On the arrival and operations of Uber and Airbnb in Brussels Capital Region: A narrative of market and non-market aspects of the business

The arrival in Brussels Capital Region of Uber and Airbnb, two major players in the sharing platform economy, has not remained unnoticed. Especially governments and competitors have paid close attention to the way both companies have made inroads in the market, witness the broad media coverage and scholarly interest. While both companies are known for their contribution to digital disruption, they also have had a major part in reshaping the market and institutional playing field, in the hopes of increasing market share and gaining acceptance among governments, users and other actors of the platform economy ecosystem.

Responses by the Brussels government and direct competitors such as taxi industry and hotel industry, have been strikingly divergent, depending on how Uber’s and Airbnb’s actions tended to interfere with the agendas of those industries. Uber’s arrival has come with more tensions than Airbnb’s arrival. The fact that both companies use technology and infrastructure in different partly explains this difference. As a result, issues of competition, legality, employment, and taxation, and the unavoidable disputes that revolve around these issues, have different meanings and outcomes in ridesharing and home sharing.
With our contribution, we aim to bring together insights from our ongoing and completed research on market and non-market strategies in the sharing platform economy in Brussels Capital Region. We initiated the research to meet a need for exploring sharing platform businesses in the Brussels context and to better understand how these app-based technology companies interact with other actors in that context. By mapping this context, we may identify the main challenges and opportunities for governments, incumbents, and for sharing platform companies seeking their way in the market.

The main purpose of our contribution is 1) to compare market and non-market strategies of Uber and Airbnb, as they expanded into the Brussels market; 2) to identify the major institutional benefits and challenges that emerged from their market expansion; and 3) to identify the institutional and strategic responses that the Brussels government and the incumbent taxi and hotel industries addressed to the sharing platform companies.

The findings in brief show that Uber and Airbnb employed market and non-market strategies in tandem to broaden their scope of operations and increase legitimacy in the Brussels market. Yet, a closer look at the results reveals a more differentiated picture. More specifically, Uber’s arrival was more conflictive than Airbnb’s arrival. Uber had to face protests, strikes, and legal complaints by the taxi industry over issues of unfair competition, licensing, legality and employment. Airbnb mainly had to confront disputes over issues of tourist taxation, data sharing, and the negative impact of the home sharing business on the quality of local community life and on real estate prices. Also, the establishment of regulations towards a level playing field made more progress in the home sharing than in the ridesharing segment.

The Brussels government, as evidenced, has alternately accommodated either newcomers or incumbents when it came to regulatory and legislative matters, although this alternating support was more pertinent in ridesharing than in home sharing. The different governance levels –European, national, regional, and city level– were another challenge for Uber and Airbnb, having to cope with a complexity of rules of the game in Brussels. Also noteworthy is that right-wing politicians were more favorable to platform entrepreneurs and legislative reforms than left-wing politicians, further challenging the decision making.

We recommend policy makers to be more proactive in creating a level playing field that reconciles the interests of both platform businesses and traditional incumbents. Innovative business models will continue to mark the future, whereas old and new sectors will eventually transform and, as it seems, converge towards new market outcomes. The spillovers that we observed between ridesharing and ridehailing, but also between homes haring and hotel, industry indicate that old and new businesses tend to mimic one another’s strategies and imitate technologies to find their way towards a common playing field. It is the government’s role to not lag behind in how this digital ecosystem is getting shape, while it is platform companies’ role to develop strategies that help to liaise with governments, rather than fixing institutional issues afterwards. Both Uber and Airbnb hold the potential to promote the urban sustainability agenda, to foster small business entrepreneurship and to create employment. The government should work towards a good balance between fair and sufficiently strict rules, on the one hand, and a minimum of bureaucratic burden on hosts and drivers, on the other hand, to ensure that also smaller players, such as home sharing hosts, can remain in the game.