Protecting the Weaker Parties in the Platform Economy

Abstract

Known by many names – platform, sharing, peer-to-peer (p2p), collaborative economy, and so on - entirely new business models have emerged in recent years, whereby online platforms use digital technologies to connect distinct groups of users in order to facilitate transactions for the exchange of assets and services. This dramatic shift in business organisation and market structure has opened an intense debate on the persisting need for those regulatory measures that typically protect the weaker party in bilateral business-to-consumer transactions. Widespread calls for a more “levelled playing field” makes a strong argument for reconsidering the scope of regulation and delegating regulatory responsibility to the platforms.

The chapter calls into question these assumptions. It demonstrates that platforms make frequent use of boilerplate, architecture and algorithms to leverage their power over users - whether customers or providers - and that it is still not clear to what extent effective market-based solutions are emerging to tackle these issues. Part I illustrates the reasons for the alleged reduction of disparities, and it explains why such conclusion fails to fully appreciate the many grounds to the contrary. Part II scrutinizes terms and conditions adopted by online platforms to assess whether they mirror an imbalance in the parties’ rights and obligations. The article concludes that it is crucial to protect the weaker parties in these emerging markets, and it presents some brief recommendations.

Keywords: Platform Economy, Sharing, Collaborative, Peer-To-Peer, Consumer Protection, Boilerplate, Standard Form Contract, Bargaining Power, Market Failure

JEL Classification: K12, K20