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How to regulate Uber and Airbnb with their own data

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uber app
uber app

Apps like Uber and Airbnb haven't just sparked concern among the taxi and hotel industries they disrupt — city regulators have been cracking down on the info-centric services despite the lack of precedent for how best to deal with them. Now Tim Wu, author of The Master Switch and recent On The Verge guest, has taken to the New York Times to put forward his solution. In short, he suggests that cities should require companies to provide apps which leverage the data they collect to highlight genuine cases of misuse — Uber hiking prices in emergencies, for example, or tenants letting out apartments on Airbnb against their landlord's wishes.

Regulators can do their job and protect consumers against harm without being so heavy-handed. The current approach recalls Prohibition: total bans that are widely violated, with semi-random enforcement and huge fines for unlucky individuals (one Airbnb host in New York recently faced more than $40,000 in potential penalties, before the case was dismissed). It's a clumsy approach that turns ordinary citizens into scofflaws.

This isn't to say that the apps should have some kind of special legal immunity. It's just that there are much smarter and more effective ways to protect consumers against potential harms. The trick is using the same techniques of real-time information access that the apps employ.