Major Mayors Meet

Municipalities Playing Catch-Up with the Modern Economy

This is a story about abrasion between the past and the future as new ways of doing business meet resistance from the entrenched, and from the regulators accustomed to a certain sense of stability.

Last month, a coalition of mayors from many major cities including Athens, Barcelona, New York, Paris, Seoul and Toronto, met in Amsterdam in an attempt to formulate a common set of rules for the companies behind the so-called sharing economy. Over the past few years, and particularly in recent months, there have been a series of conflicts between some of these companies and the municipalities that are trying to find ways to regulate them.

Home-sharing marketplace Airbnb and car-hailing service Uber have become so immensely popular that on some occasions they can alter local economies. In many cases, the change has been happening so rapidly that municipalities have struggled to keep up.

Despite popular demand from consumers, Airbnb’s entry into some large European cities such as Paris and Berlin has been anything but welcome. Regulators have raised concerns about lost tax revenues while hotels point to unreasonable advantages of informal rentals. Uber has also faced constant backlash from taxi drivers who view the app-based car service as unfair competition.

San Francisco, which requires Airbnb landlords to register with the city, approved tougher rules earlier this month: Airbnb can now be fined if it posts listings for landlords who haven’t complied with the city’s rules. And New York State legislators passed a bill last week that will levy heavy fines on Airbnb and other short-term rental companies for allowing listings that violate the state’s short-term rental laws.

But fight-back can be a two-way street. Uber and its competitor Lyft recently shut down operations in Austin after the city required drivers to undergo fingerprint background checks and Uber has threatened to pull out of Houston for the same reason.

In recent weeks, the European Commission has been exploring ways to apply legacy regulations to the new on-demand economy. So far there has been little consistency in the way rules are applied across Europe.

Uber and Airbnb are the most high-profile examples of the disruptive prowess of the sharing economy, but the consumer experience of these services varies vastly from city to city. The coalition of mayors hopes to find a way to make a clear inter-city show of regulatory force. Hopefully this can be a positive initiative for consumers and municipalities by providing a consistent experience for participants and users.