PickupPal Controversy Highlights Power of Networked Economy

My weekly technology law column (Toronto Star version, homepage version) "picks up" on the debate over PickupPal, a ride sharing service that operates around the world. Trentway-Wagar, a Peterborough-based bus company, has raised questions about the legality of the service in Ontario. PickupPal has about 100,000 registered users worldwide (approximately 10,000 in Ontario alone) who use the Internet service to connect and identify possible ride sharing partners.  The result is more carpools, less traffic congestion, and decreased emissions. Notwithstanding the benefits, Trentway-Wagar argues that the service violates the Ontario Public Vehicles Act because it allows drivers to collect money by offering strangers a ride. This is not the first time that the company has targeted ride sharing services.  In 2000, it succeeded in stopping Allo-Stop, then Quebec's biggest ride sharing company, from operating in Ontario.

The PickupPal debate has thus far focused on an outdated provincial law (the government has promised to review the legislation) and the environmental impact of rules that appear to discourage ride sharing. Yet there is a bigger story here. The law has been rendered out of date because the Internet facilitates new modes of production and organization that enable thousands of people to connect, share, and work together in ways that were previously limited larger, well-organized, and well-funded companies. As scholars such as Yochai Benkler and Clay Shirky have persuasively argued, these modes of production provide great promise.
Ride sharing is an obvious example.  Before the widespread use of the Internet, small scale ride sharing organization was possible, whether through ride boards in schools or announcements at community events.  Those methods hardly posed a threat to established bus services, however.  Once thousands began to connect online at virtually no cost, a parallel, community-created ride sharing service emerged that now challenges established companies for market share.

The same is true in dozens of other sectors. For example, the recent news that an open source advocacy group has sued the Quebec government for failing to consider open source software alternatives in its procurement processes serve as an important reminder of how far open source software has advanced in recent years.  The Linux operating system, the Firefox browser, and the Apache web server have all gobbled growing market share from proprietary software companies by using a different model that uses the Internet for both self-organizing and product distribution.  

Many businesses that have relied upon their ability to aggregate and organize as a competitive advantage now find themselves facing similar challenges. Whether it is the remarkable success of Wikipedia as a peer-created online knowledge sharing site, the emergence of Craigslist as a dominant, free classified advertising marketplace, the viability of user-generated content to attract massive audiences, or the use of social networking sites such as Facebook for advocacy purposes, the network economy offers as an "industrial scale" organizing tool at a fraction of the conventional cost.

Businesses that face this new form of competition – competition that effectively comes from their own customers – must adjust or face diminishing market share.  Moreover, attempts to leverage the law to maintain increasingly outdated business models should be rejected. Indeed, policy makers must recognize that their responsibility involves more than just addressing outdated laws.  Rather, it requires fostering a level playing field for Internet-enabled models and ensuring that our telecommunications networks treat content in a neutral and transparent manner.  In other words, lawmakers must ensure that as the Internet develops, the public is not taken for a ride.


  1. Maynard G. Krebs says:

    Common carrier/liability issue?
    Isn’t the intent of the legislation aimed at so-called ‘gypsy’ carriers – to thwart blatant price gouging, and to ensure that the carrier has appropriately licensed drivers, appropriate levels of insurance, and engages in some proscribed level of maintenance on the vehicles?

    That said, maybe the legislation needs to be updated to permit this sort of thing and ensure that drivers have some sort of recognized insurance to cover their gas-sharing friends/acquaintances should a catastrophic accident occur.

  2. What doe sit cost to have pass says:

    What doe sit cost to have passengers
    as a passenger in say your parents car what coverage would you have?
    think along those lines and no where doe sit say in my dads insurance that he cant have passengers…..
    if it did then i’m sure millions would just get one seat gas guzzling cars that would cause tons more CO2

    NOW what as we get internet style EULA for cars and insurance that slowly erodes what the fuck i can do.

    The battle begins….

  3. For that reason, copyright should not be
    Old business model that can’t adapt to new technologies and tried to outlaws peoples using their own technology, is a pathetic attempt to ” rule ” over the freedom of the citizen.

    MP3, Peer-to-peer is a technology that require from their users bandwidth. Users pay for their bandwidth, pay for the electricity, pay for their computer, take their time to digitalizes their own goods, take their time to share their own digitalizes goods…

    Thats the reality. Going against the reality, going against the right of the users, for their big greed pocket… no fucking way.

    So now, Napster and Amazon don’t sell anymore DMR songs… and their sells get boost by 40%.

    The digital world, is the world of the human being, not the world of the corporations, even if they wished they had create the WEB before the creator of it.

    The WEB put RIAA companies, on an OBSOLETE business model and they actually don’t get a clue how to work with that new reality.

    Artist don’t need them anymore to “distribute” their creations at 0,10$ cent a sales on a 20$ products..


  4. Worth Reading – PickupPal’s response
    [ link ]

    PickupPal no longer charges users of its site, so they do not receive compensation. PickupPal is citing previous cases that appear to indicate that where there is no compensation, the Ontario Highway Transport Board has no compensation.

    The argument that they are reimbursed by the advertising, is negated by both the earlier decisions, and by the fact that the ads are viewed whether a ride is booked or not.

    Finally, there are definitions under the relevant laws for both “public vehicles” and “carpool vehicles”, and it appears that PickupPal users are mostly in the latter category.

    I can see that some users of the service might actually be running a business with public vehicles — but since PickupPal is not arranging the travel for a fee, it appears to me that Trentway-Wagar would have to bring a case before the Board for each such operator. Right now, it looks more like they are going after PickupPal only because they are a convenient target, not because they have a solid legal case.

  5. oops
    “where there is no compensation, the Ontario Highway Transport Board has no JURISDICTION”.