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 phenomenon to the global economy can be best explained by listing some of the most prominent examples: Airbnb, Lyft, and Uber. These companies act as a sort of middleman by providing the technological platform, empowered by the internet and smartphones, that connects prospective consumers with nearby service providers. As the middleman and proprietor of the platform, sharing economy companies are able to collect a wealth of information about a specific industry and consumers on a global scale. At the same time, consumers have started to become aware of and concerned about intrusions into their technological privacy by entities such as the government, as evidenced by the ongoing fight between Apple and the FBI. Unfortunately, two previous incidents should warn consumers against assuming privacy and safety when dealing with sharing economies.

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:

"NYAG also conducted a second-level analysis of the Reviewed Transactions using New York City’s Geosupport Desktop Edition. By geo-locating the building addresses associated with the 35,354 unique units in the Data, NYAG identified the unique Borough, Block, and Lot (“BBL”) identification number for all but 3,138 unique units. The BBL numbers allowed NYAG to search for the units in the Primary Land Use Tax Lot Output (“PLUTO”) database, which identifies the type of building for zoning purposes."

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. While much more could be written on this subject, this immense power is derived from a concept known as the “Civil Investigative Demand” which essentially grants a state attorney general the power to engage in various discovery powers to uncover wrongdoing without the need for a pending trial or official complaint. See e.g., Mass. Gen. Laws Ann. ch. 93A, § 6. 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. Companies, such as Uber, may show an internal disregard for everyone’s information that could prove dangerous if leaked. The Airbnb investigation warns consumers that the state has numerous powers that would allow it to legally access such information.

-- AlanWong - 05 Mar 2016