Julius Baer Research | Marketplace companies active in the Sharing Economy such as Uber and AirBnB (both not listed) are combining social networks, Big Data analytics and mobile accessibility. Last week, the European Commission (EC) issued guidelines to harmonise the often wildly different treatment faced by businesses trying to shake up sectors ranging from accommodation to transport across the Eurozone.
Sharing economy platforms have been struggling in some European countries often facing bans and lawsuits.
The issued guidance is not particularly friendly to sharing economy platforms, but it establishes a unified approach that will give platforms the ability to better project future growth and expenses, alleviating the absolute regulatory uncertainty. Interestingly, the EC also estimated that gross revenue generated by sharing economy platforms amounted to EUR 28 billion last year, while the market potential is being estimated at EUR 500 billion.
Furthermore, only 17% of consumers have participated in the sharing economy in Europe so far, pointing to plenty of potential for future growth. We still believe that mobile platform owners will benefit from the continued growth in the sharing economy and we advise investors to stick to companies that have already adapted a peer-to-peer platform model and avoid companies that are not able to scale or open up their business model.
The European Commission issued guidance to mitigate bans of sharing economy activities in European countries. This is a positive sign for marketplace companies.