Why is UBER worth it, for UBER only.
Critical reflections on the digital monopoly which is taking over public transportation and something much more important.
Uber is popularly seen as an ‘innovation’ and as a great transportation service. This digital platform offers customers an on-demand service at the most convenient fee guaranteed. How this is made possible does not seem meaningful, right?
This article focuses on Uber as a leading example within the sharing economy, to better understand its defining trends, stakes. I will be looking at this phenomena from three different perspectives: the user’s, the worker’s (drivers), and the city’s.
Instead of the old traditional model, we are observing the development of a new model, apparently more horizontal and participatory, in which customers interact directly with one another, the so-called platforms. With a smartphone in their pocket, people can suddenly do things that previously required the intervention of a physical intermediary. It is a transformation that we are observing in many sectors of the economy: where taxi companies transport passengers, Uber connects drivers and passengers; where hotels offered hospitality services, Airbnb simply joins hosts and guests. Moreover, the list goes on.
The technology guru Kevin Kelly wrote in his book The Inevitable that the flow of ‘upgrading’ is impossible to stop. He says ‘How solid products now are sold as services. Your solid car parked has been transformed into a personal on-demand transportation service supplied by Uber, Lift, etc. […] You get a better telephone every few months in an uninterrupted betterment as we moved from a daily mode to real time. If we message someone, we expect them to reply instantly. Uber, the world’s largest on-demand taxi company, owns no vehicles. Instant borrowing gives you most of the benefits of owning and few of its disadvantages’.
So what exactly distinguishes Uber from traditional taxi companies? Three things mainly: A payment infrastructure which makes transactions simpler, an identificative infrastructure for not loading unwanted passengers, and a sensor infrastructure, present on our smartphones, which tracks the location of the car and of the customer in real time. This list of things has little to do with transport: they are secondary aspects that traditional taxi companies have always ignored. The main secondary aspects today relate to data, algorithms and server power that, by optimising the user experience, suddenly become not so secondary.
USERS
When you request a ride, you don’t need to tell Uber where you are. You don’t have to settle the payment at the end. Your phone does that for you. Uber uses the phones of the drivers to locate precisely where they are so that Uber can match a driver closest to you. You can track his arrival to the minute. Because almost anyone who drives can become an Uber driver, there are often more Ubers than taxis.
Uber excels in squeezing resources. We are talking about a perpetual race, where Uber cars never stay still and can pick up passengers everywhere they go. Today, there is no competition. Uber uses the advanced technologies present in our smartphones to offer passengers extremely low rates; a result partly achieved thanks to sensors, data collection and algorithms; and partly thanks to its global presence secured by capital injections from investors such as Goldman Sachs and Saudi Arabia. This is why Uber operates in the short term on a large scale and absorb losses by offering low tariffs in order to destroy competition.
Today, tech firms are different from old monopolies because they often push the prices down and are generally excellent for consumers. Some, like Facebook and Google, are technically free to use. In Tech vs People Jamie Bartlett, clearly expresses the consequences of this rhetoric for democracies. By owning the infrastructure of these massive digital platforms, these companies gain the unprecedented opportunity to tweak and nudge the public debate to their own benefits. In September 2017, Transport for London decided not to renew Uber’s license to operate in the city. In response, Uber started a petition on the website change.org and encouraged its massive user base to get involved. It has been the fastest growing petition in the UK in 2017. Uber kept its license.
The fact that a small bunch of private companies have so much power over the structure and content of the public debate, the information we receive and how we communicate, bothers only a few.
You get your ride in time and cheaply, but Uber receives so much more.
Since 2006, every car carries a chip that records its speed, braking, turns, mileage, accidents whenever the engine starts. In the same way, the information about where, when, and who you call or text is stored for months even years in your smartphone. Uber, Lift, and other decentralised rides record your trip; they get data on the time and place of your activities, as well as their frequency and intensity. These data have value; they are assets which you can be sure will be exploited in every way the terms and conditions agreed allow them to. These include the development of behavioural models, analysis, projective simulation and the training of machine-learning algorithms.
Uber’s value is estimated at around $ 70 billion. How do you think it is possible for an algorithm which brings together supplier and demand to be worth this much?
Another thing to be considered is that as a consumer, you are not protected. Instead of adhering to a precise code that defines the rights of the customers and the obligations of the service providers, the platform operates by relying on the knowledge and feedback given by those who engage with the service. Your reputation or rating reflects what others know about you. So everyone can quickly find out if you are a lousy customer or an unruly driver. This ‘dynamic’ reputational system does, however, have its limitations. In the United Kingdom and the United States, some Uber drivers were accused of discrimination against disabled people because they refused to put their wheelchairs in their trunk. It could be expected that the anti-discrimination laws that apply to taxis also apply to Uber; instead Uber claims it has its own anti-discrimination policy, not as a taxi company but as the technology company or the platform it is. Uber uses its platform status to protect itself from legal problems such as consumer protection laws.
WORKERS
It’s appealing to become an Uber driver obtaining a minimum income when the job market is precarious and it is difficult to find stable employment.
Today, the goods that we own can be easily put back on the market. The sharing economy is capable of converting any product into a rentable object, transforming us into perpetual opportunists. Everything we possess can be categorised, from tangible goods to intangible thoughts. The high levels of youth unemployment, the stagnation of incomes and the rise of property prices all contributed to making today’s innovation rhetoric of sharing economy something like a life vest for the less well.
In his book Silicon Valley: I Signori del Silicio [1] Evgeny Morozov argues that it is undeniable that the sharing economy makes the consequences of the current financial crisis more bearable, but he highlights the fact that in dealing with the effects of the crisis nothing is being done to remove its causes. If the progress of information technology allows some of us to finally get away with less by relying mainly on a more efficient distribution of resources, it is no cause for celebration.
‘[…] it’s like distributing earplugs against annoying street noises, instead of doing something to reduce them. Sensors, smartphones, apps: these are the earplugs of our generation’.
Platforms like Uber have appropriated the rhetoric of gift-oriented common goods, in which individuals can directly interact with each other, jumping intermediaries. However, Uber itself acts as an information intermediary portrayed as a courageous and innovative platform which dispossess the hated taxi companies. This univocal representation does not consider the model itself: as Uber workers enjoy minimal social protection networks and they must take on risks that previously concerned their employers. Collective claims and representation are almost non-existent. So far, the growth of the sharing economy has led to growing precariousness, as well as an erosion of job’s security, social protection and social safety nets for workers (health, pensions, maternity rights, etc …). On-demand platforms treat their workers as freelancers, not as their employees. Companies use this structure to outsource most of the costs to workers, reducing collective bargaining and implementing invasive mechanisms based on reputation and rankings to minimise costs and to monitor workers by making them more dependent.
You cannot replace laws with feedback systems ranging from one to five stars.
Fortunately, collective organisations of temporary workers are emerging. The ABDA (App-Based Drivers Association) in Seattle is an organisational model for drivers in the transport sector that represents owners of vehicles and drivers of Uber, Lyft, etc … The ABDA tries to ensure that the ‘drivers via app’ are represented in a unitary way and have sufficient resources to carry out their demands in the growing industry of digital platforms dedicated to transport.
This is a significant but limited improvement since drivers have no other employment alternatives as certain and flexible.
It is natural for the less well off to take the opportunity of turning their cars or their personal data into commercial goods. Ours is becoming a world where minorities struggle on low-wage service jobs, serving the mostly white affluent tech workers.
CITIES
In the last thirty years, a dominant logic of liberalism in the political landscape of Western Europe and North America has placed the interests of finance before any other aspect of society. Cities have found themselves subject to immense pressure which led them to delegate and to allow subcontracting to private institutions. The privatisation of parts of the state is evident in America where the main functions, as the health system, have been delegated to private bodies, while the central government only deals with paying part of the bill. Similarly, the British NHS has relied on Deep Mind (Google), leaving the data of over 4 million patients to the algorithms of the latter. While such processes move on technological capabilities to provide significant savings to consumers through the implementation of AI services, it also takes advantage of those same technologies to create short-term and extremely flexible (precarious) jobs within the sharing economy.
Evgeny Morozov highlight in his book Ripensare la smart city [2] that if we consider the prediction according to which the costs of transport will freefall, it is easy to understand why the most run-down cities are beginning to seriously consider the idea of subcontracting public transportation to companies like Uber. For a city, the idea of fighting these platforms actively involves the immediate drift whereby the citizen enter in conflict with its own city -see the London petition example mentioned above- simultaneously creating discontent amongst the slice of its population that uses these companies to earn or to save money. On the other hand, total inaction towards these platforms means isolating and alienating another group of people. Just think of the tenants who, because of the exponential use of Airbnb and the gentrification process it causes, see their rents skyrocket; or of the elderly who use public transportation and don’t know how to use or they don’t own a smartphone. The only long-term solution for cities would be to set up platforms that only respond to the interests of their citizens.
Today many of the most popular platforms are real monopolies that ride the network economies deriving from managing a service and whose value increases with the growing number of people that use them. Venture capitalists like Peter Thiel, writer of Zero to one, want us to believe that this state of monopoly is a feature of the system, not a consequence of it. But if these companies were not monopolies, they would never have had so much money to spend on innovation. Uber has a model ‘growth before profit’, holding money from venture capitalists since they chase market domination. Uber has been running billion-dollar losses for years; when there will be no competitors left, their tempting rates may properly be inflated.
Given the enormous profits (largely untaxed) that these companies are able to produce, the world of platform capitalism, despite the strong rhetoric around them, is not so different from its predecessor. The only thing that has changed is who pockets the money.
We need real infrastructures that ensure everyone the same conditions of access and use. However, cities are struggling to introduce fair rules on the taxation of large digital platforms and technology companies, and are proving unable to support fair competition among local actors. A new important aspect in terms of regulations is the one of algorithm transparency, in which governments and antitrust authorities are beginning to request access to company data to prevent ‘algorithmic discrimination’ in regards to dynamic pricing and personalised insurance which might target the most vulnerable citizens, for instance. The risk is that the sharing economy will erode the local industry more and more, generating unemployment and precariousness especially among the younger sections of the population.
The truth is that companies like Google and Uber are specialised in data extraction. Their principle is to collect the most significant amount of data possible by encouraging the activities that generate them or by financing them through advertising. They can always pretend to be saviours in the public sector. Cities do not factor, use or measure data the same way, so they tend to give them away lightly in exchange for ‘nominally’ free Wi-fi connections for citizens or advanced traffic analysis software for city planners. This way cities set up a dangerous dependency from technology companies.
Data often has nothing to do with advertising. In reality, they are used to accelerate the development of artificial intelligence (AI) technologies, which help the company automate processes that currently require human intervention. Ultimately, it is who controls the means of production of most data that develops the best AI, making all others dependent on services based on this algorithm. At this point, the services enhanced by the AI can be used to optimise the operational and management procedures of a city further. Cities that flirt with Uber are in danger of being too dependent on data flows.
Why let Uber act as an intermediary? Instead of letting companies accumulate all sorts of information about where and when their citizen go, city administrations should gather these data themselves to devise and provide their own services. Uber manages to be so effective because it controls the main crucial data points: our phones give it all the required information to plan a trip. Ask yourself: is it right for Uber to own the data of its customers and to use them as currency in negotiations with the city authorities or even to sell them to the highest bidder?
Uber’s vision is clear: launch the app on your phone, and a car will appear to take you wherever you want. The fact that walking is not convenient from Uber’s point of view does not mean that it should not be considered as an option where possible. Would Uber’s data ever say that we need fewer taxis and more cycle lanes and pedestrian ways? If we do not want the future of urban transport to be the car, we shouldn’t rely on Uber to counter the austerity ideology that drives transportation budget cuts.
Governments could oppose to such platforms, but they have budgets to work within. Uber and Airbnb are allowed to use the data as they wish, increasing their income while they step in and help citizens manage their finances. The sharing economy will never replace our current economy of debt; they will coexist. Digital platforms behave like any other sector: no company, unless there is profit involved, would push for radical social changes. Cities should favour local data platforms that are open and decentralised, through which citizens can use data to make operational decisions and develop new services. The future of sharing economy is centred on the ability of cities to take control of digital platforms, respecting workers’ rights, experimenting with new circular economy models in which data are a shared asset. In this way, the fundamental rights of citizens are guaranteed and the agency is equally distributed between local businesses, cooperatives and social organisations which offer their services relying on the use of public data infrastructure.
Moscow has been successful in reaching an agreement with Uber in March 2016. The US technology giant is allowed to operate within the Russian capital on the condition that he uses licensed drivers and shares the data he collects with the authorities. Having access to Uber’s data, the Russian capital can assess the effect of its transportation system on the urban environment, to then regulate the taxi market and guarantee the fairness of the tariff system, preventing Uber from destroying local competition. Similarly, Amsterdam is negotiating a deal with Airbnb to block illegal rents, resulting in the creation of FairBnB, an alternative response to the skyrocketing prices of rents.
The development of open digital infrastructures, open data platforms, p2p-based knowledge production networks, decentralised technologies such as blockchains and so on, can create the necessary conditions to promote collective action aimed at fostering social transformation within cities. LaZooz, for example, is a project originally developed in Israel and designed to reinvent the sharing of travel by car. It is based on the blockchain but replaces the ‘proof-of-work’ method of Bitcoin, which requires immense computational skills, with the ‘proof-of-movement’, which generates ‘zooz’ tokens. As soon as you start driving, you start earning ‘zooz’. The overall goal is to build a community of users and reward those who contribute the most to the operation of the platform. This community-driven rewards system is the added value that is missing from Uber who does not expect a community to take control of its service and thus feel empowered.
CONCLUSION
Digital platforms like Uber are considered as progress and create benefits for each aforementioned perspective analysed: users, workers and cities.
As a former Uber Eats delivery driver in Amsterdam, this job was an easy short term solution that allowed me to make ends meet while doing other work. But what I discovered and what we uncover when looking more in-depth at the mechanisms of digital platforms like Uber, is that they have tremendous socio-economical consequences in the long-term resulting from the dependencies they foster.
As users, we depend on a system that makes us seek the lowest prices and the readily available, limiting our privacy and options with time.
As workers, we depend on an uncertain job that was initially supposed to be an easy income solution.
As cities, we depend on digital platforms for data collection, as well as on the approval of citizens for decision making, limiting our ability to regulate the way digital platforms operate.
However, it would be unfair to blame cities for adopting strategies promoted and propagated globally in the first place. In this sense, the use of private technological equipment providers should not be considered a phenomenon born of malicious intent, but rather as the product of a desire to make things work at the expense of the lean resources that urban centres currently have at their disposal. Digital giants are redefining every right as a service (even free) as long as it is possible for them to collect and accumulate the data supplied. The collection of data by our digital devices is problematic, but the issue originates from upstream when they are designed rather than in the way they are used.
The challenge is to move from intentional surveillance capitalism, based on continuous extraction and monetisation of citizens’ personal data, to a system capable of socialising data. Perhaps the solution lies in using data to conceive a public infrastructure and experiment with new forms of cooperativism, social and democratic innovations for the cities to rethink the future of welfare and sustainable economic models. [3] Such alternative forms of public ownership of platforms and services based on data-intensive algorithms would help to create a more democratic and cooperative economy, capable of providing new rights to workers and citizens and to overcome the logic of speculation, profit and short term results.
NOTES
[1] [2] These books have only been published in Italian.
[3] See, Iaconesi Salvatore, 2018. Oltre il GDPR, Dalla legge alla ritualità. (Italian)
