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Uber And Airbnb Face Pushback At Federal Trade Commission Panel

At an FTC workshop on the on-demand economy, Uber and Airbnb touted the benefits of their platforms amid calls for national regulation.

Posted on June 9, 2015, at 11:20 p.m. ET

Washington, DC, taxi drivers park their cars and honk the horn in protest on Pennsylvania Avenue bringing street traffic to a stop, as they demand an end to ride sharing services such as Uber X and Lyft on June 25, 2014, in Washington, DC. PAUL J. RICHAR

The Federal Trade Commission hosted a wide-ranging seminar Tuesday to debate issues of public safety and market competition in the emerging on-demand economy, with representatives from some of the field's major players facing off in panels against critics.

During her opening remarks, Commissioner Maureen Ohlhausen assured Uber, Airbnb, and other platforms like them that they shouldn't view the FTC as an adversary, but as a potential ally.

"We did not convene today's workshop as a prelude to some planned, big enforcement push in this space," she said.

But during a day-long discussion with economists, policy experts, and industry stakeholders, concerns about market power, uneven regulation, and data privacy were clearly top of mind.

In one panel, Matthew Daus, a former Chairman of the New York City Taxi and Limousine Commission, faced off against Ashwini Chhabra, Uber's head of policy development, arguing that the company skirts labor and liability rules.

"I don't really know what we are sharing," Daus said. "This is about a person getting into a car, going from point A to point B, paying money for it, and a company making a profit."

Daus believes the term "sharing economy" is a misleading descriptor for Uber, which he sees as simply for-hire transportation. He argued that Uber should be more strictly regulated, pointing to the importance of stringent background checks for drivers and access for people with disabilities.

In another contentious dialogue, Airbnb's head of global public policy, David Hantman, tangled with the American Hotel and Lodging Association's head of government affairs, Vanessa Sinders, who framed her comments on hotels as a request for equal treatment.

"Right now there is an unlevel playing field that is compromising consumer safety and endangering the character and security of residential neighborhoods across the country," she said.

Referring to the New York Attorney General's report on Airbnb's operations in the city, which found that a small percentage of commercial users dominate the platform, Sinders argued that Airbnb props up illegal hotels, undermining industry standards.

Both Uber's Chhabra and Airbnb's Hantman emphasized the financial perks of using their respective platforms, and the public benefits they claim to provide to the cities in which they operate.

Chhabra painted a picture of a cab industry shielded by artificial regulatory barriers and beset by inertia. Forward-looking governments should remove those barriers, allowing Uber and transportation companies like it to grow, he argued. Chhabra praised Uber for taking drunk drivers off the road, serving neighborhoods with historically poor transit options, and creating a source of income for drivers.

Hantman, too, emphasized what he described as the web economy's ability to do what governments can't.

"It's increasingly the case that online reputation systems that reward good behavior and punish bad behavior are serving much of the purposes served by government regulation," he said. (An Argentinian rottweiler disagrees.)

Hantman claimed Airbnb has never been more transparent or safe and that most renters are individuals and families, many of whom rely on Airbnb for essential income.

"People doing something once in a while with their own property to make ends meet is something very different than someone doing it fulltime as a business," he said.

Only at the end of the panel did the issue of worker classification — whether on-demand workers should be classified as employees and not independent contractors — come up.

Brooks Rainwater, director of the city solutions and applied research center at the League of Cities, proposed that the federal government step in, perhaps creating a hybrid class of worker with some of the benefits and protections of an employee. Currently, Uber and Lyft drivers are designated as contractors, though some drivers allege they are subject to a high degree of control by their platform-bosses, meriting employment status. Two pending California jury trials may decide the outcome.

Absent from the entire sharing economy workshop: Actual sharing economy workers. Arun Sundararajan, a professor at New York University's Stern School of Business and a participant at the FTC event, proposed another workshop focusing just on important labor issues.

The remarks from Rainwater and Sundararajan follow a significant policy initiative by Virginia Senator Mark Warner, who would like to see worker misclassification resolved by federal legislation. Warner has also pitched an array of safety-net proposals to protect the temporary and freelance workers of the sharing economy.

On-demand labor, and the broader disintegration of stable work with a single employer is expected to become a more visible issue in the 2016 campaign.