Sharing economy firms must mobilise the public to fight regulation-hungry politicians

James Frayne
Deliveroo has faced hostile commentary over plans to change how it pays its riders (Source: Getty)

An increasing number of politicians and commentators are starting to look at the sharing economy as an exploitative one. Once apparently loved by all, it is being portrayed as unregulated and unfair – undermining hard-working people, reducing crucial tax revenue and ignoring the concerns of ordinary people whenever it is necessary.

The latest furore in the sharing economy has hit Deliveroo. A trial to pay delivery staff by the job rather than the hour led to a public protest, negative online comment and bad press – and a threat by Labour’s shadow business secretary to end such “Victorian” practices. The suggestions are that this protest worked (as such protests invariably do) and the company appears to be backing away from change.

Hostile media coverage – and particularly hostile public comment – always attracts the interest of politicians. Transport for London is set to introduce new rules stating that all London cab firms must operate London call centres; these rules will also force firms to tell TfL in advance of any changes to their business model – tricky for fast-moving app-based firms.

This is surely at least partly a response to the extraordinarily loud protest by cab drivers to Uber’s rise – which politicians seem to have mistaken for popular opinion – but also to ongoing comment that has accused Uber and others in this space of treating staff too casually. (Uber is set to challenge TfL in the courts).

Read more: Sadiq Khan’s Uber crack-down pledge smacks of the worst of crony capitalism

And once again, Airbnb looks to be in politicians’ crosshairs, with claims in the media that London landlords with multiple residences could be shifting to the platform from conventional lettings because they can make more money. It is said this could make rents even less affordable. It cannot be long until politicians look at this in more detail.

How do firms in the sharing economy deal with this regulatory challenge? Above all, by remembering what made them successful in the first place: public opinion. Just as positive public perceptions made them popular startups, so negative public comment makes them vulnerable to hostile action by vote-hungry politicians. That means understanding three things.

First, and most importantly, it cannot be emphasised enough that the public voice is the most important one for businesses because it is the one that politicians listen to most. If the public can be heard, politicians will listen. Where the public cannot be heard, special interest groups and the media will play that role.

Read more: Uber shows why markets regulate better than the state

Second, firms that built themselves up as champions of the public cannot behave like conventional big businesses. People will not accept such companies apparently chasing profit at the expense of their staff or seeming to have little regard for the lives of those who might be inconvenienced by their rise. Unfair of people, perhaps, but true. Web-based businesses need to behave and talk as if they were embedded in local communities and champions of those on ordinary incomes.

Third, as long as the public believe businesses are behaving well, they will actively defend their own access to cheap and convenient services. Just as Uber has done, businesses in this space should be prepared to mobilise their customers on their behalf. People will campaign to stop politicians taking things they love away from them.

Politicians always want to regulate what they currently do not and they will seize any opportunity they have to do so. The only thing protecting businesses in the sharing economy is their extreme popularity with the public. If that goes – or if that popularity is not understood by politicians – then they will find themselves as regulated as the telecoms industry.

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