“Sharing economy platforms exist for one purpose only, which is to make money for their investors”

An Interview with Tom Slee, author of “What’s Yours Is Mine: Against the Sharing Economy”

© Tom Slee

Tom Slee’s most recent book “What’s Yours Is Mine” is a perspicacious and scorching critique of the ‘sharing economy’ and its poster children, corporations like Uber and AirBnB. I talked to Tom about his book and his interest in the thematic.

Where does your interest in the sharing economy stem from?

I’ve had an interest in the ways that commercial web platforms promise democratization and deliver the opposite since reading Chris Anderson’s “The Long Tail” back in 2006. It’s a flawed book that got the key story around web platforms completely wrong, but in a way that had appeal. Anderson says that web platforms mark “the end of the hit” and the end of “gatekeepers”, and give more power to individuals instead of corporations; but he missed that the companies owning the platforms become gatekeepers themselves, so it’s a case of “meet the new boss, same as the old boss” only it’s bigger and global in reach.

So when Sharing Economy platforms started appearing in 2012 or so, surrounded by the same talk of democratization and of replacing corporations with peer-to-peer personal exchanges, it was not too difficult to see that the same thing would happen. And now here we are, with Uber just a few days ago taking over $3B from the Saudi Arabia public investment fund: massive money from the world’s wealthiest, which can only make a return if they overthrow democratically made rules in cities around the world.

We are often told of the many benefits of the sharing economy–for instance, an allegedly improved allocation of resources, or with services like Uber, a decrease in environmental pollution. How much of this is true or are we falling prey to delusional stories of the sharing economy’s advocates?

Sharing Economy platforms exist for one purpose only, which is to make money for their investors. Their impact on the environment will be positive or negative inasmuch as it aligns with that purpose.

It’s easy to tell stories that the Sharing Economy has a sustainable impact if you make the right comparisons. So with Airbnb, you can think of three groups of people: hotel travellers, Airbnb travellers, and stay-at-homes. When it is talking about its economic impact, Airbnb compares Airbnb travellers to stay-at-homes and says they bring a lot of money to the cities in which they operate; when talking about its environmental impact, Airbnb compares Airbnb travellers to the same number of hotel travellers and says they are running a green business. But you could make the comparisons the other way and come out with a completely different story: the Airbnb narrative sounds nice, but only if you don’t think critically about it.

The environmental impact of Uber likewise depends on how much they displace private cars, how much they displace public transit use or create new journeys that people did not take before. So it could go either way. But it would be a mistake to think that environmental impact has any effect on Uber’s business plans: they have bigger fish to fry.

The economist Tyler Cowen argued in a TED-talk that narratives cannot be trusted. He said that the more inspired a story makes him feel, the more nervous he gets. Is this something you can relate to regarding the sharing economy?

For sure. I include a number of Sharing Economy stories in my book because the “origin myths” of companies are used so widely, and because Airbnb in particular focuses on heartwarming stories of its hosts in its marketing efforts. And it’s not that these stories are false, just that they are selected from many other stories to paint the picture Airbnb wants to paint. Of course, people should distrust my own story telling: it’s a common technique these days to start technology books or business books with a story (one I resisted) and it is, as Cowen says, not to be trusted. Anyone starting a book with a story is trying to set you up to be receptive to the message that follows, and you should absolutely be nervous as you read it.

Tyler Cowen’s TED-talk “Be suspicious of stories” during TEDxMidAtlantic in 2011.

But I’d go further: statistics cannot be trusted either. The more specific the statistics I read, the more nervous I get. Because (especially given the massive amounts of data that many sharing economy companies have collected), statistics can be chosen selectively as well — and are chosen. Stories are powerful because they can tug at our heartstrings; but data can be powerful because it has the ring of authority and objectivity. Don’t be fooled by this appearance: if it’s not independently verified, data can be just as much a marketing tool as narratives.

You also write in your book that many companies of the sharing economy either try to eschew regulations or simply ignore them. Why do they get away with that? And why are they not interested in finding a compromise with regulators?

There are many reasons behind the aggressive and confrontational tactics that Sharing Economy companies have adopted. One is a strange kind of belief in the power of technology: some of the founders genuinely seem to think that their algorithms can do better than regulations. But (to take one example), reputation systems are completely incapable of replacing any kind of regulation: they are a complete failure when it comes to their task of identifying quality in service providers.

There seems to be a belief in Silicon Valley that a failed algorithm is just a step on the way to success, and the fix will arrive in the next generation of software. But they seem oblivious to the fact that many regulations are there to deal with conflicts of interest, and algorithms do nothing to address that problem. So if something goes wrong on a Sharing Economy service, it’s in the interests of the platform to cover it up, and that’s a big problem.

I think they’ve been successful in getting away with it by being very effective at building and wielding loyalty from a core base of supportive consumers, as well as old-fashioned lobbying powered by lots of money. When coupled to the big narrative (which cannot be trusted) that Sharing Economy platforms are the inevitable future, it makes for a very effective campaign.

The cover of the English and the German edition of Tom Slee’s “What’s Yours Is Mine”.

The leading companies are not interested in many compromises because their business models are based on avoiding costs. They avoid taxes, they avoid insurance costs, they avoid the costs of proper safety inspections, and they avoid registration costs that many cities use to fund complementary services.

Even when compromise does happen (like Airbnb paying tourist taxes in some cities) the companies tend to push for a path that minimizes city influence over their businesses. So Airbnb remits taxes, but does so in a way that hides the location of its hosts, so that cities have a difficult time limiting the number of hosts even in parts of cities that are overrun with tourists.

A second reason that companies resist co-operation is that giving way in one city may set a precedent for others. There are some exceptions: like Uber accepting fingerprinting of its drivers in New York City and then leaving Austin when it demanded the same, but in general they have a lot at stake in keeping their baseline business low cost.

A German comedian once said of Communism that it was “in principle a good idea but doomed to failure in reality“ — could the same be said for the sharing economy?

There is some truth to that, and part of the reason is the same, which is that power inevitably corrupts, and so it is essential to have a means of holding the powerful accountable. The trouble is, those in power often believe they are so virtuous that they won’t be corrupted. A British politician, the late Tony Benn, said that “If one meets a powerful person — Rupert Murdoch, perhaps, or Joe Stalin or Hitler — one can ask five questions: what power do you have; where did you get it; in whose interests do you exercise it; to whom are you accountable; and, how can we get rid of you? Anyone who cannot answer the last of those questions does not live in a democratic system.”

The trouble is, those in power often believe they are so virtuous that they won’t be corrupted.

We know how it went with Communism, but capitalism has its own cadres of unaccountable, powerful people. Web platforms don’t have the same influence just yet, but we need to ask the Mark Zuckerbergs of the world those questions, and we need to ask Uber and Airbnb the same. And right now, there is no good answer — no mechanism for keeping them in check.

We have seen that some countries have tried to impose limits on the activities of companies like Uber. Yet, the major players of the sharing economy keep on growing, seemingly without any upper limit. What needs to be done to contain at least their most unbridled ventures?

We have seen some successes recently, in which cities (and countries) have pushed back successfully. Berlin has clamped down on Airbnb listings that were having bad effects throughout the city; Iceland looks like it may do the same, and Barcelona has been working at the problem. And cities can learn from each other too, so these may not be isolated events.

With Uber, their high-spending attempts to buy favourable rules failed in Austin, and in Montreal too they have had to retreat. One thing that seems very interesting is that in both cities there are signs of alternative services filling the gap that Uber is leaving. Uber has so much money and organization behind it, that once it gets established in a city it is difficult for small services to compete against. Keeping Uber out may actually be a pro-innovation stance: creating a vacuum that other companies can fill, perhaps with less corrosive business models. For me, that’s one of the bright signs of recent times.

The interview as it appears here was slightly edited for clarity.

Felix Simon is a journalist and graduate in Film- and Media Studies of Goethe-University Frankfurt. He currently studies Social Science of the Internet at the University of Oxford and writes for the “Feuilleton” of the “Frankfurter Allgemeine Zeitung” (F.A.Z.) as well as the online-edition of “Die Welt”. On “Mediumhe writes about various topics. He tweets under @_Felix Simon_ and deems it odd to refer to himself in the third person.