Past Event

The Sharing/Collaborative Economy

The collaborative economy is transforming business and society, but what are the implications for traditional industries and the potential role of regulation?

Date: February 10, 2016, 11:00 am Topic: Innovation & Competition Policy

Summary

See below for video and photos.

Session 1: Collaborative economy business models

The collaborative economy is built on distributed networks of connected individuals and communities. It creates trust, uses underutilised assets, better matches demand and supply, and offers positive externalities for society. Trust, which plays a central role, is guaranteed through rating systems (often reciprocal rating of both supplier and user), safe payment environments and partnerships with insurance companies. Many services offer new, more interactive or personalised consumer experiences.

These platforms charge a fee/commission whenever a transaction takes place. In some cases, platform charges are only initiated in a particular country when a certain level of supply and demand is reached. Global expansion of collaborative economy businesses is financed through private fundraising, mainly through venture capital. Venture capitalists in the USA generally tend to invest more in collaborative economy companies, as they are more familiar with the model and therefore less deterred by the potential risks.

Studies from companies in the industry show that these disruptive business models may cannibalise demand from “traditional companies”. However, they also create additional jobs and business opportunities, as consumers start using a service they may otherwise not have used at all. Moreover, there can be positive externalities, such as an increased access to mobility and positive effects on the environment – for example by reducing the number of cars on the streets.

Workers who offer services on platforms such as Uber, BlaBlaCar and Airbnb are independent contractors, rather than employees of the platforms. This introduces a new, more flexible type of employment but creates other potential tensions in terms of social protection and tax obligations.

Session 2: Implications for existing businesses and policy

Guillermo Beltrà acknowledged that the sharing/collaborative economy has brought many advantages to consumers: reduction in information asymmetries, lower prices, greater product differentiation and innovation. However, disruption is only positive as long as competition is fair. This leaves several issues to address. One requirement is high standards of consumer protection. Policy must ensure legal certainty, while the platforms must gurantee trust and a safe environment for consumers. In general, a forward-looking policy perspective should embrace this paradigm shift, with data protection (guarantee of privacy), data portability and switching costs for consumers as the main challenges.

Adina Claici argued that competition policy can intervene in the sharing/collaborative economy through three instruments: article 101 (illegal agreements); article 102 (abuse of dominant position) and article 106 (state aid). Market definition and differentiation play a key role in the enforcement, but are not straightforward in this context. Have new products been created, or new markets? Regulation should focus on correcting market failures to protect consumers, but many earlier failures no longer exist with new platforms. For example, apps, rating and real-time updates reduce many information asymmetries, where regulation was needed to protect consumers. Changing this regulation ex-post creates tensions as some existing parties risk losing their current advantages (such as the monopolistic effect of taxi licences). However, prohibiting competition is not the solution. Uber, for example, seems to have boosted innovation in the taxi industry where apps and rating systems are being introduced.

According to Thiébaut  Weber, the sharing/collaborative economy also raises concerns in terms of tax, employment security and long-term training and career progression. One concern is the major shift in risk exposure from employers towards workers. Trade unions need to adapt to this changing business environment and find new models to protect workers, who were formerly protected by employers. Harmonisation of regulation and partnerships between companies and (tax) authorities at the EU-level is needed to create a level playing field without destroying emerging economic opportunities.

Event notes by Nuria Boot and Elena Vaccarino

VIDEO RECORDINGS

Session 1: Collaborative economy business models

Session 2: Implications for existing businesses and policy

Schedule

Feb 10, 2016

10:30-11:00

Check-in and coffee

11:00-12:15

Session 1: Collaborative Economy Business Models

Chair: Karen E. Wilson, Former Non-resident Fellow

Juliette Langlais, Public Policy Manager for the EU institutions, Air BnB

Mark MacGann, Senior Advisor, Uber

Fabienne Weibel, Head of Public Policy @BlaBlaCar

12:15-13:30

Session 2: Implications for Existing Businesses and Policy

Chair: Georgios Petropoulos, Research Fellow

Guillermo Beltrà, Director Legal and Economic Affairs, The European Consumer Organization (BEUC)

Adina Claici, Director and head of the Brussels office at Copenhagen Economics

Thiébaut Weber, Confederal Secretary, ETUC

13:30-14:00

Networking lunch

Speakers

Guillermo Beltrà

Director Legal and Economic Affairs, The European Consumer Organization (BEUC)

Juliette Langlais

Public Policy Manager for the EU institutions, Air BnB

Adina Claici

Director and head of the Brussels office at Copenhagen Economics

Mark MacGann

Senior Advisor, Uber

Georgios Petropoulos

Research Fellow

Karen E. Wilson

Former Non-resident Fellow

Fabienne Weibel

Head of Public Policy @BlaBlaCar

Thiébaut Weber

Confederal Secretary, ETUC

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevón

matilda.sevon@bruegel.org +32 2 227 4212

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