President Jyrki Katainen said in a statement. “Europe’s next unicorn could stem from the collaborative economy.” It’s a stark contrast to the tenor of rhetoric coming from lawmakers across Europe, where sharing economy companies have been fined, criminally investigated, and banned.
The commission advisory isn’t binding for member states, and no new laws were enacted. But the commission could start scrutinizing countries that over-regulate these start-ups soon in response to complaints lodged by Uber. Eventually, if the European Commission gets its way, bans on Uber and its ilk could become extinct throughout Europe.
What would a world without bans on Uber look like? For consumers, cheaper, more competitive, and perhaps even safer. According to researchers at the University of Pennsylvania’s Wharton School, Uber’s surge pricing model is ultimately beneficial to customers, because it makes the low fares during non-surge pricing periods sustainable. And, as University of Melbourne professor Jeannie Marie Paterson writes in The Conversation, legalizing Uber gives lawmakers the chance to impose strict safety standards.
The legalization of the sharing economy more broadly will also give more people the ability to supplement their income with flexible gig work.
Here’s the rub, though: Regulations ensure that sharing economy workers aren’t exploited by their employment terms need to be strict — something drivers have protested, as Uber cuts fares.
Uber also should be forced to follow the same rules as traditional taxi drivers — a point of controversy in London:
However, the opportunity for flexible income provides many workers greater social mobility.
But the free rein of Uber could have severe implications for the taxi industry wherever it operates. The price of taxi medallions in cities like Chicago and New York has fallen precipitously in the wake of Uber’s rise in these cities, where Uber empowers drivers to perform the same service as cab drivers without paying the steep price of entry.
The European Commission adopts a more optimistic outlook on the sharing economy than many of this members, viewing its opportunities as far outweighing the costs:
“The success of collaborative platforms are at times challenging for existing market operators and practices, but by enabling individual citizens to offer services, they also promote new employment opportunities, flexible working arrangements and new sources of income,” reads the EU message.
The widespread legalization of the service would unlock all of those potential benefits — and with careful regulation, lawmakers can make sure Uber’s rise doesn’t come at the expense of its drivers.
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