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Europe proposes new regulations for the sharing economy

Thu 2 Jun 2016

The European Commission has outlined proposals intended to bring the sharing economy, including rideshare giant Uber and house-share service Airbnb, into the regulatory fold. The proposals include the possibility of defining, Europe-wide, at what point an individual has crossed over from ‘hobbyist’ participation in the sharing economy (TSE).

Additionally the proposal, entitled A European agenda for the collaborative economy, aims to bring peripheral financial activity in TSE back into the tax system which the low and irregular amounts involved often keep it away from. Gross European revenue from ‘collaborative services’ was estimated at €28 billion in 2015.

The fact sheet published today observes the doubling of revenue for five key sectors – short-term letting, passenger transport, household services, professional and technical services and collaborative finance. It also cites an EU report [PDF] containing survey results showing the extraordinary uptake in collaborative services via online platforms – but detailing that the primary concern of those using them, or considering using them, remain a fear of the lack of accountability from peer-to-peer providers under a collaborative and relatively unregulated model.

Surprisingly the over-55 age range is in the majority regarding this careful enthusiasm for the new collaborative world, at 39% of the respondents.

Discussing the motivation behind the initiative, the EC states:

‘The collaborative economy often raises issues with regard to the application of existing law, blurring established lines between consumer and provider, employee and self-employed, or the professional and non-professional provision of services. This can result in uncertainty over applicable rules, especially when combined with uncoordinated and divergent regulatory actions at national or local level.’

The European Commission contends that the ‘fragmented’ approach that TSE is currently being allowed to take is creating ‘uncertainty’ for traditional operators, and notes that diverse member states already have proprietary regulatory frameworks either in place or in proposal, and intends to ‘advise’ member states accordingly.

The proposal defines ‘collaborative platforms’ as ‘internet-based tools’ facilitating P2P transactions and provision of services, whilst observing that not all popular online platforms necessarily fall into this category – and that’s a caveat that’s sure to be of interest to ride-sharing services such as Uber and Lyft, with the former battling on a practically daily basis to retain its model as collaborative rather than traditionally didactic.

The existing frameworks that member countries in Europe have established to facilitate (or obstruct) domestic rental services such as Airbnb will be taken into consideration, with the EC proposing to establish a minimum threshold below which economic activity would be considered ‘a non-professional peer-to-peer activity’, and to suggest revisions to the current regulations held by member states if necessary.

The release states that ‘ownership of key assets’ will be one factor in distinguishing between strictly low-level P2P TSE services and those whose turnover and model better fit them to be treated as more traditional businesses.

Most interestingly for Uber, the EC proposes to establish who qualifies as a ‘worker’ in the collaborative economy. These rules have already been set down by the EU Court of Justice; it’s the application (or not) of them to the TSE ‘workers’/’sharers’ that’s the critical factor. The three essential criteria in play are:

‘whether they act under the direction of the platform (i.e. the platform determines the choice of activity, remuneration and working conditions), the nature of the work (e.g. is it genuine, effective and regular), and whether the work is remunerated.’

The notion of acting ‘under the direction of the platform’ provides turbulent debate material for Uber drivers, who are provided ‘opportunities’ via the Uber app which they can turn down, but often, as many claim at the UberPeople forum, not without penalty. It would be interesting also to see the criteria that the EC land upon regarding ‘regular’ work, since this would also come to bear on rideshare services (which, presumably, beyond a certain volume of activity and turnover, risk to be ejected from TSE status depending how the EC’s proposals turn out).

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