Missing a trick? The EU's digital single market strategy needs to embrace the promise of the 'sharing economy'

The Digital Single Market initiative will provide a much-needed stimulus for online commerce in Europe. However, asks Colin Mackay, is it fully embracing the benefits to individual citizens offered by the shared economy?

By Colin Mackay

02 Sep 2015

The single market is one of the EU's greatest achievements. No market remains static, however, and the inexorable rise of digital technology demands a new kind of single market, one that allows citizens to reap the benefits of online commerce. 

The European Commission's Digital Single Market strategy, launched earlier this year, makes the right noises and ticks the right boxes. However, is it missing out on a key benefit to citizens?

The 'Sharing Economy' is based on peer-to-peer pooling of assets and services. While such approaches have been around for thousands of years, the internet has allowed us to formalise such arrangements. Probably the best known are Airbnb, which allows people to rent out spare rooms, and Uber, a means to match potential passengers and drivers. 


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Both Airbnb and Uber give consumers access to a cheaper, wider range of options than conventional markets. In addition, there are benefits for service providers. They offer the ultimate in flexible working, allowing them to offer services when it is convenient. 

If they don't want to share their home that week or don't wish to drive that evening, no problem. They can simply refuse bookings, or the in case of Uber, become unavailable until it is convenient. 

This offers an interesting counterpoint to zero-hours contracts. These can be highly constricting, even exploitative, demanding exclusivity while failing to guarantee any minimum amount of work. 

It is interesting that the most high-profile and successful examples of the 'sharing economy' are in highly regulated, consumer-oriented markets. In most cities, the number of taxis is restricted with high barriers to entry for new operators. 

This protects incumbent operators against unrestricted competition and provides a guaranteed income. Hotels and B&Bs are also highly regulated, with a closed market allowing for a secured source of revenue. 

Airbnb and Uber are challenging these existing orthodoxies. Critics - the majority of whom have vested interests - have raised various objections. In a number of countries, the tax status of earnings from the shared economy is under question. 

In Barcelona, Airbnb providers face fines from city authorities, while in the Netherlands, where there are 20,000 Airbnb listings, landlords are being investigated for potential tax evasion. There is no little degree of irony here, given the opportunity for grey earnings in the taxi and hotel markets. 

Yet both Airbnb and Uber argue that they are part of the digital single market. They act as intermediaries and market-makers, using technology to connect buyers and sellers. 

Much of the appeal of digital marketplaces is the ability to bring consumers closer to suppliers; eliminating outdated protectionism is part of that process. It is possible to have some sympathy. The cost of entry into these closed markets can be high, and dismantling the barriers will inevitably lead to calls for compensation. 

Yet many industries have been here before. Ignoring disruptive technology and seeking solace in protectionism has been a route to obsolescence since Western Union declined to licence the telephone in favour of maintaining long-distance telegraphs. 

Standing in the face of popular technologies like Airbnb and Uber will have the same result. It would be better to use the platform of the digital single market to embrace the opportunity. 

The Commission would be well advised to see shared economy business as part of the DSM and factor in the opportunities it brings. It will meet commission president Juncker's aim of "Every consumer getting the best deals", not simply in buying but also in non-exploitative, flexible working.