The sharing economy is a fast-growing phenomenon. People increasingly share their home, car, clothing or tools on Internet platforms such as Airbnb, Relayrides, and Peerby. Along with its rapid growth, however, the sharing economy has also come under fire. This criticism focuses in particular on the new taxi service UberX (or UberPOP in Europe) that enables anyone to work as an “amateur driver.” Consumers benefit from lower prices, but regular taxi drivers point to unfair competition and uninsured passengers. This controversy attracts plenty of attention to the new industry, but the real question is: why do we think UberX is even really part of the sharing economy?
The controversy makes clear that it is ambiguous where the sharing economy begins and where it ends. Because sharing has a positive and progressive connotation, more and more companies claim that they are part of the sharing economy. However, an accurate definition of the sharing economy is consumers (or firms) granting each other temporary access to their under-utilized physical assets (“idle capacity”), possibly for money. With this definition in mind, it becomes clear that many companies falsely claim that they are part of the sharing economy. (Note that our definition is more restricted than the one proposed by Rachel Botsman, who also includes sharing of other “assets” such as skills and time.) Clarity about what the sharing economy entails is important, especially now that both proponents and opponents worldwide are asking for clear regulations.
When looking at Uber, we can distinguish different services. First, there is the regular taxi service known as Uber Black. This service is provided by licensed taxi drivers who work for Uber. Uber Black is certainly innovative because of the app’s booking, payment, and ratings functionalities. It is clearly not an example of the sharing economy.
It is another service of Uber, UberX, that spurred the most controversy. With this service, anyone can be a taxi driver, and drive people from A to B without a taxi license. But UberX is only a form of the sharing economy if the driver would have made the trip anyway. In that case, there has been some idle capacity utilized. After all, a car seat that would otherwise have remained empty would then be in use. If, however, the driver only makes the trip to transport someone from A to B, then this is a regular taxi service. As this most often is the case for UberX, it should be considered as just a taxi app and not a form of the sharing economy.
Finally, Uber also recently initiated the service UberPool in San Francisco. UberPool allows multiple passengers to share a taxi. In this case, passengers together make the same ride and a seat that would otherwise remain empty is now utilized. This service, apart from the others, is a form of the sharing economy.
A similar confusion exists around Airbnb, the platform that allows people to rent out their home. If people do so while staying temporarily elsewhere (vacation, business trip, family visit), their otherwise uninhabited house is now being shared. If, by contrast, people live permanently in another house, and continuously rent out their own house, they are actually just running a (often illegal) hotel. The first example is part of sharing economy, the second is not.
Even more confusion arises as people associate websites such as Taskrabbit or Needto.com with the sharing economy. On these websites you can hire someone for all sorts of tasks ranging from walking the dog to plastering the ceiling. These sites enable the delivery of services, but not the sharing of idle capacity between consumers. They are equated incorrectly with online platforms such as Peerby, on which people share all kinds of stuff, such as drills or evening dresses.
Politicians in various countries have demonstrated a favorable attitude towards the sharing economy, most prominently in the U.S., South Korea, and the Netherlands. They see economic benefits (lower prices for consumers), social benefits (people are more in touch with each other) and environmental benefits (houses and goods are used more efficiently).
However, politicians are not insensitive to the growing criticism regarding practices that are wrongly associated with the sharing economy. In drafting new policies, they would do well to distinguish sharing initiatives from other Internet services which, although clearly innovative, do not enable people to share a thing.