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Airbnb, Uber and problems with the digital-sharing economy

Matt Weinberger | Nov. 6, 2014
Sharing isn't always caring.

Critics say the law only serves to jack up housing prices in the already-too-crowded San Francisco Bay Area, but hey, people have to afford their juiced-up Silicon Valley rents somehow. 

The net result of municipal government beneficence: a lot of red tape cut and grey areas cleared up. That hans't stopped HomeAway from claiming that the part of the Airbnb law that restricts rentals to permanent San Francisco residents is anticompetitive; HomeAway's model specializes in renting properties like vacation homes, and since it doesn't participate directly in the financial transaction (serving more like a personal ad than Airbnb's marketplace), it has a hard time paying hotel taxes. Both Airbnb and attorneys for the city of San Francisco seem to think that argument is without merit.

Uber takes on Lyft
Meanwhile, let's look at the controversy around the sharing economy's other golden child, Uber. When it first launched in San Francisco in 2010, Uber's big differentiator was that it let you skip the hassle of finding a cab by calling a black car directly to you, via a GPS-powered mobile app, with payment automatically charged to your credit card at ride's end -- gratuity included. It wasn't very "sharing" at the start.

These days, "Uber" is used interchangeably with "taxi" among the Silicon Valley in-crowd. People complain mightily about surge pricing -- where Uber jacks up prices during periods of high demand by as much as 400% to make sure cars are always available for those who really need it -- but not enough to stop shelling out for it. For out-of-towners who have never taken one before, it's so simple as to sometimes be mistaken for magic. For those who live in an Uber market, it can be addictive, if only because it's always such a nice alternative to a crowded bus after an exhausting night out.

That message turned out to be powerful enough to spark a revolution in livery, and Uber saw massive growth that led it to expand to major urban markets across the United States and abroad -- though New York City, true to form, has seen a much slower adoption compared to the rest of the country thanks to its strict taxi licensing rules and pressure from the yellow cab lobby. 

But all that growth has to come from somewhere. 

Uber's history is actually best defined by its competition with Lyft, which markets itself as the kinder, gentler alternative cab service. Both let you hail a car to your exact location with your phone. But where Uber's pilot service offering was a black car, driven by a man in a suit, Lyft hired anybody with a car and a desire to make a little extra spending money, sending them a pink plush mustache to affix to their car's front grill so prospective riders couldn't miss it. Prices were lower, and riders without a yen for living the mafioso, tinted-window lifestyle loved it.

 

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