What can Uber learn from Airbnb in international expansion?

As Silicon Valley's hottest startups with a valuation of over 10 billion dollars, Uber has encountered setbacks on its international expansion, while Airbnb has encountered fewer troubles. Why is this the case? What can Uber learn from Airbnb? Foreign media recently wrote an article to explore this issue, saying that Uber's strategy is very different from Airbnb's. The latter knows how to win over and cooperate with regulators, while Uber always has an attitude of "Come and arrest me if you can", putting itself in a hostile position with regulators everywhere.

Paris taxi drivers protested against Uber's cheap ride service UberPop last week.

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Paris became the most popular destination for tourists last week when Airbnb surpassed 400,000 listings in the city, prompting Paris government officials to applaud the innovation it brought to the city's hotel industry.

Ride-hailing app company Uber didn't have a good time in Paris last week.

Thousands of Parisian taxi drivers took to the streets to protest UberPop, Uber's cheap ride service, similar to UberX in the United States. French politicians publicly accused the company of violating the country's traffic laws. Two Uber executives were detained by police and charged with operating an illegal taxi business. Last Friday, Uber announced that it would suspend UberPop operations throughout France.

Uber and Airbnb have a lot in common. Both were born in San Francisco and are hot newcomers in the instant response economy. Both are highly sought after by investors and have completed multiple rounds of huge financing, with their respective valuations already in the tens of billions of dollars. Both are using financing to expand rapidly around the world.

However, the two companies’ divergent paths in France highlight their different strategies for dealing with regulators around the world. Since launching in 2009, Uber has taken a “catch me if you can” approach to cities in Europe and elsewhere, while Airbnb, which has more rooms than traditional hotel groups, has tended to court local officials in most of its hot markets.

So far, Uber’s approach hasn’t significantly slowed the company, which operates in more than 300 cities in nearly 60 countries and is valued at more than $40 billion. But its aggressive approach has put it in hostile positions with regulators in many cities that are critical to its global ambitions.

"These startups generally don't think much about government regulation at the beginning," said Thilo Koslowski, an executive at market research firm Gartner. "They just go out and strike hard, and then they see what they can do. As they mature, they will change."

Airbnb’s approach

Airbnb has also been troubled by regulatory issues and has been affected by them. It faces severe restrictions in American cities such as New York, and some local policymakers say that Airbnb rentals may lead to a reduction in the city's long-term housing supply. Last year, Airbnb was fined for the first time in Europe for violating regulations in Catalonia, Spain, that prohibit the rental of personal homes for travel purposes. Airbnb is appealing the $33,000 fine.

But overall, Airbnb's attitude is to cooperate with regulators rather than fight them.

A few months after Airbnb was founded in 2008, local rental listings in France began to appear on the Airbnb platform. At first, the startup had little contact with local regulators because few of them could understand its business. In 2012, shortly after the rapid increase in rental listings in Paris, Airbnb established an office in the city and began to meet regularly with the local government. Airbnb continued to do so in 2013, when the government was discussing the formulation of new rental regulations.

Now, to combat illegal vacation rentals, a team of Parisian investigators conducts regular inspections and imposes fines of up to $28,000 on offenders. Airbnb supports the implementation of this regulation. In addition, by the beginning of 2016, the company will collect a tourist tax from its users on behalf of the Paris government. Paris will thus become the second city in Europe, after Amsterdam, to offer that service.

Dealing with regulators “is about finding partners within government who really understand the sharing economy,” said Patrick Robinson, Airbnb’s head of European public policy. “We want to explain to them what’s going on because they’re going to want to regulate it in the future.”

Aggressive attitude

Uber began operating in France in late 2011, saying it was difficult to get meetings with French officials at first. Two years later, lawmakers are trying to curb its service, proposing new rules that would require any ride-hailing service like Uber to wait at least 15 minutes before its driver picks up a new passenger, giving traditional taxi drivers a first-mover advantage.

Uber executives began meeting more regularly with French lawmakers last year as part of an effort to improve relations with regulators. But by then it was too late. Uber faces a tough situation in France as the well-connected taxi industry continues to put pressure on the government.

France this year began to implement a new traffic law that requires all drivers to have a professional license and restricts drivers from using location software to display the location of their cars. These regulations essentially mean that UberPop drivers cannot operate legally. Germany, Spain and the Netherlands have also banned Uber's cheap taxi service, saying it creates unfair competition for traditional taxis.

Last month, Paris taxi drivers strongly protested against UberPop, and riot police were dispatched to mediate

Uber then continued to operate UberPop in France, arguing in local courts that current traffic regulations were unconstitutional. However, French police began issuing tickets to some UberPop drivers. During the investigation, the company's offices were attacked in March. Faced with a new round of protests, Uber was forced to suspend the UberPop service last Friday.

“We are providing citizens with an alternative to travel,” Uber’s public policy director Antoine Aubert told European politicians last week. “Our operations are limited by untimely regulations in countries like France, Spain and Germany.”

Uber's problems worsened last week, with taxi drivers collectively blocking roads, burning tires and attacking people they thought were Uber drivers. Two French executives of Uber were also detained and charged with "deceptive business practices" and illegally organizing taxi services through Uber's cheap services. They will go on trial in September.

After anti-Uber protests spread across the country, French Interior Minister Bernard Cazeneuve said: "Modernisation is about innovation, quality services, the sharing economy, not the black market work and clandestine work organized by Uber that is illegal."

Uber has shown more willingness to engage with lawmakers in recent months. At a meeting in Munich in January with many European officials, Uber CEO Travis Kalanick said Uber wanted to find a way to operate legally in the European Union. He said the company would create up to 50,000 new jobs for drivers if it was allowed to operate.

However, recent events in France have shown that the company sometimes acts too impulsively and ignores the opinions of the legislature.

"Any government can shut you down, so you have to accept the regulatory game," said Gerald R. Faulhaber, professor emeritus of business economics and public policy at the Wharton School of the University of Pennsylvania. "You have to work with regulators. There's no getting around it."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.