FTC Chief Calls for “Targeted” Regulation of Uber, Airbnb

“Flexible” and “targeted” regulations of so-called “sharing economy” services like Uber and Airbnb may be necessary, the head of the Federal Trade Commission said Friday.

In a speech at Fordham University Law School, FTC Chairwoman Edith Ramirez warned that imposing “legacy regulations on new business models” can stifle competition and ultimately leaves consumers worse off. But, she said, regulators shouldn’t shy away from enforcing important consumer protections on issues like health, safety, or privacy.

“We must allow competition and innovation in the form of these new peer-to-peer business models to flourish,” Ramirez said, according to a copy of her remarks. “At the same time, where necessary, 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.”

Any new regulations might not necessarily come from the FTC itself. While the commission does have authority over issues like privacy and data security, it also offers advice to state and local agencies on how to impose regulations without hurting competition.

Ramirez’s speech is the latest tentative attempt by policymakers to try to grapple with the explosion of “sharing economy” (also known as “peer-to-peer” or “on demand”) apps that can connect buyers and sellers with the push of a button. The FTC held a workshop on the services in June and has been sifting through public comments.

Uber, Lyft, and Sidecar allow users to request a car ride; Airbnb allows users to book rooms from other users; and TaskRabbit allows users to hire someone to complete a small job or task. But the services have come under fire from local regulators around the world, and incumbent industries like taxi drivers and hotels have accused the start-ups of having an unfair advantage by ignoring costly regulations. Uber, for example, has been banned in a number of cities, and its executives are facing criminal charges in France.

Ramirez argued that existing regulatory schemes can “entrench” old business models and prevent consumers from accessing exciting new services. And she warned that agencies can be unduly influenced or even controlled by the incumbent industries they regulate.

But she also argued that the government “picking winners” by applying regulations only to the old companies “should be just as undesirable.”

Finding the right middle ground, Ramirez acknowledged, is “complex and challenging” and has “no simple answers.”

The FTC chief’s speech follows a hearing earlier this week in the House Energy and Commerce Committee’s trade subcommittee, in which lawmakers struggled to find the right approach to regulating these new services. The subcommittee’s chairman, Republican Rep. Michael Burgess of Texas, acknowledged that there should be some “limited government oversight” of the companies. But he added, “I for one am more concerned about existing regulations hurting new jobs than I am about the need for new regulations.”

Sen. Mark Warner, a Virginia Democrat, has argued that workers in the on-demand companies should get disability insurance and other benefits, but he has also called for a “regulatory time-out” to give the government time to settle on the right rules.