Frank Pasquale and Siva Vaidhyanathan write: In February, Airbnb chief executive Brian Chesky compared his firm’s defiance of local housing ordinances with that of Gandhi’s passive resistance to British rule. Meanwhile, a tweeter compared Uber to Rosa Parks, defying unjust laws. Chesky quickly backed down after widespread mockery. Companies acting out of self-interest comparing themselves with the noble heroes of civil rights movements is as absurd as it is insulting.
But there is a better analogy from the US civil rights era for law-flouting firms of the on-demand economy. It’s just not the one corporate leaders claim. They are engaged in what we call “corporate nullification”, following in the footsteps of Southern governors and legislatures in the United States who declared themselves free to “nullify” federal law on the basis of strained and opportunistic constitutional interpretation.
Nullification is a wilful flouting of regulation, based on some nebulous idea of a higher good only scofflaws can deliver. It can be an invitation to escalate a conflict, of course, as Arkansas governor Orville Faubus did in 1957 when he refused to desegregate public schools and president Eisenhower sent federal troops to enforce the law. But when companies such as Uber, Airbnb, and Google engage in a nullification effort, it’s a libertarian-inspired attempt to establish their services as popular well before regulators can get around to confronting them. Then, when officials push back, they can appeal to their consumer-following to push regulators to surrender. [Continue reading…]