How will Uber, Lyft and Airbnb fare under Trump?
Donald Trump has been clear about his stance on certain issues: Illegal immigration, build a wall. Jobs, keep ‘em local. Obamacare, repeal.
What we don’t know much about yet are his views on a number of tech topics.
Take the on-demand, or sharing, economy companies such as Uber, Lyft, Airbnb and TaskRabbit, which let people rent out their homes or cars or offer personal services through an app or website. Politicians’ stances on issues like regulation, trade and taxes can make or break these businesses. The people in office matter.
Case in point: California lawmakers last month drove Uber’s self-driving car project out of the state because the company didn’t see a need to be regulated. Arizona welcomed the autonomous vehicles, saying Uber could do as it pleases. Then there’s Airbnb. While cities in New York, California and Washington have laid out strict rules curtailing the home rental company’s operations, states like Louisiana and Arizona have taken a more relaxed approach.
Trump, who on Friday becomes the 45th US president, hasn’t publicly shared a lot about his views on these types of companies, but for clues we can look at his general policies, along with the people he’s picked to serve as his secretaries of labor and transportation.
“There is no doubt he understands the sharing economy, and as a hotel/resort operator, he certainly gets the Airbnb, Uber and Lyft models,” said Kathleen Smith, principal at Renaissance Capital, which helps institutions invest in newly public companies. “I am not so sure his new policies will be that helpful to the sharing companies, in particular the ones that are growing at breakneck speeds.”
Trump has had a rocky relationship with the tech industry, having taken public jabs at Facebook, Microsoft, Amazon and Apple, among others. Last month, however, he offered the industry an olive branch when he hosted a who’s who of tech executives at Trump Tower. Separately, he announced that Tesla Motors CEO Elon Musk and Uber CEO Travis Kalanick would join the President’s Strategic and Policy Forum -- a business advisory group comprising CEOs of some of the biggest financial, retail and consulting companies in the US -- as Trump advisers.
“I look forward to engaging with our incoming president and this group on issues that affect our riders, drivers and the 450-plus cities where we operate,” Kalanick said at the time.
The Trump transition team did not respond to a request for comment for this story.
Appointees on deck
But one person can’t shape government policy by himself.
That may be one reason Uber looks favorably on Trump’s nominee for transportation secretary, Elaine Chao, known for supporting the on-demand economy and deregulation. Previously the labor secretary for George W. Bush and deputy secretary of transportation for George H.W. Bush, Chao will oversee the rules governing self-driving cars -- something Uber and Lyft are banking on for success.
“Ms. Chao’s knowledge of transportation issues is extensive,” said Niki Christoff, Uber’s head of federal affairs. “We look forward to working closely with her.”
Lyft echoed Christoff’s sentiments. The company’s head of policy communications, Adrian Durbin, said Lyft has the “utmost respect” for Chao, calling her an “accomplished public servant and highly capable leader.”
Trump’s pick for labor secretary, Andrew Puzder, is CEO of the company that owns the Hardees and Carl’s Jr. fast food chains. He is known for being pro-entrepreneur, a fan of deregulation and a critic of minimum wage hikes. His stances could benefit on-demand companies whose businesses rely on contract workers.
“Both Democrats and Republicans spent much of 2016 talking about how to help the middle class. Airbnb helps middle-class families by allowing them to use their house -- typically their greatest expense -- to generate supplemental income,” Airbnb spokesman Nick Papas said.
But while Trump and on-demand companies could see eye-to-eye on government regulations and taxes, say analysts, they may face some sticking points on tech’s impact on jobs.
“The upside is an administration that is more friendly to bringing down regulatory barriers,” said Arun Sundararajan, New York University professor and author of “The Sharing Economy.”
“The potential downside is an administration that may start to put in place policies that slow the pace of job displacement through automation, which could thwart Uber’s, and eventually Lyft’s, long-term plans,” he said.
Here’s a short list of top issues that could affect on-demand companies.
Regulation
Uber and Lyft have battled lawmakers across the country about being able to operate without having to adhere to laws about background checks, carpooling and autonomous vehicles. Airbnb has butted heads with legislators on rules governing home rentals.
Trump has been disdainful about regulations, too.
“I don’t like regulation, I don’t like regulation, I’m not a person that believes too much in regulation,” Trump said in an October 2015 interview on CNBC when asked about Airbnb. He added, however, that he wouldn’t allow tenants in his buildings to rent out their homes on Airbnb.
Bottom line: Trump and on-demand companies will probably agree on government regulations.
Jobs
One of the top issues that got Trump elected was his pledge to create more jobs. He has railed about trade, immigration and high corporate taxes taking away U.S. jobs and has said his goal is to fix that.
“My administration is going to work together with the private sector to improve the business climate and make it attractive for firms to create new jobs across the United States from Silicon Valley to the heartland,” Trump said in a statement.
Most on-demand companies classify their workers as contractors rather than employees. That means drivers have to pay all of their own costs for things like health insurance, Social Security, gas and car maintenance. It’s one of the reasons drivers have filed a slew of lawsuits against Uber and Lyft. If drivers were classified as employees, the companies would have to manage a workforce of millions.
Chao appears to agree with Uber and Lyft on this issue.
“It is legitimate to ask if the regulatory solutions of the past -- crafted by big government for big business -- are appropriate for a peer-to-peer economy that is fluid, flexible and filled with workers who prefer independent arrangements,” Chao said at a talk at the American Action Forum in November 2015. “Government policies must not stifle the innovation that has made this sector such an explosive driver of job growth and opportunity.”
Renaissance Capital’s Smith, however, points out that -- if Trump does bring more jobs to the US, as he’s promised -- people might prefer to work in those jobs instead.
“If Trump’s policies actually tighten up the U.S. job market with better full-time wages, improved health care, and immigration control, there may be fewer U.S. citizens who need part-time work or extra income from renting their residences or other property,” she said.
Bottom line: While Trump and Chao may agree with on-demand companies on contract labor, Uber and Lyft could lose drivers to better-paying, full-time jobs. Drivers might have a hard time getting reclassified as employees under the Trump administration.
Trade
Uber and Airbnb operate around the globe, and US relations with the countries where they operate could affect business.
China is the big kahuna for most tech companies, given its population of 1.3 billion. But Uber pulled out of the country last year because of tight competition with local ride-hailing company Didi Chuxing. Airbnb is now working to enter this market.
Trump has vowed repeatedly to be tough on China. That could crimp Airbnb’s ambitions if the new president sours relations with the country.
“Airbnb is trying to become the first US company to gain a dominant platform position in China. Google has tried and failed. Facebook has tried and failed. Uber has tried and failed,” said NYU professor Sundararajan. “If the Trump administration starts a trade war with China, this could hurt Airbnb’s expansion plans.”
Bottom line: Trump’s goal to rein in globalization could hurt on-demand companies’ expansion efforts.
Taxes
Trump has said he plans to cut corporate taxes. By a lot. The current plan is to drop from today’s 35 percent to 15 percent.
Yet, Smith said, corporate tax cuts might not benefit on-demand companies as much as one would think because they’re not yet turning a profit.
“His plans to lower corporate taxes will help the companies who are already paying higher taxes,” Smith said, “not the sharing companies who are not making money yet.”
Bottom line: Once these companies make a profit, Trump’s corporate tax cuts could be a boon. But until then... not so much.
This article originally appeared on CNET.com.