Uber and The Market Platform Backlash
The shadowed economics and ethics that underlie market platforms like Uber
Uber’s public relations nightmare continues, ranging from Susan Fowler’s accusations of sexual harassment, claims by Google — an Uber investor — of intellectual property theft, and new dirt about Uber’s ‘Greyball’ tool, used to dodge authorities in many cities. Then, to top it all, Uber CEO Travis Kalanick is caught on a dashcam video losing his shit, yelling at an Uber driver who challenged him about smaller fares due to company policy changes.
Uber is the poster child for market platforms, and the shadowed economics and ethics that underlie them.
Uber is the poster child for market platforms, and the shadowed economics and ethics that underlie them. Operating under the camouflage of internet era disruption and innovation, market platforms are beginning to be seen as an exploitation of the precarious workforce rather than agile and flexible transformation of industrial-era inefficiencies and waste. The halo is slipping, and the devil horns are showing.
Uber (and its competitors, Lyft, Sidecar, Juno, and so on) has built a narrative around meeting the unmet needs of users, on one hand — fast and affordable car-based transportation via smartphone apps, specifically in large metropolitan centers — and on the other, satisfying freelancers’ desire to work. That the drivers are just people who would like to make additional income to support their slash lifestyles. You know, like ‘graphic designer slash musician slash Uber driver’.
The story is starting to fray.
Cities already had a model for car-based transportation, called cabs. Yes, these are regulated in a variety of old-fashioned ways, with taxi meters imposing standardized fares, taxi inspectors ensuring safety, and taxi medallions limiting the number of cabs on the streets. And yes, this came with municipal bureaucracies and forms, and with a medieval arrangement where the owners of taxi medallions make bank by renting access to their expensive, licensed vehicles. Uber and its fellows simply sidestepped those strictures, dismissing them as outdated and monopolistic, and as failing to meet the 21st century flexibility demanded by both sides of the new market.
Uber has externalized major elements of its operating economics, just like industrial polluters taking no responsibility for spewing carbon into the air or pouring toxic chemicals into our waterways. But the externalities in this case are people.
But, at least in principle, taxi regulations are in place to enforce public policies determined by the municipal and state authorities, the people we’ve elected, and whose decisions we can influence through our system of government. However, Uber and the other platformers mostly determine their own policies¹ without our consent, motivated by their financial goals and those of their investors, and without deep consideration of their impact on broader economic and social issues.
And, at the core, the market platform narrative is illusory. Many drivers are signing up because of lack of other options, and only partly lured by the mystique of being ‘your own boss’ and being able to make a solid living while choosing ‘your own hours’. The grim reality is that Uber sets rates so low that the average ride is worth $11 to an Uber driver, and they wind up ‘choosing’ to drive long hours just to make ends meet, if that.
Uber has externalized major elements of its operating economics, just like industrial polluters taking no responsibility for spewing carbon into the air or pouring toxic chemicals into our waterways. But the externalities in this case are people. Uber drivers are not employees, and they shoulder their own car loans and maintenance, health insurance, and social security payments. They get no vacation or sick time, and just forget about family leave.
Meanwhile, in the arena of public opinion, the boorish, bro-ish, and illegalish operating model at Uber is leading to a consumer backlash, ranging from distaste at Kalanick’s harangue of a bankrupt driver, to anger about sexual harassment, all the way to a growing sense of the inequities inherent in the economic underpinnings of unregulated work markets.
This inequitable setup was brought into stark relief with a recent Lyft news story about a pregnant driver who went into labor while taxiing a passenger across town. She completed the ride and en route to the hospital she was auto-dispatched by the Lyft app… and she picked up that fare, too. Yikes.
The strange thing is that Lyft’s PR team decided this was some sort of positive news about the can-do attitude of its drivers:
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“Luckily,” as Lyft put it, the passenger requested a short trip. After completing it, Mary went to the hospital, where she was informed that she was in labor. She gave birth to a daughter, whose picture appears in the post. (She’s wearing a “Little Miss Lyft” onesie.) The post concludes with a call for similar stories: “Do you have an exciting Lyft story you’d love to share? Tweet us your story at @lyft_CHI!”
Of course those hewing to the official story at Lyft (or Uber, or the other platformers) have to position this as modern day pluck and moxie, but the reality is Mary will get no maternal leave paid for by Lyft, no sick time, no help whatsoever. The platformers are at best quasi-employers, making a market from drivers who have decided a bad deal is better than none, and riders who put convenience and cost ahead of social justice. And that implicit pact between the rider and driver is beginning to unravel, too, as more drivers are coming forward to sue the company for exploitative practices and misclassification as contractors, not employees. And in that reckoning, the passenger is complicit: a co-conspiritor with the company.
The question of the legitimacy of the model will ultimately be settled in the courts, legislatures, and agencies like the National Labor Relations Board. The issues involved are a microcosm of the precarious work economy as a whole, based on the shifting tides in the relationships between workers, the businesses that pay them, and the governments that are supposed to look after the interests of both.
Can we live with a system that disenfranchises the freelancer, makes subcontractors of those pushed or barred from employment, and externalizes all the social costs of those who do this jobless work? Something better than the Uber model will have to be ginned up, clearly. The only question is how far will it go and in which direction.
Even if the investors at Uber do the obvious thing, and fire Kalanick, there’s a storm coming.
Meanwhile, in the arena of public opinion, the boorish, bro-ish, and illegalish² operating model at Uber is leading to a consumer backlash, ranging from distaste at Kalanick’s harangue of a bankrupt driver, to anger about sexual harassment, all the way to a growing sense of the inequities inherent in the economic underpinnings of unregulated work markets. Will that only lead to a small bore response, like former Uber users deleting that app and installing Lyft on their smartphones? Or will we see a shift away from the ride-calling market platforms as a whole?
My bet is that the public response will start with just a limited anti-Uber backlash, and it may stop there. But it’s all a teetering house of cards. Even if the investors at Uber do the obvious thing, and fire Kalanick, there’s a storm coming.
The hollowness at the core of market platforms — their disconnect from the societal pact we need to hold our polity together — is part of a larger, broader social mismatch: the staggering shortfall in retirement investment in the US, our lack of workable paths to employment, our indifference to those falling between the cracks in our economy, and the shadows of automation threatening the livelihoods of millions.
Uber — and on-demand transportation as a whole — is only one thread of a larger, knotted discussion about the collapse of the social contract around work, and we can’t settle that one argument in isolation. We’ll have to cut the whole knot, and all at once, I’m afraid.
- For example, surge pricing can be viewed as a means to dynamically respond to increased demand for drivers, or as a failure to provide service at a deterministic price to the riders. And the question becomes ‘what are we optimizing for’?
- It’s only illegal if they get prosecuted, or legislated out of existence, though.