The Real Reason Governments Are Cracking Down On Uber And Airbnb

It hasn’t been a great week for Airbnb. On Tuesday representatives of New York State Attorney General Eric Schneiderman and lawyers for the apartment sublet company Airbnb met in an Albany court. At issue is a broad subpoena issued by the New York AG last fall, demanding that Airbnb turn over information about its “hosts” (those who list their apartments) in the belief that thousands of them are in violation of the law by acting as de facto unregistered hotels.


What is notable about these models, however, is that they provide technology allowing users and buyers to transact without mediation by the powers that have traditionally controlled those transactions. So Airbnb matches those with rooms to those seeking to rent rooms; Uber matches cars and drivers with those seeking to hire cars and drivers; and so on. In a sense, Bitcoin serves a similar function, providing a direct means of exchange for any set of buyers and sellers anywhere in the world, with clear pricing and no involvement by banks or payment companies.


At stake are hundreds of billions of dollars of revenue (which will not be “shared”). Incumbents are attempting to protect that revenue using the legal system. As we all know, laws are not simply the manifestation of societal norms of justice and a need to protect and serve the common good. They can also be tools crafted in the interest of established groups and businesses to further their needs and inhibit those of others. Regulations used to protect and steer the common good are essential, but laws used to stifle innovation are deadly.


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