The sharing economy in Switzerland: Do we need more, fewer, or new regulations?
The sharing economy is a growing trend. More and more people are using and offering products and services which are supplied via online platforms. This leads to a more efficient allocation of goods such as cars and apartments, a greater range of goods and services on offer, lower prices and frequently better quality, all of which is ultimately better for consumers. But the sharing economy also benefits private persons who are able to offer their goods and skills to a global network – until recently virtually inaccessible – at low cost and with little risk.
In spite of these advantages, opposition to the sharing economy is on the increase. The huge success of platform operators such as Airbnb and Uber has led to businesses within the “traditional” economy coming under strong pressure. These businesses complain that providers and platform operators in the sharing economy are subverting regulations, and demand that they have to comply with the same regulations as “traditional” businesses, or even demand that they be banned from operating.
Based on the accommodation and personal transport sectors, this opinion paper shows that such demands are exaggerated. While some legal adjustments are needed, consumer protection, which is the purpose of many regulations in the “traditional” economy, can be achieved without state intervention, often more efficiently. In the opinion of the authors, the following six measures need to be addressed in Swiss legislation. Taken together, they form a kind of regulatory framework for correcting market failure, easing the burden on the “traditional” economy, and ensuring the necessary legal safety:
- Existing outmoded regulations need to be scrapped: the sharing economy provides an opportunity to get rid of regulations in the “traditional” economy which have grown up historically and are now outmoded, such as the local knowledge test for taxi drivers and the quantitative restrictions imposed on taxi companies.
- Statutory legitimacy should be accorded to self-regulation: statutory legitimacy should be accorded to rating and monitoring systems as a form of self-regulation. Such systems are capable of replacing many traditional regulations (e.g. relating to the cleanliness of accommodation and the reliability of drivers) and can achieve the same aims more efficiently.
- Minimum requirements should be introduced: not all problems can be solved by means of self-regulation, and therefore certain minimum legal requirements should also apply in regard to sharing economy platforms, such as the background check on drivers, or the mandatory registration of foreign tourists staying overnight.
- The legal distinction between “commercial” and “private” activities should be abolished: since the legal distinction between commercial and private activity is almost impossible to apply to the sharing economy, proven aspects of market failure – in particular, specific hazardous situations – should form the starting points for minimum requirements. For example, the requirement that transport intermediaries (both electronic and traditional) must carry out a background check on their drivers could depend not on whether the service is carried out on a professional basis, but instead – which would accord with the hazard potential – in a general way. In the accommodation sector, certain minimum standards could depend on the number of days for which a property is let. The effectiveness of such regulations should be reviewed periodically and corrected if necessary.
- Cooperation with platform operators: cooperation between the authorities and platform operators will make it possible for taxes such as visitors’ taxes to be collected without great administrative cost.
- Standard digital billing tool for social security contributions: a similar solution should also be aimed for the provision of social protection for the working population: with a digital tool, the standard billing of contribution rates for social security can be easily achieved both for businesses and for individuals or intermediary platforms. The distinction between the employed and the self-employed would no longer be of prime importance.