Shared economy has been a buzzword over recent years, empowered by the thriving technological advancements in big data and cloud computing. From mobility industry (Uber, Didi, Ola, etc.) to hospitality industry (Airbnb and Couchsurfing), almost all major industries are being disrupted by the innovative digital business models. (Wallenstein and Shelat 2017) With the emergence of AI and IoT technologies, more profound disruptions can be foreseen that will completely change the industry competitive landscape.
The innovations with shared economy sound very exciting. However, more and more problems are starting to appear. Earlier this year, Didi, the biggest carpooling service who won over Uber in China has been wired with a fatal scandal related with its hitchhike service. A passenger who used the hitchhike service was found dead after being raped by the driver. Although the driver was arrested eventually, this tragedy has alarmed people in the country and they begin to rethink the operating mechanism of Didi’s carpooling service. (En.people.cn., 2018)
Shared economy is built upon trust. On the foundation of trust, people are able to better utilize resources and reach maximum efficiency in society. With the rapid technological advancements, and the enormous convenience that is brought by shared economy, we tend to focus solely on maximizing efficiency, and forget how to ensure the trust mechanism.
The field under discussion is completely new and loosely regulated. There are many unresolved questions left behind for us to ponder over. For example, when accidents occur, who is there to be blamed? Is it only the driver’s fault, or the platform’s fault? To what extent should the platform take the burden, and how can the government better regulate the online carpooling market? Is it possible to better incorporate technologies to identify potential mischievous users by analyzing their past data? I look forward to the solution to these questions and comments are very much welcomed.
Reference
Wallenstein, J. and Shelat, U. (2018). What’s Next for the Sharing Economy?. [online] https://www.bcg.com. Available at: https://www.bcg.com/en-nl/publications/2017/strategy-technology-digital-whats-next-for-sharing-economy.aspx [Accessed 11 Oct. 2018].
En.people.cn. (2018). Didi’s fatal scandal leads to rethink of carpooling service – People’s Daily Online. [online] Available at: http://en.people.cn/n3/2018/0518/c90000-9461607.html [Accessed 11 Oct. 2018].
Very interesting topic! Like you mentioned regulation in this field is very loose as it cannot keep up with the current technological developments. Laws are already lacking behind and with the current pace of technological development this is likely to become even worse. For shared economy platforms this means an open playground with little restrictions. However, at the same time a platform is still responsible for the safety of its users. Even though it might not be legally punished, it can still be socially punished. Platforms who have a large number of users that show misbehaviour will drive other users away through negative network effects.
HI Minxin,
thank you for your very interesting blog post! I fully agree with you, that the future of any share economy platform will depend on the level of trust that users have into the platform, but also in their counterpart, with whom they engage in business. When we look at Uber, customers are currently not very well able to judge how safe a driver will drive, which is on form of seller uncertainty in the information asymmetry framework (Dimoka et al, 2012). In most instances the rating that is offered by the company, serves as a benchmark for the customer and for the driver, to behave accordingly, since better rated drivers receive more passengers.
From my perspective I see a regulatory need from two sides. First the company has to make sure that there are all regulations in place to reduce seller and product uncertainty as well as possible. This might include driving records, records of accidents or flat reviews for Airbnb. Once this is in place the customer should have sufficient information, ta make an informed decision. Second, I feel like the state has to take some regulatory responsibilities, to ensure that the share economy companies are doing their best to give the customer a holistic picture of the seller and the product, and are not distorting the image to generate more revenue. As mentioned by Bull, a state regulation has to be balanced with the immense costs that it bears (2018). One thing that should definitely be avoided as a federal state law, that would allow a “race to the bottom” where the company exploits differences in federal policy making.
Overall, this will be a very pressing issue for the future of the share economy, but I believe by taking some of the aforementioned points into consideration, a first step towards a safer and more regulated share economy could be taken.
Bull, R. T. (2018, April 26). Uber and the Future of Regulation. Retrieved October 14, 2018, from https://www.theregreview.org/2018/04/26/bull-uber-future-regulation/
Dimoka, A., Hong, V., & Pavlou, P. A. (2012). ON PRODUCT UNCERTAINTY IN ONLINE MARKETS: THEORY AND EVIDENCE. MIS QUarterly, 32(2), 395-426. Retrieved October 14, 2018.
Thanks for your interesting topic! As I know, some measures have been taken by government and DIDI. From government side, many local governments have stopped DIDI’s hitchhike services in local area. From DIDI side, they stopped the service during night period and made some changes on the APP and internal management. On the APP, the new functions “one-button alarm” and “one button to call emergency contact” has been added. Internal the company, DIDI improved the quality of customer service and had stricter review of registered drivers. All of these measures will improve the situation to some extent. In my opinion, people’s trust in shared economy results from the platform. For example, people are willing to take the pick-up service from an unknown just because he is recommended by DIDI. So DIDI may not take all responsibility but it will have the biggest influence on people’s trust on shared cars. By better customer service, a more considerate product and stricter management, DIDI should try its best to gain people’s trust.
Hello there Minxin. Thanks for your insight into this topic.
Unfortunately, now and then rather horrifying stories appear about people being harmed, robbed or even killed while using services belonging to shared economy, such as those of Uber. There is no doubt that this might discourage some of us from booking a privately owned Uber cab and instead resort to overpriced taxi-services. At the same time, we know absolutely nothing about the driver and his past reputation, whether he is a good lad or a sick maniac. Yet we would entrust him our safety.
Despite all the negative news we might encounter, I still tend to contemplate the future outlook of the shared-economy from an optimistic point of view. Most people still have good intentions; I do believe in humanity 🙂 At the end of the day, there will always be a certain risk of an accident happening, regardless of the type of economy being applied. As for uncertainty, at least in my opinion rating and feedback features create sufficient transparency, making it comparable to buying any other product or service on the Internet. Besides, it really has not been proven that there is a statistically higher danger associated with services like AirBnb, Couchsurfing, etc.
In an era when we ever more prefer distance communication to a personal one, the emergence of shared economy could bring us back closer to each other once again.