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San Francisco Puts the Brakes on a Parking App Startup The City Attorney says that MonkeyParking – an app that allow users to pay for information about available spots – is selling the use of public parking spaces, not information.

By Laura Entis

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

San Francisco may have birthed the sharing economy, but it's cracking down on a fleet of startups trying to turn the art of public parking into a monetizable peer-to-peer experience.

Yesterday morning, City Attorney Dennis Herrera served MonkeyParking, an app that allows drivers to auction off their parking spots to the highest bidder, a cease-and-desist letter. The letter also warns similar apps Sweetch and Parkmodo that they will be subject to the same legal action.

"Technology has given rise to many laudable innovations in how we live and work -- and Monkey Parking is not one of them," Herrera said in a statement, arguing that not only does the app create "a predatory private market for parking spaces" but it encourages drivers to pay attention to the bidding wars taking place on their phones instead of the road.

Related: Tread Lightly on Regulating the Sharing Economy

Herrera is giving MonkeyParking until July 11 to end all operations; after that, drivers could be fined $300 per transaction and the company could face fines of up to $2,500 per violation. "People are free to rent out their own private driveways and garage spaces should they choose to do so," he said. "But we will not abide businesses that hold hostage on-street public parking spots for their own private profit."

In response, MonkeyParking's chief executive Paolo Dobrowolny is positioning his service – alongside industry disrupters like Airbnb, Uber and Lyft -- as a victim of plodding legislation that fails to adapt in the face of innovation. "As a general principle we believe that a new company providing value to people should be regulated and not banned," he said in an email statement. "Regulation is fundamental in driving innovation, while banning is just stopping it."

Related: Zipcar Founder: Entrepreneurs Have to Build a Collaborative Economy, or Else

Meanwhile, Daniel Shifrin, the chief executive of Parkmodo (also mentioned in Herrera's cease-and-desist letter) argues that his company isn't selling or renting public parking spaces, but is facilitating the exchange of information for a price. "You can't sell something you don't own," he told The Wall Street Journal. "The last time I checked there is no law in America that prohibits you from selling your information."

San Francisco may be coming down hard on Parking Monkey and co., for applying supply-and-demand pricing to public parking, but the city will soon implement a "surge pricing" model of its own for public meters (raising and lowering hourly rates based on demand). Dubbed Sfpark, the pilot program -- which ended in 2013 – will be reinstated citywide, according to the San Francisco Chronicle.

Related: The Outrageously Silly Argument Against Uber's Surge Pricing

Laura Entis is a reporter for Fortune.com's Venture section.

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