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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe genie of service businesses consumers can connect with on their smartphones—like ride-sharing and room-sharing—can’t be put back in the bottle. Particularly popular with millennials, such services are here to stay. Indiana would be wise to create a welcome business climate for them, while protecting the safety of local residents. Legislation wending its way through the General Assembly looks on track to maintain that balance.
Ride-sharer Uber and room-sharer Airbnb are at the forefront of the worldwide movement, and also in the thick of the ensuing controversies over pricing, consumer safety, insurance, licensing and taxes. Uber, launched in 2009, already has a presence in 200 cities in 54 countries; Airbnb, started in 2008, has accommodated 25 million guests in 34,000 cities in 190 countries. (It should come as no surprise that both companies are based in cutting-edge San Francisco.)
But along with the soaring popularity of such services has come pushback from traditional providers of transportation and housing. Taxi drivers and hoteliers across the globe have complained that the app-based services don’t compete on a level playing field—adhering to health inspections, for example, or paying local taxes to help promote tourism.
Government response to the concerns has varied. New York’s attorney general is waging a rancorous battle with Airbnb—claiming nearly three-quarters of Airbnb’s New York City listings were actually illegally run hotels. Last April, Airbnb dropped about 2,000 of its 25,000 New York listings.
Last month, Massachusetts passed a law that will require ride-sharers to obtain a license to operate in that state. Georgia has twice tried but failed to pass legislation requiring a license of not only ride-sharing companies but individual drivers as well.
And France recently voted to ban Uber’s lowest-cost offering after Paris taxi drivers went on strike to protest what they called unfair competition. A court battle continues in that country, and controversies have erupted in Spain, India, Brazil and Canada.
But, as is often the case, the upstarts have forced old-timers to up their game. Yellow Cab and other taxi companies are launching apps, and hotels are streamlining online reservations and payments. Some are offering keyless entry for guests who don’t want to wait in line at the front desk.
Indiana’s House Bill 1278, headed to the Senate, would require ride-sharers to purchase insurance that covers their passengers. Uber and its main competitor, San Francisco-based Lyft, already do so. A related bill would require driver background checks, a practice Uber and Lyft also already follow.
These companion bills follow the wise course in the relatively uncharted regulatory waters of app-based services: Protect Hoosier consumers without strangling a new-generation business model.•
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