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Is the Sharing Economy Joining the Legal Mainstream?

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By Casey C. Sullivan, Esq. on May 18, 2015 11:09 AM

It's a whole new world for the sharing economy, as the Philippines issued new regulations for ride-sharing services such as Uber and Lyft, last week. Though other countries have taken action on ridesharing services -- Uber has been banned everywhere from Eugene, Oregon, to all of Thailand -- the Philippines is the first nation to develop ridesharing specific regulations, according to Reuters.

In an industry that has often operated by bumping up against the margins of the law, the new regulations could help further institutionalize the sharing economy. If successful, they may be a model adopted by other jurisdictions looking to regulate such services.

First of Its Kind Accreditation System

Under the regulations, newer private vehicles can be accredited and allowed to operate for ride-sharing companies. The accreditation system is meant to spur modernization and innovation in the Philippines' taxi industry, according to the nation's Transportation Secretary. It's also meant to help alleviate some of the congestion that plagues Manila, one of Asia's most gridlocked cities, and which results in millions of dollars of productivity losses every day.

Uber has been opposed by the traditional taxi industry in the Philippines, as elsewhere. The head of the national taxi organization, which represents many of the 27,000 cabs in Manila, has threatened to sue the government over the regulations.

Normalizing the Sharing Economy?

How this will impact Uber remains to be seen. Part of the company's success has been the legal and regulatory gray area it has occupied -- allowing it to avoid the same regulatory schemes applicable to the traditional taxi industry. The view that Uber and other sharing economy startups operate outside the rules is also behind much of the animosity they face. Will the regulations help to quell some of that controversy and normalize such upstart companies?

Perhaps, though many sharing economy services will still face opposition. Over the past years, the billion dollar start ups have come under greater regulatory scrutiny, as with the crack down on Airbnb rentals in New York City. Much of this scrutiny focuses on making sure the companies comply with existing rules, but some jurisdictions, like San Francisco and now the Philippines, are moving to adapt their existing rules to the new economies.

In-house counsel whose companies are competing with or embracing the sharing economy -- or just lawyers who like to take an Uber every now and then -- should pay attention to the developments in the Philippines. They could inspire similar regulations elsewhere.

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