Uber, Lyft and the Rise of the Sharing Economy in Florida
10.27.15Popular ride sharing services Uber and Lyft have been operating in Florida for a year and a half, and residents have eagerly embraced this new form of transportation. Uber and Lyft are part of a new segment of the economy, often dubbed the “sharing economy.” The popularity of these companies and other asset sharing peer-to-peer services has spread not just across Florida or the United States, but all over the world.
In 2013, The Economist magazine estimated the value of this portion of the digital economy to be $26 billion. By 2014, venture capitalists estimated Uber’s value at approximately $18.2 billion dollars, and Uber’s CEO cited revenues that were doubling every six months as a basis for that valuation. Though that growth sounds extraordinary, forecasts are projecting the trend to continue. In ten years, experts estimate the total value of the sharing economy will hit $335 billion.
Despite a bullish outlook and warm welcome from locals, the initial reaction from local governments and law enforcement to the introduction of this new technology was not enthusiastic. In June of 2014 Miami-Dade law enforcement was running sting operations to catch drivers using Uber and Lyft to connect with users looking for rides. If drivers were caught using the service, they were fined as much as $2,000 and their cars were impounded. A year and a half later the relationship between these ride sharing services and local government is still on shaky ground.
Although the sting operations have ceased, individual counties are still locked in heated debates between consumers and other interest groups about how to deal with the regulation of this new business. In an attempt to bypass regulation at the county level, Uber lobbied the state legislature early this year to pass laws that would trump county regulations and establish the legality of the services statewide. In the House of Representatives, HB 817 sought to pre-empt all local regulation, along with imposing strict background checks and insurance requirements. In the Senate, SB 1298 and SB 1326 dealt mainly with insurance requirements and did not have a pre-emption clause. Despite wide support, both bills ultimately stalled and the session ended before either could be passed. The failure of the legislature to pass any new laws left counties in a perilous position, as they tried to manage the exponential growth of these services in the face of some vocal opposition.
That opposition, not surprisingly, is coming almost exclusively from taxi, limousine, and car for hire companies. Those companies argue that Uber and Lyft must be regulated as traditional taxicab companies to ensure public safety and fair competition. The proposed legislation, particularly HB 817, would alleviate concerns about safety as it requires existing insurance coverage gaps be closed and level II background checks for drivers. In reality, it appears the main concern of taxicab companies is the part about fair competition. In fact, those same companies have filed lawsuits against the State in Tallahassee and Broward County, alleging that Florida officials are not requiring Uber and Lyft to prove the accuracy of the way they calculate trip distances and charges. The lawsuit further claims that the state’s failure in this regard puts taxicabs at a competitive disadvantage.
On the other hand, public support for ride sharing is impressive. As of the date this article was written, a petition started by Uber to have the legislature take up and pass ride sharing laws during its special session has 65,290 signatures. The target goal for the petition was to obtain 50,000 signatures. Similar petitions are started each time a county tries to ban or regulate these companies. When Uber pulled out of Broward in July due to allegedly onerous regulations, a petition to change course and bring Uber back quickly gained 96,507 signatures. Broward County returned to the negotiating table and Uber has announced it will resume operations there.
Although Uber and Lyft are two of the most visible and powerful companies that make up the sharing economy, small startups are coming online all the time. As an example a Miami based company, Peer-to-Pier Technologies, LLC, recently launched BoatDay, an app aimed at bringing boating to the masses by connecting boat owners looking to subsidize their costs, with users looking to get out on the water.
BoatDay’s founder, Kimon Korres, believes this is a glimpse into the future of business and offered the following outlook:
- Sharing economy companies have created immense new sources of value simply by exploiting inefficiencies in peoples’ use of their own property. They can also scale online with relatively low costs, and quickly reach millions of users. Uber, Lyft and Airbnb have shown that when you get this combination right, rather than simply capture existing demand in a particular market or industry, you can create new demand on a wide scale, which is when you start to see these $1billion plus valuations in just a few years. While the many misses show that not everything lends itself to ‘sharing’, relative to the traditional business challenges of financing asset acquisition and building infrastructures, the structure and successes of many sharing models means they are unlikely to go away any time soon.
As a lawyer himself, Korres understands the legal wrangling surrounding this debate, but feels that it will ultimately get resolved in favor of innovation.
Whether Uber and Lyft’s opponents like it or not, at this point it seems that change is inevitable. As a legal community, we need to start getting ready for this shift as well. As use of these services grows and new services are invented, business opportunities will grow with them. Law firms throughout Florida need to be ready to meet the challenges presented by the sharing economy. Who will a Plaintiff sue when a ride sharing vehicle is involved in accident? What variables will go into that decision? Questions attorneys will need to ask could include any number of facts. For example, was the vehicle owner actually driving a user to a destination or just logged onto the app and waiting for a ride request? The same variables might be considered by a defendant trying to find insurance coverage or coverage counsel deciding what policy was triggered. Where might vicarious liability, if any, exist? What holes are there to plug or exploit to get clients the best result possible? Law firms ahead of the curve will be at a distinct advantage in tapping into that $335 billion dollar economy projected for 2025.