The sharing economy is catching up with Japan

If sharing is caring, one part of Tokyo just does not care anymore

• By Gearoid Reidy / Bloomberg Opinion

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Shinjuku is moving to restrict minpaku, the practice of letting out apartments and houses for platforms such as Airbnb Inc, following a surge of complaints. Residents of the neon-lit area that is home to the world’s busiest railway station are unhappy about tourists causing noise late at night, jamming apartment building corridors with suitcases and failing to correctly put out garbage. Shinjuku has the most minpaku properties of any municipality in the country, a stock that has more than doubled in just three years.

The mayor, a longtime opponent of short-term rentals, said that the “lofty ideals” of this type of platform — hosts earning a little side money from utilizing unused rooms, perhaps introducing their guests to the neighborhood — simply have not materialized. About 2,000 existing properties would be hit by the changes.

It seems like another black mark against Japan’s sharing economy. Further deregulation of ridesharing, introduced in limited form and to great fanfare in 2024, has stalled. The typical view emerging is that the country has closed ranks to foreign companies to protect entrenched interests such as the taxi lobby.

However, that is far from the full story. Shinjuku’s mayor is right: The “lofty ideals” are often just ways of using technology to sidestep laws. Japan’s approach has long been that if it looks like a taxi or hotel, and operates like a taxi or hotel, then it should be regulated as such, regardless of whether an app sits in between users and providers.

Uber Technologies Inc chief executive officer Dara Khosrowshahi told The New York Times that “Japan is forcing me to be patient,” a persistence that is easy to understand given that Japan is the single largest taxi market in the world. Uber works with existing taxi firms to allow them to utilize its technology, but the move to UberX-style private rides has made little headway.

Individual drivers are in fact a great example. Japan already has a similar system, known as kojin taxi, which is tightly regulated. A license requires years of accident-free, professional driving experience. There is absolutely an argument for loosening those rules, but it should not be simply to convenience Silicon Valley disruptors.

Japan was less skeptical about property rentals, but still resisted getting fully onboard, capping stays at 180 nights a year. Changes this year allow municipalities to further restrict that. Shinjuku’s data indicate that the vast majority of minpaku are investment properties. It is these non-resident owners who benefit, along with tourists, while local residents are stuck with the nuisance, uncollected garbage and pressures that can force rents higher.

Japan is not alone in becoming increasingly skeptical about the sharing economy. New York has regulated Uber more like taxis and cracked down on Airbnb rentals with a law that requires the host to be a resident of the property. Paris has tightened rules on short-term stays; Barcelona is about to shut them down entirely.

Japan is not a great market for disruptors whose advantage comes from exploiting legal loopholes. Most here still expect regulators to regulate, and the government to supervise private business.

That does not mean new technologies cannot be co-opted within existing frameworks. Go Inc, which runs the largest taxi-hailing app and listed earlier this year, operates an efficient platform that reduces payment friction. A forthcoming team-up with Alphabet Inc’s Waymo plans to bring robotaxis to Japan, which needs more rides, especially in rural areas.

Likewise, while Airbnb might be ill-suited to Shinjuku condos, holiday homes in the mountains are another matter. In Osaka’s Nishinari, one of the poorest districts in the country, I was fascinated to see flophouses that once accommodated day laborers now being remade into Airbnbs; less densely populated areas in Tokyo are actually planning to loosen restrictions.

Japan famously has millions of empty homes, but also some of the most cramped apartments in the developed world; rural areas with no taxis, served only by a handful of trains a day, and urban centers with the world’s most crowded public transport. One approach for all is not going to work. The lesson of the sharing economy is not that Japan needs UberX and Airbnbs everywhere. It is that the technology can be useful even when the regulatory model is not.

Gearoid Reidy is a Bloomberg Opinion columnist covering Japan. He previously led the breaking news team in North Asia, and was the Tokyo deputy bureau chief. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.