The Mutual Effect of Regulation and Trust in the Sharing Economy


The Sharing economy has gradually become the dominant trend in global economic development, since the continuous growth of the internet. The rise of the sharing economy addresses social needs and market vacancies and indicates the prominent potential and influence of the sharing economy (Geissinger et al., 2019). It penetrates various aspects of people’s lives. One of the most influential areas is car sharing, applications such as Uber are increasingly recognized as an emerging choice for travel. However, the success of any form of sharing economy is based on trust (Venkateswaran et al., 2021). The trust of the sharing economy is seriously dependent on the regulation of the platform, the platform drivers and consumers, and the government’s supervision. Firstly, the transparency of the platform system is essential, the platform provides consumers with the use of rights and benefits, services, and security affecting the consumer’s trust in the platform. Furthermore, it is hard to maintain trust between platform drivers and consumers as strangers, platform features such as authentication mechanisms and evaluation mechanisms can enhance consumer trust in drivers. In addition, the government as an authoritative core, has the power to regulate the online platform.

Platform Regulations

In the context of the sharing economy, car sharing has benefitted people’s demand for travel, the efficiency of underutilised vehicles, and the lack of transport capacity. Privacy threats are an unavoidable issue in online services, and the sharing of personal data and information by Internet users online is prone to cause privacy breaches and harm (Teubner & Flath, 2019). User anxiety about privacy has become a major obstacle to the online transaction model (Lutz et al., 2018). For online shared service platforms such as Uber, one is faced with the contradiction that users are willing to share data over the Internet to access more convenient services, despite the risk of privacy threats. Nevertheless, the existing privacy risks and concealment of stipulations hinder consumers’ trust and support for the platforms. Many doubters on the Internet believe that Uber is an unregulated and exploitative system in which users are not protected by employee entitlements or social rights (John, 2017).

In the 2016 hack, Uber failed to protect user’s personal data, resulting in the personal information of 57 million users being compromised. The company paid heavily for hackers to delete the data and attempted to cover it up until a year after the incident was reported in the media. The incident had a profound impact on Uber and challenged people’s trust in the industry of the sharing economy. Uber’s declaration suggests that the company has taken a tougher approach to data security and is working hard to earn the trust of its users. The governance and transparency system of a platform is a significant factor for the platform to safeguard its value and attract consumers.

Therefore, user privacy concerns deepen, forcing them to be less willing to engage in online transactions. Optimizing the platform’s regulatory system and safeguarding the rights and interests of consumers is the best way to accelerate the development of car-sharing applications.

CNET News. (2017, Nov 22). Uber belatedly reveals data breach affecting 57 million users [Video]. YouTube.

Trust between Uber driver and consumer

The relationship between technology and the sharing economy is linked by the term ‘peer-to-peer’ (P2P) (John, 2017). Michel Bauwens (2011, as cited in John, 2017) asserts that P2P is the system that permits agents to freely and permissionless interact with each other, which demonstrates that the online participants share their information and are accessed directly by others without a central hub. The online users are both servers and clients of the service and content resources.

Everyone with an account can be a user and consumer of Uber. Uber employs the peer-to-peer business model to help strangers interact and conduct business. In a typical Uber transaction, the driver and passenger are strangers and randomly matched based on distance. It reinforces the challenge of the platform transaction as the transactions between strangers place greater emphasis on trust (Venkateswaran et al., 2021). Although the fact that Uber has strengthened user authentication to reduce the risk of fraud by tying in personal information such as mobile phone numbers, as well as implementing a 2-way rating system that gives users the opportunity to rate each other on a scale of 1 to 5 after using Uber, which allows the platform to detect drivers who violate the rules and help the platform to improve the system. There are still many controversies between Uber drivers and passengers that raise people’s awareness of online unfamiliar transactions. Hot issues related to Uber have aroused public concern and affected people’s attitudes toward Uber. Disputes such as traffic accidents, refusal and delays in picking up or dropping off passengers, infringement of privacy rights, and malicious price hike, as well as criminal issues such as robbery, rape, and burglary, are frequent occurrences. The number of vicious incidents against Uber has caused a serious decline in trust in Uber.

Hired an Uber with my iPhone app” by naotoj is licensed under CC BY-NC-SA 2.0.

Government Regulation

The rapid renewal of business models in the sharing economy has brought a brunt to traditional government regulatory concepts and approaches. The contradiction between government regulation strategies based on traditional economic models and the sharing economy is becoming more prominent (Lee et al., 2020). The huge number of users and the complexity of databases across sharing economy platforms have boosted the difficulty of government supervision. The sharing economy integrates resources through online platforms, and many products and services need to be combined both online and offline. John (2016) indicates that community and trust are doubtless important values for the sharing economy. It illustrates that the Internet enables people to feel a sense of community and induces trust thus encouraging people to achieve from online sharing to offline sharing. It is difficult to use offline legal provisions to be directly applicable to online businesses, and the government has readjusted the provisions based on the development of sharing economy platforms and strengthened the management of platforms (Hong & Lee, 2020). For instance, The Australian government has imposed strict controls on Uber’s invasion of user privacy. In light of Uber’s breach of the Privacy Act 1988, The Office of the Australian Information Commissioner (OAIC) focused its investigation on the precautions and system overhauls that Uber has adopted to protect Australians’ data since this incident. The government plays an important role in organizing, guiding, and supervising enterprises to implement national laws, regulations, and policy guidelines on the development of the sharing economy. It is the bond that coordinates the relationship between enterprises and users and helps to build trust in the sharing economy.

150422theOnlyWayisAPP040” by ALDE Group is licensed under CC BY-ND 2.0.


Under the online sharing context, the participants are strangers who do not know each other. They complete the transactions through the platform, while the establishment of trust is the fundamental way to the success of the transaction. The development of the sharing economy is also intimately connected to the support of the system of the platform, Based on the credit mechanism, constructing regulatory rules that conform to the sharing economy and reconstructing the regulatory model are the basic requirements for the development of the sharing economy in the mediated society. Consumers’ trust in the platform comes from the contract. It could be explained that the agreed rights and interests of use and security guarantees provided by the company for consumers establish the authoritative status of the platform. Moreover, strict adherence to platform rules and regulations by platform users can reduce disputes between users. In addition, government regulations and legal penalties for inappropriate behaviors can directly reflect the authoritative trust construction.

Uber” by noeltock is licensed under CC BY-NC 2.0.


CNET News. (2017, Nov 22). Uber belatedly reveals data breach affecting 57 million users [Video]. YouTube.

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Venkateswaran, V., S Kumar, D., & Gupta, D. (2021). ‘To Trust or Not’: Impact of camouflage strategies on trust in the sharing economy. Journal of Business Research, 136, 110–126.

This work is licensed under CC BY-NC-ND 4.0