Brussels shies away from Airbnb, Uber battles in EU states, for now

19 May 2016. By Magnus Franklin and Lewis Crofts.

Uber, Airbnb and other companies seeking to overcome barriers to the “sharing economy” in the EU will have more luck lobbying the union’s 28 national governments than lawmakers in Brussels will, judging from a new policy paper seen by MLex.

At most, the EU could take action against governments failing to abide by European laws, but policymakers for now prefer to address their concerns through a “structured dialogue” with national capitals, according to the document, which the European Commission is due to make public next week.

The collaborative economy has become a disruptive force in Europe, as new businesses using the openness, reach and speed of the web compel EU policymakers to rethink how transport, tourism and financial services are done.

Uber’s battles with taxi drivers in London, Paris, Madrid and Brussels, and Airbnb’s struggle to stay on the right side of the law in Barcelona and Berlin, are among the skirmishes have come to define this new economy.

Shifting mood

Not long ago, EU policymakers in Brussels got caught up in the turbulence, with former digital chief Neelie Kroes presenting herself as a champion for the ride-hailing service, whose board she has since joined. Kroes and other EU officials wanting to be seen as digitally savvy viewed sharing-economy operators as agents of change, breathing new life into stagnant industries.

A European Parliament report in January continued the upbeat tone, suggesting that the collaborative economy could add as much as 572 billion euros ($645 billion) a year to the EU economy.

But the rosy picture has since become more clouded, as the darker side of the sharing economy has begun to show. Services based on “gigs” — where apps or websites act as brokers between suppliers and users of services — are now viewed as threatening accepted norms.

Pension plans, social insurance, unions and employment contracts all become unmoored in a market where workers are “self-employed,” staring at their phones to see when their next job will come through. Many column inches in newspapers have been given to aggrieved users of these new platforms — both customers and suppliers — and to their rivals, who complain of unfair competition.

Backing down

Governments are trying to balance this tricky equation. On one side, the new operators offer productivity gains through a more efficient matching of supply and demand. On the other, their business models can have a deleterious impact on the economy and on society as a whole.

But in Brussels, officials are now backing down, judging from the new policy paper. They are tacitly acknowledging that EU civil servants are no better placed than their national colleagues to strike the right balance — at least not yet.

The document acknowledges that many of the issues are best resolved at local level. With that in mind, it offers some pointers to governments on EU laws that touch on the sharing economy.

An e-commerce law, for example, says that websites acting as pure “intermediaries” can’t be held liable for illicit or otherwise unwanted activity taking place on their platforms. Another EU law aims to ensure that countries don’t raise too many barriers for companies seeking to provide services across borders. Still other EU rules cover employment, social protections, regulated professions and value-added tax.

Infringement proceedings

The commission could, in theory, use all of these laws to rein in governments whose efforts to regulate the sharing economy risk damaging the bloc’s “internal market.” But that would involve starting “infringement proceedings,” a formal warning procedure used against EU states that fail to correctly apply EU legislation.

These proceedings take a long time to process and are largely ineffective at stopping governments determined to forge their own path. For a company at the sharp end of a new disruptive business model, there’s little point in spending years lobbying Brussels in a potentially toothless administrative procedure.

The new paper also suggests that the commission would prefer to resolve any problems that arise in an amicable way. The EU executive and national governments engage in an ongoing “structural dialogue,” in which EU officials make suggestions on changes governments could make to better fit into the internal market. This is the most likely place that the debate will continue.

None of this means that the commission’s analysis — and the millions spent on research that went into it — was done in vain. The document offers a well-reasoned and evenhanded take on the opportunities and risks that the sharing economy presents. It also offers useful advice to national governments and lawmakers considering measures in the affected sectors.

And with the sharing economy set to grow at a rapid pace, it would be unwise to count the EU out in the long term. A new group of commissioners will be taking office in 2019, and will be receptive to suggestions for new laws.

The policy paper is set to be published on May 25.