Self-regulation can address issues that arise in the digital economy, says Airbnb

Self regulation can be a "more effective way" of addressing issues that arise in online markets than passing new legislation, Airbnb has said.

In written evidence to a UK parliamentary committee which is looking into how the UK government can support the growth of the digital economy, Airbnb said self regulation can offer a faster response to issues that develop in "fast-moving" digital markets.

"Self-regulatory initiatives are emerging (such as Sharing Economy UK’s forthcoming 'trust mark') that may present more effective, more flexible approaches to consumer protection and quality than statutory models of regulation," Airbnb said. "We would therefore encourage the [Business, Innovation and Skills] Committee to consider the role of self regulation in such a fast-moving environment. It is so often found to be a far more effective way of regulation keeping pace with rapidly evolving markets."

Airbnb is an online platform that helps match people willing to rent out their accommodation to those looking for a place to stay. It is an example of a business operating on the basis of the so-called 'sharing economy' model. The sharing, or collaborative, economy is a term used to describe operations where ordinary people trade the use of their assets with consumers who have a temporary need for them, usually over digital peer-to-peer platforms.

Airbnb said that "trust is the essential currency of the collaborative economy" and that the "trust mechanisms" it deploys, which include peer-to-peer reviews, serve as "additional layers of protection" for users of its platform beyond those provided for under law.

The company said that there is no "single regulatory framework" which could be developed to appropriately govern activity across the entire collaborative economy. It called on the UK government to consider "targeted" sector-specific reforms if those are justified.

"The UK is a good place for start-ups and established businesses in the collaborative economy to thrive," Airbnb said. "As the UK considers wider reforms to regulation in this area, it should bear in mind that an effective single regulatory framework for such varied models and businesses would be impossible to construct."

"It is therefore important for the government to continue examining what existing regulations exist in the particular sector under consideration (e.g. financial services, accommodation, transportation) and whether they can be adapted to apply to new models of delivery. In some cases, sector-specific regulation may be required, but this should be targeted carefully, and designed to be proportionate for occasional, non-professional activity," it said.

Competition law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said that there could be "unintended consequences" if new regulations were developed and applied to all online platforms.

"Online markets, and especially sharing economy business models, are developing at significant speed and in the variety of their service offerings," Lougher said. "Unless it was very carefully conceived, additional national regulation aimed at addressing all online platforms could easily and unnecessarily distort or hinder market developments that would otherwise be pro-competitive."

"Adopting a ‘one size fits all’ approach to regulating online platforms carries particular risks of unintended consequences given the variety of service offerings and business models in the marketplace, which is often geographically wider than national boundaries. The motivation for any additional regulation also needs to be transparent, because some national regulatory initiatives within the EU appear motivated much more by a desire simply to protect pre-existing business models rather than by a desire to safeguard consumers’ best interests," he said.

In its written evidence Airbnb said that UK tax rules could be improved to help support the growth of the sharing economy.

"We think there is more the government can do to identify itself as the world leader for the home sharing and the sharing economy, particularly on tax," Airbnb said. "The existing 'rent-a-room relief' is already available to people who share spare rooms in their primary home. Extending this relief to the sharing of an entire home (i.e. a main residential property) would simplify the tax affairs of many thousands of hosts."

"PWC has predicted the sharing economy will be worth £9bn within a decade, up from £500m now. This is a common sense way for the UK to support regular people to earn a little extra money and recover from the recession, and make the UK the world leader for the sharing economy," it said.

Guy Lougher and colleague Sammy Kalmanowicz also of Pinsent Masons previously highlighted the role that competition law and competition authorities could play in shaping the sharing economy.

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