Digital economy businesses have grown rapidly in the last 10-15 years, transforming how we work, travel, consume, and contract workers. Some impacts have been problematic, with growth of short-term lettings platforms reducing access to housing, and gig economy platforms increasing the precariousness of work. In this article, Dr Luke Yates outlines research findings on how platforms have approached regulation, and proposes policy changes in this area.

• Statutory lobbying registers are needed in the interests of good governance, transparency, ethical lobbying, and in order to be able to regulate properly.
• In order to protect housing and employment, government should provide the means for councils to take action to stop further losses of housing to short-term accommodation platforms.
• The UK is in the process of regulating short-term lettings (STLs): regulation should not be watered down or delayed, as losses to housing stocks through turning long-term accommodation homes into STLs will continue until changes are made and councils are given the powers they need.

Digital innovation and platform economies – initial promises versus current challenges

A lot of potential benefits were predicted or promised from digital innovation in commentary about the ’sharing economy’. Following the global economic crisis, it was hoped that platform businesses might lead to new sources of income and even hold benefits for communities and the environment.

But as digital innovations have led to new practices and businesses, policymakers at local, national and international levels have encountered challenges including lack of information or reliable data about digital platform businesses and their impacts, lack of cooperation from businesses in complying with existing or new regulation, and difficulties in understanding what people affected by these businesses need.

Our research – ‘lean platforms’ and ‘corporate grassroots lobbying’ 

My research examines the conflicts and negotiations around ‘lean platforms’ such as Airbnb, Uber, Deliveroo, Uber Eats, Taskrabbit, Upwork, and others, but focuses especially on Airbnb and Uber. It finds that there is a typical trajectory of digital platform business regulation. Firstly, platform businesses begin to operate in a jurisdiction often without permission, scaling up rapidly and with generous incentives in order to build a local market and a large number of users. Secondly, they deal with potential regulation around housing loss, safety, or employment rights, using robust public relations tactics and mobilising their now numerous users and allies to attempt to reshape proposals. Thirdly, they work hard to slow down legislative processes or make the enforcement of existing or new regulation difficult or impractical.

In this way, digital platforms have lobbied extensively to avoid regulation and protect their advantages, often including using opaque and innovative approaches known as ‘corporate grassroots lobbying’, where platforms mobilise their users and allies against legislative proposals.

Platform power 

‘Corporate grassroots lobbying’ (CGL), also known as ‘platform power’ refers to a set of corporate practices where civil society tactics are used by businesses. Until recently they were mainly practised in North America and, most prominently, were used by tobacco, pharmaceutical, food and drink, and fossil fuel companies. But many platforms have used their access to customer and worker data in profiles and apps to contact their users, or have partnered with NGOs or charities, to guide people to petition, protest, engage in media actions, or otherwise lobby decision makers.

It is very difficult to detect corporate grassroots lobbying, as it is often presented as independent of companies, allowing platform businesses to shape and manipulate public debate and opinion and lobby policymakers in ways that deliberately hide the support and influence of companies. The research, which uses interviews with former platform employees across 14 national contexts and collates secondary data from examples across the world, shows how this has been done, especially by Airbnb but also by most other platform economy sectors, and the governance problems that it creates.

Challenges and risks 

All new business types create challenges as well as opportunities. With digital economy businesses so far, the main challenges have been loss of housing to entire-home STLs, and the gig economy platforms increasing precarious employment.

There are also issues around taxation, safety, unfair competition, congestion and over-tourism. It is important to listen to stakeholders affected by businesses, who feel their voices have been drowned out by business, lobbyists, and the users of platforms.

The risk of the development of corporate grassroots lobbying, as with the rise in misinformation, ‘bots’ and ‘deepfakes’, is that democratic processes are misused and subverted, making things harder for policymakers and citizens, and impacting on trust, participation, and good governance. Without transparency from businesses around their lobbying, it is also difficult for policymakers to do their job in evaluating public support for different legislative approaches.

Currently, many practices of platform power breach standards for responsible lobbying practices as set out by leading anti-corruption and open governance NGOs such as Transparency International. These warn specifically against ‘hidden and informal influence’, described as ‘activities … specifically designed to confuse and conceal their true origins and beneficiaries from public decision-makers and any external observers. At the more extreme end, this includes acting through front organisations’, a practice that has become common among platform businesses.

Recommendations, regulations and resources

A key recommendation for the new government is the creation of statutory lobbying registers that include corporate grassroots lobbying. Campaigners have recommended a statutory (mandatory) register of lobbying, as used in the United States, Germany and several other contexts. In contrast with these contexts, however, it must include a distinct category for funds spent on grassroots lobbying or what is sometimes called ‘indirect communication’. It would have a spending threshold or a size of business threshold designed to exclude smaller campaigns; companies would need to reveal their civil society ‘clients’; and the register would need to include in-house as well as consultant lobbyists.

The second recommendation is around STL rules which were announced in February 2024 by the Conservative government not implemented due to a lack of legislative time before elections. This regulation has many positive elements to it, including requiring planning permission for future short-term lets, and giving councils the right to refuse permission for properties to be changed from residential dwellings to short-term lets. However, the new government have not yet commented on this, whilst Airbnb continued to commission and publish research by consultants, suggesting the company has little/no impact on UK housing, contradicting a substantial body of independent academic research showing the links between increases in Airbnb numbers, rent increases and expulsion of long-term residents.

The proposed regulation fails, however, to tackle numbers of existing short-term lets, which in some coastal areas account for up to one in three homes, nor the favourable environment for short-term lettings in terms of taxation. Government, and all policymakers, should lose no more time in implementing new legislation nationwide, and aim to reduce further losses of housing to Airbnb and other platforms. The legislation should require consultation with councils about their needs, which might need to include plans for reducing numbers of short-term lettings in their areas to claim back long-term housing.

A third, related recommendation considers, when the above regulation is passed, what resource is available for local governments to monitor and enforce this regulation locally. A non-departmental body is needed to help deal with additional capacity needs in planning work and enforcement generated by this change, to support planning enforcement officers with investigations and breaches.

In the case of short-term lettings platforms this could be crucial in protecting housing stocks from uncontrolled continued expansion of listings.