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PickupPal Controversy Highlights Power of Networked Economy

Appeared in the Toronto Star on September 1, 2008 as Network Economy Changes the Rules

PickupPal, a ride sharing service that operates around the world, recently attracted considerable attention after Trentway-Wagar, a Peterborough-based bus company, 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The PickupPal debate has thus far focused on an outdated provincial law (the government has promised to review the legislation) and the environmental impact of rules that appear to discourage ride sharing.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 The law has been rendered out of date because the Internet facilitates new modes of production and organization that enable thousands of people to connect, share, and work together in ways that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.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at or online at

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