Federal Trade Commission Chairwoman Edith Ramirez recently made statements regarding regulation of the developing “sharing economy” exemplified by on-demand apps and websites such as Uber and Airbnb that connect sellers of a service with buyers nearly instantaneously and without traditional middlemen.
Last week, in a speech at Fordham University Law School, Chairwoman Ramirez recognized that, in some instances, regulations directed at traditional business models are not well-suited to new methods of doing business as they are still being developed, and expressed concerns about “imposing legacy regulations on new business models.” That being said, she cautioned, regulators such as the FTC should still enforce protections that affect consumer health, safety, or privacy. Ramirez stated: “[W]e must allow … these new peer-to-peer business models to flourish,” however “targeted regulatory measures may be needed to ensure that these new business models have appropriate consumer protections; but they should be no greater than necessary to address those concerns.” She also candidly observed that the FTC is not immune from being swayed or influenced by the dominant, established industries they regulate. However, she noted that neither should the FTC only apply regulations to older companies and industries thereby implicitly “picking winners.”
It has been reported that PricewaterhouseCoopers has estimated that five key segments of the sharing economy – travel, car sharing, finance, staffing, and music and video streaming – have global revenues of roughly $15 billion and may increase to around $335 billion by 2025.
Chairwoman Ramirez’s comments follow on the FTC’s workshop on peer-to-peer services in June, which resulted in thousands of public comments. Such workshops are often a prelude to ramped-up enforcement. Based on her recent statements, it is clear that the FTC’s primary concern is striking the appropriate balance in regulating the sharing economy – not only between old ways of doing business and new, but also between innovation and consumer welfare.