Tuesday, March 24, 2015

Ceci N’est Pas Un Taxi: Definitional Defiance as Innovation in the Platform Economy

Guest Blogger

Orly Lobel

For the Innovation Law Beyond IP 2 conference, March 28-29 at Yale Law School

Over 10,000 new platform companies have sprouted and mushroomed in less than a decade and they continue to pop up daily. The platform economy, while not easy to define or quantify, was valued in 2013 at $26 billion with predictions of an exponential growth to $110 billion in the next few years. A recent Price Waterhouse report predicts that globally, revenues from the platform sectors could hit $335 billion by 2025.

So what’s your business? You don’t need to open a restaurant to host cooking events; you don’t need to become a taxi driver to offer paid rides; you don’t need to open a hotel to be a lodging host; you don’t need to start a moving company to get paid for helping someone relocate. Platform businesses are challenging conventional industries in every realm, including hotels (Airbnb, Couchsurfing, Homeaway, VRBO), office space (Liquid Space, ShareDesk), parking spaces (ParkingPanda, Park Circa), transportation (Lyft, Sidecar, Uber), restaurants (Eatwith, Feastly, Blue Apron, Munchery), used clothing (ThredUp), household tools (Open Shed), outdoor gear (Gearcommons), capital (Zopa; Prosper, Kickstarter, Bitcoin), broadcasting (Aereo,, co-developing (Quirkly, Etsy), legal services (Upcounsel), medical services (Healthtap), academic tutoring (Uguru), everyday errands such as grocery shopping and laundry (TaskRabbit, Instacart, Airtasker, Washio), and specialized errands, such as  flower delivery (BloomThat), dog-walking (DogVacay) and package delivery (Shyp).

New digital technologies are turning everything into an available resource: services, products, spaces, connections, and knowledge, all of which would otherwise be collecting dust. It’s been called the sharing economy, the disaggregated economy, the peer-to-peer economy (P2P), human-to-human (H2H), the community marketplace, the on-demand economy, the app economy, mesh economy, gig economy, and the "Uberization of everything."

Each of these terms represents an aspect of the digital platform revolution, but none fully captures the entire scope of the paradigmatic shift in the ways we produce, consume, work, finance, and learn. A new wave of starts-ups, relying on digital platform technology, are connecting people and transforming behavior and relationships outside of the digital world, closing down on underutilized human, social, and real capital. The life cycle of products is being dramatically extended; dead capital resurrected, the time unit of access is vastly shortened; and connectivity exponentially expanded. The platform economy is radically changing the traditional equilibria of supply and demand, lowering transaction costs, blurring the lines between owners and users, producers and consumers, workers and contractors, and transcending the spatial divides of business and home, market and leisure, friend and client, acquaintance and stranger, public and private.

Unsurprisingly, new platform companies are facing challenges from a broad range of regulatory fields, including consumer protection laws, safety and health regulation, permitting and licensing of businesses, property and zoning laws, tax law and financial services regulation. In my new article, "The Law of the Platform," I  pose a foundational inquiry: Do the regulations we have carry over to the platform economy? By unpacking the economic and social drives for the rise of the platform economy, the article develops a new framework for asking whether digital disruptions comprise loopholes akin to regulatory arbitrage in the tax field, circumvention akin to controversial copyright protection reforms, or innovation-ripe negative spaces akin to design-around competition in patent law.

Bringing together these different bodies of law, the article offers a contemporary account of the relevance of regulation for new business models. The article shows that more often than not, legal disruption by the platform economy should be viewed as a feature---not a bug---of regulatory limits.

Orly Lobel is Don Weckstein Professor of Employment and Labor Law, and a Faculty Member of the Center for Intellectual Property & Markets at the University of San Diego. She can be reached at lobel at


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