Cutting Corners: Uber, Lyft and the Dark Side of the Sharing Economy

The feel-good side of the sharing economy - aside from the fact that it feeds our convenience-determinant lifestyle - was supposed to be  that it reintroduced human values into the anonymity of the net-driven economy. People werent just providing a service for a fee, they were getting to know you, opening themselves up to the possibility of interaction and otherwise reasserting their primacy over that of the machines and devices.

And some of that may still be true, but the more we learn about some of the so-called sharing enterprises, the more we are forced to get the impression that at least some are old-fashioned exploitative conspiracies with a friendly tech face designed to obscure the fact that those providing the service are underpaid while those who created it are just trying to get rich by avoiding all of the safeguards and rules put in place by a concerned society justly desirous of protecting those who work and those who pay for their service. JL

Andrew Orlowski reports in The Register:

The "tech startup" and "sharing economy" labels are nothing more than gimmicks designed to swing web-smitten regulators in their favor.
More allegations have emerged of dodgy tactics on the part of car ride app Uber and rival Lyft – this time relating to so-called "brand ambassadors".
Glossy gadget blog The Verge obtained and published the handbook Uber contractors allegedly follow to woo Lyft drivers, under something called Operation SLOG. Whether this is legal or not – it surely is – it’s quite revealing. Before we get to the reveal, though, let’s take a step back for a moment and have a look at what each business really is about.

The more we discover about their casual-labourer-driving-any-old-car business model, the more these car ride apps look like embarrassingly old-school*, cheapskate taxi firms. The "tech startup" and "sharing economy" labels are nothing more than gimmicks designed to swing web-smitten regulators in their favour.
(And yes, we mean you, Neelie Kroes.)
Accusations about dirty tricks on the part of Uber and Lyft first emerged in a CNN report earlier this month – we’ve a summary here. The news channel gathered evidence that the two firms were trying to sabotage each other’s businesses using bogus rides that were then cancelled.
Crucially, the two companies rely on casual labour – but the potential labour pool for “new economy” taxi firms such as Uber and Lyft is actually quite limited. This makes the casuals worth a premium; they just don’t know it. One more Uber driver is one less available to Lyft. This means very aggressive recruitment is very important, depriving a rival's ability to operate in a given location.
If Uber is indeed pursuing the aggressive policies outlined in the report, it will be in response to a "problem" that is entirely self-made: it arises from the nature of the labour pool from which unlicensed car ride firms choose to recruit their drivers.
Remember that there’s no magical technical w00 to Uber, such as a Retina display, or a unique algorithm. It isn’t really a technology company at all. The "sharing economy", "disruptive technology" are a cover story.

Licensed to .... Ahhh, I see

Uber is really an old-school taxi company whose gimmick is dipping into the casual labour market. It uses a pool of potential drivers who aren’t registered with licensed firms, and perhaps would never do so anyway.
Taxi licensing varies in each country and even in each city – but the never-before-casuals is universally applicable to wherever Uber operates. (In the UK, municipal authorities license private hire firms and generally let them get on with it; many authorities offer a privileged "Hackney Carriage" licence, allowing cabbies to pick up passengers from the street. But it’s different wherever you go. For example, in Italy, drivers can’t be hailed as they drive by at all.)
The private licensed taxi business is comparatively casual anyway, with many drivers falling in and out as they need to, and many require them to bring their own car. By contrast, London’s biggest firm Addison Lee provides its own cars, but registers its drivers as self-employed. They have to provide their own sick cover. So the trend towards "casualisation" started long before Uber.

The RyanAir of taxis?

But what the gimmick allows Uber to do is indulge in radical de-risking, which is what RyanAir and EasyJet did to air travel. Yes, they use virtually empty airfields often far from their passengers' ultimate destinations to cut costs, as this didn’t require buying expensive landing slots at established airports and the newer airports were glad of the business. That was certainly part of the "innovation".
But what they largely did was increase the inconvenience and uncertainty – the risk – that passengers must endure as part of a low margin, no frills rides. Want a guaranteed seat? Go with BA, they’ll be happy to see you. Want a snack? Pay or bring your own. Want to get there with your luggage? You’ll have to trust us on this…

In the same way, Uber and Lyft can cut corners that private licensed firms – or even Addison Lee – can’t really cut. They do background checks on the drivers – but the "crowd" does a lot of the rest of the checking. They don’t check how clean the cars are. They don’t appear to fire drivers for unreliability, and they can’t reward their reliable ones.
Ah, you say, but Uber is a technology company because it’s using a new dispatch method – the internet. But if this is really a new dispatch method, it’s already being used by both private firms and the Hackney carriage end of the market too.
Kabbee, for example, provides a list of well-known private firms (although funnily enough, my preferred local firm isn’t on it – and that’s always cheaper). Hailo began life as a way for London’s black cabs to compete with Addison Lee, until it expanded to include private hire firms – and the cabbies gave it the bum’s rush.
So there are two trends here: increasing casualisation of the labour force, and new dispatch methods. And Uber is distinguished only by its reliance on casualisation.
That puts the car-ride firms' aggressive recruitment into a useful perspective. Uber has nothing unique to offer, just a distinctly brutal approach to its labour supply. It knows it.

What about regulation?

As I wrote recently, I don’t have an ideological objection to unused resources being priced and marketed. If you instinctively reach for a ban – where were you in 1994 when eBay launched, putting reputable toyshops out of business with their second hand tat? Today, nobody would seriously call for eBay to be banned – trade just goes on. But perhaps there should be an objection when a business appears to misrepresent itself. There’s no new, magical "sharing economy" here. Yet some areas of government are so stupid, Uber finds itself pushing at an open door.
For example, the European Commission’s "Commissioner for a Digital Agenda" Neelie Kroes appears to take its arguments at face value. The Commission’s office has talked itself into the ludicrous position (because it must) that every “digital startup” is morally superior and socially benevolent, whereas another kind of startup - an organic butcher, say, or a cleaning company - isn’t.
So it must advance the cause of anyone who claims to be a digital startup, particularly if they’re “disruptive”. Here’s Neelie’s representative on Earth fighting in Uber's corner:
“Because the disruptive force of technology is a good thing overall.”
Hook line and sinker.
The Hackney Cabs vs Uber dispute was presented as one of the stick-in-the-mud Luddites trying to fight change. And yes, the Hackney carriage end of the market is uniquely privileged by regulatory mandate. But the reality that Uber is simply a cheap taxi company that doesn't bother with the whole "get a licence from the pesky municipal authorities" thing seems to have been overlooked, and should be mentioned.
What should also be mentioned is its reliance – in common with so many "disruptive startups" – on cuddling up to regulators to get the law changed to enable their own businesses (or Bongonomics, as we call it). ®