Civic Innovations

A few months ago, I dug into the issue of how state and local governments regulate sharing economy companies that operate in their jurisdictions. I argued that open data should play an key role in a new regulatory approach for these 21st century companies.

With a new battle over how the sharing economy is regulated taking shape in the City of Chicago, I’m more convinced now than ever that open data can and should play a central role in how governments regulate this new breed of companies.

In my original post, I argued that one way to use open data to help local governments efficiently regulate sharing economy companies was to require them to submit data to the regulating government, possibly as open data on the government’s very own open data portal.

Thinking about it now, I think sharing data the other way may actually make more sense.

The City of Chicago, like other cities where Airbnb is active, requires a permit for short-term rentals. The compliance rate for these permit requirements is dismally low – that makes sense when we consider that there is really no incentive for Airbnb hosts to obtain a permit. Using the Airbnb service without one is quite easy.

“Uber is a technology company that develops applications that connect riders…”

— Legal statement on Uber website

Sharing economy companies self identify as “technology companies.” To be clear, they insist that they are not dispatch companies (in the case of Uber) or hoteliers (in the case of Airbnb) that just happen to make heavy use of internet technologies. They position themselves not as the providers of a service, but as software companies that connect those that are in need of a service with others that can provide it.

Cities like Chicago, San Francisco and other places where Airbnb is active usually have open data portals. These portals typically come with built in APIs and extensive user documentation. As such, it seems to make a lot of sense for these cities to publish their short-term permit data on their open data portals and ask Airbnb to verify the existence of a valid permit via this API before letting a host list a property on their site. *

For companies that self identify as technology companies, making a simple API call during the listing process to ensure a user is properly permitted should be pretty easy.

This approach has some very attractive qualities for cities. First, it would require almost no additional investment in technology to work. Cities like Chicago, San Francisco and other places already have the digital infrastructure in place to support this approach – open data portals.

Second, requiring Airbnb to verify the existence of a valid permit before a host could list a property would immediately incentivize users to comply with existing city permit requirements. The number of permits issued would jump dramatically almost overnight.

Third, by making short-term rental license data available as open data (and requiring Airbnb to use this data) citizens would have enhanced insights into their own communities. They would be more aware of short-term rental activities in their building or their neighborhood and could hold both Airbnb and city officials accountable if need be.

The question of how to regulate sharing economy companies is an important one for city governments and the communities they serve. Open data should play a central role in how regulations are constructed. Many cities are already armed with the digital infrastructure they need to implement effective regulatory approaches for this new breed of companies.

They just need to start using them.

* Some cities may already publish short-term rental license data on their open data portals. Those with permit requirements for short-term rentals that do not already publish this data should be encourage to do so.