As downtown Austin was transforming for the first day of the more raucous South by Southwest Music Festival, the SXSW Interactive Festival’s last day had many legal-related sessions taking place in quiet, air-conditioned rooms across town. The three I attended shared common themes of privacy and personal freedom, liability, and the impact on technology and innovation.
Law and Policy Fundamentals of the Sharing Economy
As the first SXSW continuing legal education session of the year, Washington, D.C., attorney Gerry Stegmaier defined the “sharing economy” as individuals borrowing or renting access to assets and services, often with platforms connecting the individuals. Uber and Lyft, Airbnb, Rover, and Fiverr are all examples of the sharing economy, which the PwC predicts could be worth $335 billion by 2025.
“The sharing economy can bring you tremendous experiences, but who is responsible when something goes wrong?” Stegmaier said, touching on one of the main questions faced by lawyers representing the platforms and users. “The answer typically is always, ‘It’s a gray area.’”
According to Stegmaier, the platforms say they are just software companies that create an environment in which the peer to peer exchanges can happen—and thus aren’t responsible for injuries at properties rented via Airbnb, assaults by drivers of Uber, or even treating workers as employees instead of contract laborers. But the critics claim this less regulated environment enables the businesses to operate at the margins and undermine local needs and effective governance.
Still, Stegmaier explained that many times when local officials have sought more stringent regulation, grassroots efforts by the companies and their fans have led to the politicians backing off. In California, for example, Uber was suspending drivers who registered their cars as commercial in an attempt to comply with Department of Motor Vehicle regulations. The DMV initially sided with drivers but then backpedaled and agreed with Uber that drivers are using their cars as personal vehicles.
Sometimes, the platform will see value in establishing more trust with its users, such as Airbnb’s decision to implement $50,000 host insurance and a customer hotline.
Stegmaier shared his top practical considerations for practicing lawyers who represent sharing economy companies:
- Risk management
- Lawyers should decide what happens if things go wrong and what can go wrong—and shouldn’t just say “No you can’t do that.”
- Agreement design and drafting
- This can help mitigate risks.
- Entity structure
- In the future, Stegmaier thinks a lot of sharing economy platforms will become nonprofits and co-ops, which will create opportunity for small-firm lawyers.
- Legalities and taxation of exchange
- Securities regulation
- This is very important for crowdfunding operations.
- Employment regulation
- Are the providers of the goods and services ever employees?
- Regulation of production and commerce
- Relationships with and use of land
- Intellectual property
- Derivative works, copyright issues
- Who owns the rights when it’s a collaboration?
How to Fight ISIS Without Breaking the Internet
Featuring four human rights and terrorism experts, this panel was full of timely and invigorating discussion on what the public, Internet companies, and the government could do to better address online propaganda by groups like ISIS.
All four panelists agreed: Policymakers around the world are taking the wrong approach by persuading companies like Twitter and Facebook to censor terroristic activity on their sites—conversations that often happen with little transparency to consumers.
“Never before in history has one person been able to affect the globe in such a manner, and people are justifiably freaked out,” said Shahed Amanullah, CEO & Co-Founder of startup Affinis Labs that focuses on businesses with positive social impacts in global Muslim communities.
Amanullah listed several causes of ISIS’s recruitment, including—in addition to their slick videos and magazine articles—economic destabilization, minorities in West feeling more marginalized, and technological change. But, he said, the only way to confront their online messaging is by dispersing more powerful messaging—not by trying to take down all of their communication.
“We have to respect what the Internet does for people that is incredibly positive,” he said.
Lisl Brunner, policy and learning director of the Global Network Initiative, said that due to human rights concerns, we must use the least intrusive means possible to solve the problem. She agreed that we should be putting more effort into counter messages.
In many countries, Brunner said, terrorism speech laws are used to stifle speech of political rivals. At the same time, there are more and more proposals to hold companies liable for content that users post on their sites and some countries have held companies criminally responsible for failing to delete material that has been deemed terroristic. These approaches are problematic, she said, because they violate due process. Instead of law enforcement taking content to a judge, government actors flag the content and say it violates the company’s terms of service and that they should take it down.
Rebecca Mackinnon, director of New America’s Ranking Digital Rights project, said that some social media companies are responding to political pressure by putting more language about terrorism content into their terms of service. But, she said, the companies don’t share data on terms of service enforcement activities with the public.
“Governments are turning to these terms of service because it’s difficult to pass legislation,” Mackinnon said. “But there’s no transparency about this.”
All of this is hurting free speech and silencing authentic voices who might happen to be critical of extremism as well as their own government’s actions. “The problem is that when you require companies to censor their content and threaten them if they don’t, the companies go overboard and over-sensor. A better long-term response is to let counter messaging thrive.”
Policies Impacting Drones and the Future of Flight
Two drones experts and one Federal Aviation Administration official discussed the state of the drones industry at this panel sponsored by the Consumer Technology Association. The takeaway? The industry would prefer that government implement loose regulations so that drones technology and innovation can thrive; the FAA, on the other hand, is listening more to the industry and improving their relationship, but at the end of the day, its top concern is public safety.
Marke “Hoot” Gibson, the FAA’s senior adviser of unmanned aircraft systems, told the audience of drones company representatives, attorneys, and other stakeholders that a final rule regulating non-hobbyist drones is expected in late Spring 2016, at which point the number of commercial drones will likely surge. Based on feedback received during the comment period, there will likely be a separate rule issued for “micro” drones weighing less than 4.4 pounds. Until this happens, all commercial drones flyers should still apply for a 333 exemption.
Gibson also said that the FAA’s Pathfinder initiative is making progress in the areas of rail, power lines, agriculture, and more to push beyond visual line of sight, such as drones being able to quickly observe BNSF Railway derailments.
Greg McNeal—co-founder of AirMap, which helps the industry understand and navigate the national airspace—said he had long been an FAA critic but is seeing a change in the administration, partly due to industry lobbying. A rule for micro drones, for example, would enable solo entrepreneurs and small businesses to use these devices for commercial reasons.
“The FAA is really starting to understand the utility of these devices and is starting to open things up.”
Jon Resnick, policy lead for drones company DJI, touched on the intersection of innovation and risk. He said that the 333 exemption process is overly burdensome and drastically slows innovation while also decreasing public safety by pushing some drones flyers to ignore the regulations altogether. Good rules that industry likes, he said, will enhance safety and compliance.
Resnick said that to create good policy, the government should apply realistic standards to drone aviation, which so far has seen very few dangerous incidents. “In the past, we were expecting [drones] to operate in a safer zone than manned aircraft.”
McNeal echoed this sentiment, saying that the main question is: What level of risk are we willing to take on? As examples, McNeal mentioned that thousands of people swerve into traffic on bicycles and people are injured with chainsaws. He would prefer to see very loose regulations and let industry standards and policy catch up afterwards.
“Lets allow innovation to take flight,” he said.
To respond for the FAA, Gibson stressed that “the key way forward is partnership” with industry but to do so safely. “We all put our families on airplanes and don’t think twice about them arriving safely,” Gibson said. “What we’re witnessing now is the most fundamental change in aviation in our lives. We take our public trust very seriously. So—innovate, but safely.”
When asked about the existence of both federal and local regulations on drones, Resnick said that the FAA has the final word about how national airspace is regulated so he says these local and state rules are questionable and expects them to eventually be preempted. He singled out the Lone Star State, the home of SXSW, saying that Texas laws on drones are “innovation crushers.”
Far beyond city and state rules, what about international rules governing drones? All panelists agreed that something uniform will eventually be needed. With that, Gibson touted the respect that he said other countries have for the administration’s work: “Global partners want to know what direction the FAA is going.”