Can we hijack Le.Taxi ?
Regulating the Gig Economy
Late 2015, the French public services launched “Le.Taxi” as an answer to the conquest of the old, well-supervised taxi market by independent drivers, through the king of the gig economy : Uber. Rather than developing its own public mobile app, the French administration chose to open a taxi register in the form of an online service, revealing real-time location and availability of taxis across the street. The private sector could therefore develop fully interoperable client-side or professional-side applications connected to the regulated database. From their smartphone, users have the ability to order a taxi, no matter what application drivers are using on their side. This solution has received a mixed response, from enthusiasm among policy-makers to the disappointment of professionals.
Is it an outdated answer that goes against the tide and evidences the State’s decline, or an innovative weapon that must set an example?
When web platforms become regulators
Let us first reset the example into its broader concept. Facing an increasing complexity, growing interdependency and rapid change, public policy has progressively moved from traditional legislative proceedings to a more adaptable governance where regulation is key. A framework in which web platforms, often brought up with hacker culture and trained on tax avoidance practices, particularly shine.
States are therefore being challenged not only on their commercial public services (eg. Amazon versus postal services) but also on their ability to supervise markets or even more sovereign issues. In the example of the gig economy, Uber is now regulating competition on its own internal market, setting universal prices without being blamed to be a cartel in any way. Deliveroo circumvents the traditional labour market, but defined its own minimum wage and labour rules to attract couriers in the UK. To a certain extent, social networks have also taken charge of freedom of speech, a common constitutional principle, as new information gatekeepers, while tech giants have already launched their own ethics committees on AI…
As these American, privately owned and profit-driven companies take over States’ prerogatives, how not to raise concern about democracy ? Especially when one of the most famous Silicon Valley investors once claimed
“I no longer believe that freedom and democracy are compatible.”
— Peter Thiel
Competition may not be the answer
The State’s reaction to those companies, which derive their influence from a monopoly position, is the one prevailing since the 1970s : trying to promote competition to balance power. But focusing on consumer protection can be misleading for State regulators.
In a digital context, where information is a non-rival good, web platforms experience strong network effects. This means that consumers usually value the size of a platform more than any other feature. That is why Facebook users would hardly move to a social network where they could not find their friends, and Uber can guarantee the quickest client-driver matching thanks to its critical mass of users on both sides. It looks as if consumers were pleased with monopolies!
Le.Taxi took those network benefits into account. The public platform promote competition by imposing interoperability. Users have access to the entire pool of drivers and vice-versa, no matter which application they choose. Unfortunately, after one year, 6 applications are available on iOS and Android, but none of them exceeds 10.000 downloads, except the one developed by the city of Paris… It is then easy to understand why taxi drivers firstly requested a public national application. Competitive ecosystem: 0, Monopolistic market: 1.
Le.Taxi, an epic fail? Not so sure.
The initiative hardly took off because it was limited to the very regulated french taxi market, whereas Uber is still operating on a sector which is currently too dynamic and unbounded to be legally framed. Another viewpoint shows that Le.Taxi is a radical shift in the way we could supervise digital markets. A solution that could have been a bargain when the French government tried to frame real-time ridesharing via the Thévenoud Law.
How? As a public and open database with the only access condition being an agreement to the terms of use, Le.Taxi put the public authorities at the center of a market. State thus plays the role of a meta-platform relying on a technical infrastructure. Any company is free to connect to the database to run its service as long as it respects the licence. Market players are not hampered and the state does not have to worry about the application design, development, marketing etc… This is the strategy of every web platform, from Google to Twitter, when opening their services or infrastructures to third parties!
Le.Taxi as a new schema for ride-sharing regulation would only require the legal framework to be set once. Drivers must register with public authorities to be available on the database. Web platforms have to submit any drive to the public platform for certification. Then, it is up to the regulator to adapt the terms of use based on the data they have gathered in real-time. This format is very well suited to the French ride-sharing market, where drivers already must register at public office to be able to carry clients, but can’t we think of it as a reliable framework for Deliveroo’s self-employed couriers or AirBnB accomodations ?
Without going so far, governments must now think of their old administrative registers as key market infrastructures, and tools for a soft regulation.
— Henri Verdier, Pierre Pezziardi
Conclusion
Web platforms challenge states by taking some of their prerogatives. Competition could be an answer to those threats on democracy as it may avoid power concentration. However, it seems that consumers tend to choose monopolies by nature. That is why competition law will have to be redefined, with a focus on interoperability and the use of a technical infrastructures. In such a dynamic environment, where law is increasingly confused with technology and computer code, states must fight with the same weapons as tech companies.
Le.Taxi is what uberization could have looked like since the very beginning. And that is why regulating the digital economy will not be possible if governments do not fit themselves with strong digital infrastructures.
