Opinion

Uber: Congress’ New Private Driver

As the peer-to-peer economy continues to grow and push the boundaries of services and the regulations that govern them, one aspect of the debate adds a twist to the typical regulatory process. The people tasked with drafting the laws and enforcing the regulations are consumers as well.

Data from the Federal Election Committee (FEC) gives us a glimpse into the consumer habits of one key rule-making body – Congress.

Members of Congress, more specifically their campaign committees, report on a regular basis not only where they raise their campaign funds, but also how they spend them. Typically, this data is used to evaluate and offer additional context for analysis of campaigns and elections. In a report recently released by Hamilton Place Strategies, that data was used to understand how Congress has become a participant in the peer-to-peer economy over the past three election cycles through ridesharing.

In the 2010 election cycle, ridesharing was absent in political spending reports. Uber was only launched the summer before the election. Taxis, limos, rentals, and other car services were the only option for campaigns at the time (for simplicity’s sake, all types of car services besides Uber were referred to as taxis in the report). Because campaigns use car services for group transportation (coaches, buses, etc.), some charges can be significant purchases. Thus, the report limits its analysis to spending that is below $100.

In the 2012 cycle, as Uber was just getting started, there were only about 100 Uber rides for less than $100 on congressional campaign filings. This compared to about 2,800 low dollar taxi rides during the same period.

Fast-forward to the 2014 cycle and a monumental shift in the data occurs. At the time of the report, Uber had increased its number of rides to roughly 2,800, more than 25 times the volume of the previous cycle. During this same period of time, taxi use decreased by 33 percent, going from about 2,800 rides to 1,800 rides. Uber is now the dominant provider of rides; it is both taking more of the market in the low dollar ride space and expanding the overall market size. Congressional use of Uber increased form representing 0% of the market share in the 2010 election cycle to 61% of total Congressional rides in the 2014 cycle, while the overall market demand for rider services during campaigns has increased 84% from 2010 to 2014.

Many may question how this impacts Uber from a regulatory standpoint. Members of Congress represent only a small portion of the total number of lawmakers across the country. Additionally, many of the regulatory decisions in this space are being made at the local level, not in Congress.

However, it is likely that the same dynamics impacting Congress are also happening in communities across the country. Furthermore, as members of Congress become early adopters and consumers, they may exert an influence on their local counterparts when these local regulations are debated.

These dynamics also have significant implications for how regulators navigate the peer-to-peer economy. The nature of oversight changes when someone is both the regulator and the consumer. It is entirely possible that the personal interactions of regulators with innovative technologies will have an impact on how they approach regulating these technologies.

This debate surrounding peer-to-peer economies will undoubtedly be one of the most significant policy conversations of the coming decade. It will be addressed at all levels of government as many of these startups will become the new normal for what consumers expect.

Ride sharing represents only one part of an evolving peer-to-peer economy that is making it more efficient for consumers to get the goods and services they want when they want them. As this market continues to evolve, we will have to wait and see if politicians turn to Task Rabbit to help with “Get Out The Vote” efforts, or if AIRBNB replaces Hyatt and Marriott as the “hotel” of choice on the campaign trail, or if the next big campaign fundraiser is hosted at a Meal Sharing home instead of a restaurant.

One thing at this point is clear, however: Members of Congress have personally embraced peer-to-peer car services. They are voting Uber with their rides.

 

Tom Kise is a Director with Hamilton Place Strategies. His full report on Uber can be found here.

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