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Uber banned, AirBNB in troubles. What’s the future of the sharing economy?

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It seems that lobbies are wining some battles against newcomers in mature industries : UberPOP was banned from several countries or cities in the last months (Belgium, France, Italy, Germany) and we were wondering in a previous post whether AirBNB would be the next victim of the authorities. Unfortunately we predicted it right and AirBnb got in troubles. The Flanders region in Belgium threatened people using AirBnb to rent their house / apartment to fine them if they wouldn’t register and declare their activity. The consequences are quite symbolic and individuals using the service to make some money will not necessarily have to pay taxes if it remains a side activity. However the signal is clear : shared platforms are being scrutinized by authorities which are not willing to lose control on them.

Why are traditional players so frightened by newcomers ?

We analyzed in length the situation of taxi drivers in a previous post. In a nutshell, traditional players feel the threat of new entrants and don’t know how to react. They don’t know how to react because they have provided the same service for decades without changing anything, without being innovative and without having to really care about service quality and customer satisfaction. Oligopoly-like situations were created through for instance special rights needed to start a business (a taxi license for instance).

Now that new players are coming with innovative solutions to better serve the customers’ needs, and after having seen that customers were massively willing to switch to those new solutions, traditional players don’t know what to do and have no other solution than to react aggressively to defend their position.

Fear has replaced enthusiasm

AirBnb, Uber, Djump, … have in common that they propose a new vision of the economy where resources are shared. A better utilization results that obviously will make some businesses redundant or useless. If everyone would be able to generate some revenues from sharing his / her car, taxis would not exist anymore. This could well be the reality in San Francisco in 18 months as a Hansu Kim, DeSoto Cab Co. president predicts.

Authorities are now severely gaining control back over those platforms and the result is just terrible : bans, fines, pressure, … you name it.

Don’t get me wrong. I think it’s alright to get things under control and make sure they are not misused. It would be unfair to let individuals carry clients in their care and make money without paying taxes and without respecting any rules. The fight must however be fair if we want the customer to be better off.

Currently the situation is worse than ever. Panic has spread among those who believed in these sharing platforms while nothing or little is changing on the side of traditional players. Customer satisfaction is at stake.

How does it impact the share economy ?

The real question however is to understand how this pressure will eventually impact the whole sharing economy. If trust is being lost, if pioneers are brought down by authorities, if too high hurdles are set, people will just abandon the fight or our countries will just be left behind.

It’s far better to harness the power of the sharing economy rather than to draw a restrictive framework around it, full of rules and norms.

To do this however we would need politicians with reason and understanding of the sharing economy. Rather, I think that we have crowds of traditionalists who are more concerned about being reelected than by changing things at the risk of unpleasing their voters.

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Author: Pierre-Nicolas Schwab

Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

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