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  3. London School Of Economics (LSE)
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The Emergent Legal Issues of the Sharing Economy

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Some of the fastest-growing companies are now so-called “gig economy” employers. The world’s largest holiday letting company owns no hotels or properties while the world’s largest taxi firm owns few vehicles. Some believe the massive success of these companies is achieved at the cost of lac...

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  • May 19, 2020
  • 10
  • 2019/2020
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Week 8:
Emergent Legal Issues in the Sharing Economy:
- Questioning the impact of automation on individuals
- Constant surveillance
- Deregulatory dimension of the sharing economy
Overview:
1. The Sharing Economy Model
• The Sharing Economy business model
• Self-regulation
2. Licensing and Planning Issues
• Is it legal to operate a business from a private residence?
• The legality of offering a service without necessary consents.
3. Employment Rights in the ‘Gig Economy’
• Are workers employees or agency workers?
• What rights attach to workers?
The Sharing Economy Model:
The Business Model:
- The sharing economies allow individuals and groups to make money from underused assets.
- Examples
o Hospitality and Dining: CouchSurfing, Airbnb, Feastly.
o Transportation: RelayRides, Capten, Uber, Lyft.
o Retail and Consumer Goods: Neighborgoods, SnapGoods.
o Media and Entertainment: Wix, Spotify, SoundCloud, Earbits
- Some concern that the sharing economy also allows for human assets to be “shared”.
o Human labour being utilised in a way that is protected by regulation
- For example, TaskRabbit, Mechanical Turk, Fiverr etc
- The platform as the intermediary between those who are selling and those who need to buy
o Should we be treating these platforms as intermediaries for the purposes of e-commerce regulation
- Seeing a shift from a P2P sharing to more platform based  trying to make £ from the P2P sharing
Potential Legal Issues:
- Peer-to-Peer Selling
o Consumer Safety, Consumer Protection, Counterfeit Goods, Seller or Buyer Fraud
- Automotive and Transportation
o Insurance, Criminal Records Bureau Checks, Licencing, Employment Rights, Vehicle Safety, Disability Access
- Hospitality and Dining
o Insurance, Local Planning Laws, Public Liability, Fire Safety, Public Health, Lease Conditions, Gas Safety
Certification, Disability Access
- Financial and Crowdfunding
o Licensing, Regulatory Oversight, Fraud, Money Laundering, Transparency.
- Human Agency
o Employment Rights, Insurance, Criminal Records Bureau Checks, Safety.
The Role of Self-Regulation:
- These services were unregulated
o Uber saying it isn’t a taxi service- so escaping regulation
 We had a regulatory gap- a gap filled by the providers themselves who gave loose measures in some
circumstances to exercise some control/oversight that could’ve been implemented by actual regulation
 For example, ratings.

The Limits of Self-Regulation
- Absence of top down regulation of the actual service
Howell v AirBnB [2015, High Court]
- Facts:
o Howell, an Airbnb host, sued Airbnb for breach of contract and for libel.
o Following a complaint, Airbnb cancelled 21 future booking claiming Howell violated ‘terms of service’.
 Two claims:
 Violated terms of service’ – defamatory. He didn’t know why he was being removed from the
platform.
 He claimed that he ought to be reinstated
- Judgement:
o HHJ Moloney QC:
 Ordered Airbnb to provide particulars of the complaints so that the applicant could address them
fully. Airbnb’s duty of confidentiality did not bar disclosure of relevant documents in litigation.
 Interim injunction for defamation was refused as damage had already been done.
 No right to reinstatement on the site as Airbnb’s contract with Howell expressly provided for
termination summarily, without notice or reason, at its own discretion.

,  Example of private ordering. They are looking into the specifics of AirBnB contract.
Licensing and Planning Issues:
Licensing Transport Services:
- Illinois Transportation Trade Assn. v City of Chicago (7th cir. CA)
o Facts:
 Claim that City regulation deprived taxi drivers of their property (an exclusive license) for a public use
without compensation.
 As licenses are given out and there is a limit to it
o The failure to regulate ubers is a deprivation of their property [license]
 Case against Uber by taxi drivers in that area
o Completely rejected by the Court:
 Taxi medallions authorize the owners to own and operate taxis, not to exclude competing transportation
services.
 Viewing the taxi companies as acting in a way that is anti-competitive
 Claim that City discriminated by not subjecting them to the same licensing rules was anti-competitive.
Its premise is that every new entrant into a market should be forced to comply with every regulation
applicable to incumbents in the market with whom the new entrant will be competing.
o Outcome: Preference for deregulation upheld as a legally permissible choice.
 Different agents within the industry can have different forms of regulation
o Queries of this case
 From the City of Chicago a very hands-off approach to economics, so unsurprising
 Do we consider a service provider by Uber as comparable to a taxi provider?
 And if not, who do we equate Uber to?


Uber Spain [European Case]
- Facts:
o Barcelona’s licensed taxi association argued that the UberPop service (UberX) was unlawful as it was being
operated without the necessary licenses required of private taxi service operators.
o Uber’s defence was that it was an intermediary [not a transport service] which could benefit from the
o Services Directive and/or the E-Commerce Directive to allow Uber BV, the Netherlands based subsidiary which
directs all European Uber operations, to operate the Uber service in Spain without a local license.
 Get to benefit from e-commerce exceptions
o Essential to Uber’s case was the classification of their business.
o Uber BV would only be able to operate in Spain under the provisions of the E-Commerce Directive without
license if they could show they were an “information society services”, while the Services Directive has an
exception for “Transport services, including urban transport, taxis and ambulances.”
- Advocate General’s Opinion: [see Andrew Murray’s blog post]
o Uber is a “composite service” where part of the service – the location of nearby cars and the ordering and
payment for carriage – is provided electronically and at a distance, the remaining part, the ride itself, is not.
o It was undoubtedly the supply of transport which was the main element and which gave the service economic
meaning; Uber does not operate an information society service.
o Noted in passing that in employment law terms most trips are carried out by drivers for whom Uber is their only
or main professional activity, the fare is set by Uber. Furthermore:
o “Indirect control such as that exercised by Uber, based on financial incentives and decentralised passenger-led
ratings, with a scale effect, makes it possible to manage in a way that is just as — if not more — effective than
management based on formal orders given by an employer to his employees and direct control over the carrying
out of such orders.”
 Found that it was undoubtedly the transport that gave the app its economic meaning, so uber doesn’t
operate an ISP as under the definition of the e-commerce directive
- Findings of the Court:
o Where passengers are transported by non-professional drivers using their own vehicle, the provider of that
intermediation service simultaneously offers urban transport services, which it renders accessible, in particular,
through software tools such as the application at issue in the main proceedings and whose general operation it
organises for the benefit of persons who wish to accept that offer in order to make an urban journey.
o An intermediation service such as that at issue in the main proceedings, the purpose of which is to connect, by
means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with
persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service
and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of Article 58(1)
TFEU.
- Current status
o We have Chicago not critically examining the deregulatory context, but the EU takes an opposite approach and
actually looks under the hood of Uber’s business model

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