Nalo Gungubele | Associate | Adams & Adams | mail me |
One of the focal points of the discussion on how to regulate the future relates to the sharing economy and the increasing adoption/use of digital platforms (e.g. Uber, Bolt & Airbnb) which facilitate the sharing of physical goods and assets.
The benefits associated with these platforms include:
- Reduced transactions cost;
- Access to assets and services that consumers might not ordinarily afford;
- Opportunities for self-employment and alternative sources of income;
- A reduced negative environmental impact through the efficient allocation and utilisation of assets.
South Africa has proposed amendments to the Tourism Act 3 of 2014 and the National Land Transport Act 5 of 2009, to bring short-terms rentals and e-hailing services provided by the likes of Airbnb & Uber within a regulatory framework in attempt to quell what has been perceived as areas of concern.
A central theme in the proposed policy interventions is the levelling of the playing field between disrupters and sector incumbents. One might argue that e-hailing services are in fact not competing with metered taxis services but against car dealerships by shifting consumer preferences away from private ownership in favour of access. With due weight given to this consideration, and the associated benefits, one might instead endeavour to create an enabling environment to promote collaborative consumption as opposed to introducing overly protectionist regulation.
Although the benefits derived from a sharing economy are substantial, there are some clear legal challenges which might warrant the imposition of restrictions on how these platforms are allowed to operate, such as:
- Asymmetric regulatory burden on incumbents
Sharing platforms attract criticism due to their ability to circumvent unfavourable regulation. Whereas guesthouse owners may need to comply with registration and regulatory requirements, Airbnb hosts do not. It becomes unclear whether the favourability of the services provided by these platforms is as a result of competition on merit or a cost advantage gained through regulatory arbitrage. The cost of compliance thus makes it difficult for incumbents to compete.
- Consumer protection
Sharing platforms operate as facilitators of transactions as opposed to being direct service providers. The ‘triangular’ nature of these transactions creates uncertainty as to consumer rights in instances of injury, harm or loss. The imposition of minimum quality standards is often put forward as a solution to protect consumers from poor quality services and their inability to assess the risks associated with using different platforms due to information asymmetry.
- Work Conditions
Suppliers of work in the platform economy do not fit squarely into traditional labour regulation frameworks, leaving participants such as e-hailing drivers unable to…
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Read the full article by Nalo Gungubele, Associate, Adams & Adams, as well as a host of other topical management articles written by professionals, consultants and academics in the October/November 2019 edition of BusinessBrief.
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