The question is at the heart of San Francisco's recent battle with companies that use financial incentives to lure local drivers into trading their parking spaces with other app users.
Documents obtained by The S.F. Examiner detail the struggle between tech companies and The City for control over public parking spots, and illustrate the conflict between The City's attempts to woo tech companies and the legal complications of the sharing economy.
On June 23, the San Francisco City Attorney's Office issued cease-and-desist letters to MonkeyParking and ParkModo, two apps that enable drivers to exchange their parking spots for money, and threatened a third, Sweetch, with the same treatment.
Correspondence released by the City Attorney's Office shows that, while Sweetch appealed to the City Attorney and offered to change its business model, MonkeyParking and ParkModo chastised the office for overreaching the bounds of local law and asked for retractions of their cease-and-desist letters.
MonkeyParking and ParkModo argued that, as businesses of the sharing economy, they were not selling parking spots, but information – and that such activity should be considered free speech. On June 26, both apps submitted responses to Herrera's office.
MonkeyParking CEO and co-founder Paolo Dobrowolny wrote, “The shared economy trades on information, not on goods or services or other commodities. We are very surprised that the City of San Francisco, which prides itself of being a liberal, innovative and tolerating city, is taking a position that appears to be contrary to the First Amendment.”
Dobrowolny continued, “Please consider retracting your letter.”
In a strongly-worded letter, ParkModo co-founder Daniel Shifrin told Herrera's office that his company would discontinue operations in San Francisco “until such time when the proper legal authority concludes and enforces ParkModo and its Users right to freely exchange private information.” Like MonkeyParking's Dobrowolny, Shifrin argued that Herrera's cease-and-desist violated his First Amendment rights.
“As the exchange of personal information is not governed by your office in any way whatsoever, we are confident that your interpretation is not accurate and any enforcement of such interpretation potentially violates the rights of ParkModo and any Users that would potentially utilize the application,” Shifrin wrote. Shifrin also asked the City Attorney's Office to retract its previous comments about his app in a public statement, claiming Herrera had damaged ParkModo's brand and Shifrin's personal reputation.
Sweetch likewise claimed in a June 25 blog post that the City Attorney's Office had infringed its rights, writing, “There’s simply no law on the books prohibiting this and the City Attorney is overreaching to say that there is.” However, its founders took a slightly different approach than that of the other parking apps – negotiating a new business model with Herrera. In a letter from Deputy City Attorney Michael Weiss to Sweetch's attorney, dated just one day after the blog post, Weiss describes a phone call in which Sweetch offered to change its business model to comply with the law. Weiss adds, “This office is willing to refrain from issuing the cease and desist letter until the close of business on Wed, July 2.”
On the deadline, Sweetch's attorney responded, saying that Sweetch would become free to users. Further, Sweetch unveiled Freetch, an open-source version of its app. “Freetch is an open source version of Sweetch's technology that any public organization, developer, or entrepreneur can use to build a parking solution that focuses on driver collaboration,” attorney Kristen Garcia Dumont wrote. “Sweetch will continue to operate using its own application but is happy to help others who can think of ways to use its innovative technology to help urban life.”
In an interview with The S.F. Examiner, Sweetch co-founder Aboud Jardaneh explained that when the app launched in May, the San Francisco-based startup team believed there needed to be an incentive for people to participate and that the financial incentive “was what worked.”
But unlike MonkeyParking’s incentive system that allows users to bid for parking spots, Sweetch from the start only allowed users looking for a spot, instantly matched with someone leaving a spot, to transfer $5 that the recipient could either keep as a credit for finding another parking spot or contribute to a charity, neighborhood group or the like.
“It was a financial incentive to make people think they were doing good and eventually that would go back to something that would have a social impact,” Jardaneh said. “Unfortunately, mainly because of our competitors being in the highlight of everything, that was not possible. So we moved to Freetch.”
Beside turning Sweetch into Freetch, Jardaneh planned to announce Friday another free, open source app: spotAngel, which is designed to help people avoid parking tickets by giving them information on street cleaning and other pertinent information. The new app, Jardaneh said, abides by parameters set by local government and achieves his startup’s goal: “We are not here to make money, just to solve the problem.”
Currently, Freetch and spotAngel are funded by investors.
On MonkeyParking's July 7 cease-and-desist deadline, Dobrowolny apparently changed his mind and offered to make changes to his app as well. “In light of your letter, we have made specific modifications to our app, to correct the perceived issues and avoid any future misunderstandings. The modified app version is currently under review by Apple and should be ready for release within days,” he wrote to the City Attorney's Office. He also requested a meeting with city attorneys early next week to discuss the changes.
ParkModo, however, remained firm in its conviction to shame the City Attorney's Office for its perceived violations of the law. San Francisco remains on ParkModo's website, with a big, red, “void” stamp placed over a photo of The City skyline. In his letter to the City Attorney's Office, Shifrin claimed he would add an error message to his app, so that San Francisco users who attempted to use it to find a parking space would instead be told to protest the City Attorney's decision by contacting their elected representatives. According to Shifrin, the error message will read in part: “If you would like to support your right to freely exchange private information and protest the city attorney’s interpretation of the law, then please click on the 'Help Us' button below to send your local representative a message of support for our app.”
Although ParkModo appears to have moved on from San Francisco, the futures of Sweetch and MonkeyParking in The City are still in limbo. It's unclear whether the City Attorney's Office will accept MonkeyParking's request for a meeting, and even though Sweetch removed the financial incentive portion of its app, Herrera remained unconvinced. In a July 7 letter to Sweetch's attorney, Herrera said he would continue to delay the cease-and-desist letter, but asked to schedule a meeting to review the app late next week. Among his concerns, he said, was “whether Sweetch members would block access to parking spaces until another Sweetch member is able to take that space.”
If MonkeyParking and Sweetch are able to assuage the City Attorney's Office in the upcoming meetings, it appears San Francisco may end up with several new parking apps after all.
Update 5:15 p.m.: City Attorney Dennis Herrera released the following statement: "I'm grateful that these parking apps have at least temporarily honored my request to halt business practices that clearly violate San Francisco's Police Code. At the same time, we're going to remain vigilant against those who would try to hold on-street public parking hostage for their own private profit. We intend to continue communicating with these businesses to make sure we're all on the same page about what local law requires. I wish them well as they reassess their business models, and I hope they can come up with some innovative and legal ways to serve their customers' transportation needs."