Peer-to-peer ("P2P") business models have become both increasingly innovative and more successful. But that success often leads to clashes with regulators, or established market competitors using existing laws as a defensive tactic: the latest example being the plan by London black-cab drivers to block London's streets to protest against P2P car service Uber. These legal battles illustrate the need to plan proactively how to deal with likely legal risks during the early structuring phase of any new venture.
P2P business models involve individuals sharing their resources with strangers, enabled by a third-party platform. Established businesses include online marketplaces for goods and services (such as eBay or Taskrabbit), platforms that provide P2P accommodation (Airbnb), social lending (Zopa), crowdfunding (Kickstarter) and car sharing (Lyft).
The internet, social media platforms and mobile technology have been the enablers of the economic and cultural shift behind the growth of P2P. There's clearly both supply and demand, and a very happy set of users for a great many of these new P2P services.
But not everyone is in favour of the rapid growth of this new business model. Most of the opposition comes from incumbent businesses that are threatened by the new competition or are concerned about the risk posed by unregulated market entrants. Accommodation-focused P2P models have faced opposition from hoteliers who complain that home owners using these platforms have an unfair advantage by not being subject to the same laws as a traditional hotel. City authorities have cited zoning regulations and other rules governing short-term rentals as obstacles to this burgeoning market.
Not all traditional players are taking a completely defensive approach. Some companies have chosen to work with their upstart rivals, rather than oppose them. GM Ventures invested $13 million in RelayRides and Avis acquired Zipcar, giving Avis a stake in Wheelz, a P2P car rental firm part-owned by Zipcar.
Legal and regulatory issues
Lawmakers around the world are having to interpret existing laws in the context of P2P business models and consider whether new regulation is required.
Any P2P-based business will need to address the legal and regulatory issues affecting both the platform operator and the users of that platform. Often, this may mean tailoring services to anticipate particular legal or regulatory concerns.
Typical areas for concern include laws dealing with consumer protection; privacy; employment; anti-discrimination. Other key issues for the platform operator include liability issues and basic concerns of safety and security for users.
Tax is also a big issue. Some sectors of the economy – hotels, for example – are subject to special tax rates by many cities or tax authorities, who seek to challenge P2P models that are seen to by-pass the normal tax system.
Laws relating to payments are also relevant. One key to success for a P2P business model is to implement a reliable and effective payment model. But most countries impose restrictions on certain types of payment structures in order to protect consumers' money. Where payments are made via the P2P platform rather than directly between users, operators will need to address compliance with applicable payment rules, and potentially deal with local payment services laws. Fundamentally, it needs to be clear whose obligation it is to comply with these laws.
Most regulations that were originally devised to apply to full-time commercial providers of goods and services apply less well to occasional providers. It's a particular feature of the market for P2P platforms that much of the regulatory activity tends to be at the municipal or local level, rather than national. This makes for a less cohesive regulatory picture.