The Sharing Economy and Our Privacy

-- By AlanWong - 05 Mar 2016

Within recent years, consumers have witnessed and quickly adapted to the rise of the “sharing economy.” This term is used to describe a recent trend in the global economy, where new technology companies create a service or platform that connects customers with independent service providers. For example, Uber and Lyft connects commuters with drivers, and Airbnb connects travelers with lodge providers. Similar applications have been created for other areas such as grocery deliveries, car rentals, and housekeeping. Instead of facilitating connections with traditional companies like taxis and hotels, the sharing economy purports to allow the common layperson to become a proprietor by utilizing already owned items such as their cars or houses. This trend has been greatly embraced by consumers, with some of these sharing economy companies being valued at over a billion dollars. In embracing these new technologies and companies, both consumers and market participants are unknowingly volunteering a wealth of information that could potentially be misused. This information can include personal interests, physical location and tracking, and ownership of certain items. The two below examples show that this information can be abused by both the company and also accessed and potentially abused by government entities.

Uber and the “God View” Incident

In late 2014, the world learned that Uber allowed its employees to track its customers and view their travel logs through an internal application known as “God View.” . As part of this controversy, it was revealed that an Uber executive had tracked a journalist without permission and that the application was used to track customers during Uber’s Chicago launch party. It would take more than a year for corrective action to occur in January of 2016. Uber recently reached a settlement with the New York State Attorney General that included a paltry $20,000 fine, a commitment to encrypt and password protect geolocation data, and to limit access to the “God View” application.

While this settlement provides needed privacy protections for consumers, one wonders why such actions only occurred after the controversy and subsequent settlement with the New York Attorney General. While the origin date of the “God View” app is unknown, one could assume that it was used for quite some time before it was revealed to the general public. Furthermore, it may also be assumed that privacy safeguards such as encryption and limited access were not in place for the year before the settlement. Consumers should be incredibly wary of entrusting their privacy, which includes travel information, geolocation tracking, and payment information to a company that has demonstrated a cavalier and reckless disregard for protecting such information. While there have not been any known breaches and access to such information, one can never eliminate that such a breach has been undertaken by either hackers or government spying entities. Finally, Uber was the victim of a data breach in May 2014 where the names and license plates of possibly 50,000 of its drivers were downloaded.

Airbnb’s Settlement with the New York Attorney General

Within the previous example, the New York Attorney General was able to secure a settlement that advances privacy protections for consumers. On the other hand, state attorney generals may also be empowered to obtain and examine the wealth of information collected by sharing economy companies to identify potential lawbreaking. In 2013, the New York Attorney General initiated an investigation into Airbnb to determine whether hosts in New York City were violating the Multiple Dwelling Law and circumventing a hotel tax. See Airbnb, Inc. v. Schneiderman, 44 Misc. 3d 351, 356 (Sup. Ct. 2014). As part of this investigation, the Attorney General issued a subpoena that would require Airbnb to supply a spreadsheet that would include information on all New York City hosts, their listings, and their gross revenue. Id. at 354. After a lengthy legal battle, Airbnb agreed to relinquish this information with the one concession that the information was anonymized.

With this information in hand, the Attorney General released a comprehensive report in October of 2014. Despite the information being anonymized, the report’s methodology shows that officials were able to nevertheless reach a very high level of specificity for the majority of listings through the use of available government databases.

The report is then able to release information that demonstrates that a large majority of New York City Airbnb listings violate the law and are in fact illegal hotels. During this investigation period, more than a hundred New York hosts were upset to learn that Airbnb would be handing over information about them to the New York Attorney General unless prevented by a court.

This incident is an illuminating illustration of the power that the state wields in obtaining private information from a private company. Furthermore, this demonstrates the sophistication and ability that state officials possess to analyze data even after it has been supposedly safeguarded by anonymizing the information.

Conclusion

The rise of the sharing economy has been a boon for consumers as it creates more affordable choices. However, consumers are also entrusting a massive amount of trust to these sharing economy companies to protect their privacy. As the incidents with Uber and Airbnb demonstrate, consumers should not be so trusting of such companies. As seen within the Uber example, a company can gain an immense amount of information about consumers, which can be misused by the company. The Airbnb example is important because it demonstrates that such collected information is not beyond the reach of government. Even when such information is anonymized, the state has already shown that it is nevertheless able to narrow this information down with startling specificity. What happens if a government entity one day seeks to obtain all of Uber’s data for a certain location known to sell drugs in an attempt to locate potential purchasers? Sharing economy companies need to prove that they are protecting the information we provide as we utilize their services from both internal and governmental abuse

-- AlanWong - 12 May 2016