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Sheila Raju Headshot

The Fare-ness of Uber, Airbnb, and the Sharing Economy

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The recent announcement prohibiting the use of Uber in Berlin by the city's Department of City and Regulatory Affairs comes on the heels of vocal opposition of the transportation service from taxi unions in several cities, including Barcelona and London. Another sharing economy player, Airbnb, faces significant challenges from the well-established hotel industry in cities across the globe.

The democratization of services that were previously so safe guarded is at the heart of the opposition, as regulators attempt to protect the unions and companies that have dominated the markets for transportation and accommodation, respectively.

Instead of finding ways to work together with companies in the sharing economy, many local government officials support the significant reduction in the number of options available to consumers by hindering the growth and expansion of Uber (as well as competitors such as Lyft and Sidecar) and Airbnb in their cities.

What politicians, unions, and regulators must accept is that the sharing economy is permanent. Attempting to ban it isn't a viable option. Consumers have had a taste of a wider range of transportation and travel accommodation options and prices, and, not surprisingly, they've embraced it.

The long standing dominance of taxi unions and hotels around the world have led to expensive fares and limited options. These are only two of the many arenas that are ripe for innovation. In the coming years, many such disruptive companies will emerge, changing the way cities and consumers operate. The fact that there is such resistance to challenging the status quo illustrates an outdated mentality that needs to change. The increased competition in previously dormant industries will hopefully lead all players to continue to innovate and provide the best, most cost effective solutions for consumers.

Naturally, the safety of residents is certainly a consideration of local governments, as the Berlin press statement mentioned. Concerns, such as who is accountable for injuries caused by a reckless UberX driver or damage to an apartment caused by a party thrown by an Airbnb renter, are valid and absolutely need to be addressed.

Berlin leaves open the potential for reconsideration of the decision to prohibit Uber, while Airbnb's offer to pay hotel taxes illustrate that these two companies are willing to fight to remain in their markets.

Innovation can't be muzzled, and a little competition is good for everyone.