Junko Kimura-Matsumoto/Bloomberg

Just five years ago, "ridesharing" meant something utterly benign. If you've got three people in one car, literally sharing a ride to work – that's ridesharing. One guy owns the car. He picks up the other two on his way to the office. Maybe they split gas money, or alternate driving days, or take turns bringing the coffee. Their arrangement is perhaps more flexible than the old-fashioned "carpool." But, in short, they're all heading the same way, so they might as well get there together.

Transportation planners love this kind of ridesharing because it's efficiency in motion. In the U.S., about 76 percent of commuters drive to work alone, which means that 76 percent of us pull onto the street most days with at least three perfectly good but empty seats. If more of us would simply pile into cars together – on our way to work, or school, or wherever – we could reduce congestion, emissions, even the need for parking. And what's not to like about that?

Technology has made it increasingly possible to do this with total strangers, vastly expanding the network of people with whom we might share unused car capacity. But the arrival of new technology has also meant that "ridesharing" has evolved into new forms: Sidecar and Lyft enable people to make money driving strangers to places they may never have been planning to go themselves. UberX has pushed the concept even further in the direction of a pseudo-taxi service. RelayRides, on the related "carsharing" front, lets you hand over your entire vehicle to a stranger, as if it were a rental.

Suddenly the picture has become much more complicated: How does the insurance work? Who pays taxes on ridesharing income? How do you regulate these new models that more closely resemble cab service than our company man driving his neighbors to work? All of these questions bring us to Seattle, where the city council voted on Monday night to adopt  unprecedented new rules regulating so-called "ridesharing" services like Sidecar, Lyft and UberX.

Under the new plan, each company will be required to cap the number of drivers on the road in Seattle at any given time at 150. From afar, this looks slightly bewildering: Why would any city want to limit the number of drivers who can give rides in their private cars to strangers?

Setting aside the wisdom of this policy, here's why Seattle is doing it: First off, the city is targeting a kind of "ridesharing" that strays from the original definition of the word in some crucial ways. Sidecar, Lyft and UberX arguably provide a benefit to society, creating viable alternatives to car ownership (for the riders) and new means of part-time income (for the drivers). But these services aren't as innocuous as traditional ridesharing. And unlike the guy who drives his neighbors to work, the guy who uses an app to find paying passengers across town on their way to work probably needs some regulation.

Secondly, while Sidecar, Lyft and Uber are all very unhappy today, Seattle's taxi industry is elated. Cab drivers view ridesharing apps as direct (and unfair) competition. And they have a point: Why should they have to pay for expensive cab licenses and comply with strict regulation when anyone with a car can download an app and offer an awfully similar service? The new regulation makes little sense if you're a Lyft driver in Seattle. But it makes perfect sense from the standpoint of taxi drivers who already operate in a marketplace that's limited by the city.

Outside of Seattle, the bigger question isn't why the city is doing this, but whether this approach to regulating peer-to-peer transportation services makes sense. Local governments all over the country are wrestling right now with how to handle these companies. Seattle just happens to be one of the first to dive in. Other provisions of the new regulation there – requiring companies to provide commercial insurance, for instance – are smart policy. But the driver cap seems less so. The number is arbitrary. It's not clear how Seattle will police it. And cities need to strike a number of delicate balances here: between innovation and out-dated regulation; between companies that have been playing by old rules, and startups that need new ones; between the interests of consumers and those of incumbents like taxi drivers.

The best solution will no doubt look much more nuanced than a cap on Uber drivers.