It is time to regulate the collaborative economy (Uber/Airbnb etc.) for basic accountabilities to their customers

There is no freedom without accountability. The very reason we have a government is to ensure that no undue harm is caused by markets (which are, otherwise, a glorious thing), and that accountability for any harm so caused is placed on the appropriate person or persons. There is no benefit to be made (selling a product) without taking responsibility. 

I’m a great fan of the collaborative economy (link takes you to a FB group that I started on this topic). There is much good that has come from the collaborative economy, and even greater benefits to productivity are surely on the way. But some of the key companies involved have repeatedly demonstrated a lack of basic due process to deal with a range of man-made physical risks that they might place their customers into. [E.g. this]

Declaring such companies as co-employers (in the case of Uber)/ co-landlords (in the case of AirBnB) is an urgently needed regulatory reform. The moment there is a significant commercial stake/involvement, then responsibility must co-vest with these companies.

Employers/ landlords have a duty of care that arises largely from the fact that they offer a commercial product in the market, and their profits are not expected to be obtained from fraud, misrepresentation or murder. They are not required to physically protect customers, but they are required to act on behalf of customers when they are in physical trouble. These companies are washing off their hands. That shows they are pirates, not good faith companies. Pirates have no place in a civilised free society.

I was waiting to see whether such companies self-regulate. Self-regulation is best, but if companies repeatedly show disinterest in the safety of their customers, then they need to be hit with a ton of bricks. Their CEOs and directors must be held to account for failure to take reasonable steps to ensure safety of their customers. Just like these companies are avoiding payment of taxes, they are also avoiding basic responsibility for the produce they facilitate/ provide. There are cases where these companies have refused to act responsibly – by palming off the burden to the owner/customer. There is a breakdown in the chain of responsibility, and people don’t need to be raped/ die just because of such a breakdown. 

Competitive alternatives may not be available in abundance, either; thereby creating a lack of concern in these companies for their customers. In any event, it should not be possible to escape a duty of care merely by defining one’s contract in a particular way. Customer/s would never have undertaken such risky activities (collaborative economy can potentially raise the level of risk, e.g. of traveling with strangers, of living in stranger’s houses, to the stratospheric level) without a belief being created by these companies that they are responsible in some way.

We need to force these irresponsible companies undertake risk management and mitigation, and appropriate emergency management. All we need is to ensure that the standard duty of care provisions already applicable to owners/employers are imposed on such companies. It is the role of a government in a free society to define the rules by which the market will operate. Defining rules and clarifying contractual obligations is not interference. It is an essential part of ensuring a functioning marketplace. Without such regulations, such new markets can disappear. The cost-benefit test of any such regulation would need to be undertaken, no doubt. But the idea that these companies are not responsible for basic things like security is simply not tenable. 

Regulation is about necessary, not unnecessary intervention. There can be no commercial gain made by any party without responsibility for delivery of the proper – and safe – good or service. The law is largely intended to fix responsibility. There is now enough evidence that these new companies, like most others across the world in all areas of commerce – will NOT take responsibility seriously unless these are legally mandated.

I had a bit of a discussion on this on FB, and received some objections, which I’ll note and address, below.

Objection: Risks (e.g. of being raped/ killed) are known to the customer before he/she books the property. It was a voluntary decision to take such risks.

Airbnb is not your typical Indian Third World company where everything (including rape/murder) is on the menu. Citizens are entitled to safety first, in any commercial transaction.

Objection: The consumers should sue the company

It is wrong to put the burden of suing the company on a consumer who has been raped/ killed. The goods (safe ride/ safe rental) have not been provided, and the company must pay a penalty under a law that acts uniformly on behalf of all citizens.

Objection: The police should punish the rapists. The company is not responsible

This is not about the police issue. This is about the accountability of the company for undertaking due diligence/ immediate actions to create a safe environment. These companies are refusing to do so. They want the money but will not take responsibility. That’s the reason we have to force such companies to undertake appropriate risk management and to ensure that all reasonable steps are taken to provide a safe service. 

They can’t take money over the dead body of their customers and escape responsibility because this is a “police” matter. 

Objection: This is interference in the free market

Defining the obligations of parties to a contract is not interfering in anyone’s freedoms. There is no freedom to rape/kill your customers. Companies must demonstrate that they have taken reasonable steps to prevent criminal harm as part of the service they are providing.

Objection: Regulation doesn’t remove risks

Regulation has radically reduced risks in a vast number of industries. While commercial interests have driven most risk reduction, there is no doubt that regulating the responsibility of employers for a safe workplace, etc. has forced companies to invest in R&D to work out ways to reduce unnecessary risks. 

Objection: This is a slippery slope towards socialism

It is not socialism to demand accountability. There’s some rather loose usage of language when “slippery slope”/ “socialism” is used in such contexts. There is absolutely no freedom to take money from someone and wash your hands off when he/she is being raped/ likely to be killed.