Recently I did an opening interview for the On Demand Conference here in New York. As part of the conversation we discussed intermediary liability for platforms and I suggested that complete transparency was a good trade for intermediary liability. Someone from the audience became quite upset and asked, “so you mean Uber should have no liability for a rape by one of their drivers?” I was reminded of that moment when I read the medium post about “Living and Dying on Airbnb.” So let me explain my position further.

Right now platforms have intermediary liability. So for instance someone who suffers injury in an apartment found on Airbnb could sue Airbnb and not just the owner of the apartment. The same is true for Uber and also marketplaces such as Etsy. Fear of such law suits leads to the paradoxical situation that platforms withhold a lot of information that relates to safety which in turn means there are calls for stricter regulations.

Consider for example the situation of a rental on Airbnb. The government could decide to require an inspection for safety violations of every place that is rented out. Once you start to go down this route two things happen. First, it severely restricts the reach of a network or marketplace (which is on the margin bad for all participants) and second, it means a lot of further regulation is required which specifies what kind of safety inspection, the frequency with which it has to take place and so forth. In return there is a strong incentive to then conduct the minimum effort possible to clear whatever bar the government has set.

Now consider the opposite approach. The government offers Airbnb an immunity from intermediary liability in return for much more transparency. For instance the requirement instead could become a need to disclose whether anyone has stayed at a location before or not (not just whether someone has reviewed it) along with offering a field where hosts can display the results of any voluntary safety inspection they have conducted (or none if they have not done one). Now a potential renter has significantly more information available. Maybe I don’t want to be the person staying at a place that no one else has ever been to and that doesn’t have a safety inspection.

If in addition to this Airbnb would be required to disclose safety statistics and make rentals fully searchable (to allow enforcement of local or even building level regulations). Then it seems fair that there should be no intermediary liability. A similar fundamental difference in approaches is possible for every network that operates on the Internet. You can either try to regulate the network’s behavior in detail or you can regulate for increased transparency.

Providing networks with a relief from intermediary liability is not at all unprecedented. For instance, we decided long ago to do this for the telephone network. Imagine how little progress we would have made with communications if the government had imposed strong liability on the network operators for every crime committed using the telephone network. Or imagine the same for the Internet at large.

We want more networks/platforms not fewer. These are a good thing with immense benefit for all participants as they can result in much better sharing and usage of existing resources. With my proposal though these companies themselves though will have to make a decision. Either they become much more transparent and offer real choice to participants or they should be as liable as a traditional (non-networked) provider. For instance, Uber would have to pick more clearly between being a platform/network or a transportation company.