There was something that was missing from the Uber Files revelations that the Gig Economy Project couldn't quite put our finger on, but thankfully Hubert Horan, a transport specialist and Izabella Kaminska, a journalist, have done.
In a piece on Kaminska's blog, the authors find it "inexplicable" that "an investigation of this scale could miss the actual story at the heart of the Uber phenomenon: the fact that Uber’s business model was patently suspect from the very beginning and should never have received the massive support from capital markets and the political and media establishment that it did."
And when you think about it, a deeper economic analysis really was the missing piece in the puzzle here, because without it French President Emmanuel Macron was able to get away with basically saying that all that illegality and bad behaviour was irrelevant as compared to the fantastic jobs and innovation that Uber brought to France. Thus, Macron was unashamed about the support he gave the company: "I would do it again tomorrow and the day after tomorrow," he said.
As Horan and Kaminska find, "Uber’s rapid growth and ability to drive competitors out of the marketplace have never had anything to do with superior productivity driven by technological breakthroughs". Uber was what Nick Srnicek, in his book 'Platform Capitalism', has described as a "lean platform": unlike a technology company like Apple which has enhanced the computer and thus added value, Uber never changed anything fundamental about picking-people up in a car. Their speciality was instead in outsourcing as much of the risk as possible to the driver (hence, 'lean') and in effective marketing of the company to investors to attracts billions in venture capital. Macron is wrong; Uber has not been a major jobs creator, it has replaced relatively stable taxi jobs with highly precarious Uber jobs.
Horan and Kaminska correctly point out that nowhere in the Uber Files was it mentioned that the company has burned through $31 billion while never turning a profit, nor does it question "the staggering and totally unprecedented $20bn in investor funding, 2300 times the pre-IPO funding Amazon required". And it's when this economic analysis is added to the picture that we can see why political corruption, tax evasion and use of illegal techniques to deceive government investigators were so central to the company's strategy, as rapidly monopolising markets and eliminating competitors was the only solution when you haven't actually addressed the problem of cabs being a low-margin business.
"It is absurd to argue that the toxic behaviours reported by the Guardian were due to aberrant behaviour by a few bad actors," Horan and Kaminska find. "Uber’s investors wanted managers to pursue the company’s meteoric growth at any cost and knew that this ruthless, hyper-aggressive behaviour was the only way to deliver it."
This is not meant to lament the journalists who have investigated the Uber Files. They may justifiably argue that it's up to others to explain the context of what they have revealed (although in 124,000 leaked documents, it's hard to believe there were no revelations which would make for a good story about the business model itself). But for those of us seeking to understand and act upon these revelations, it's essential to realise that Uber behaves badly for a reason: it can't succeed otherwise.
Ben Wray, Gig Economy Project co-ordinator
Gig economy news round-up
- FRENCH TAXI UNION TO FILE COMPLAINT AGAINST MACRON FOR "INFLUENCE PEDDLING": The National Union of Taxis (UNT) have announced that they will file a legal complaint against French President Emmanuel Macron for "influence peddling" and "conflicts of interest" in wake of the Uber Files revelations. The Uber Files revealed messages between Macron and Uber's former chief lobbyist in Europe, Mark MacGann, when the President was a Minister in 2015. The messages show Macron interfering in a dispute in Marseille over Uber's presence in the city in favour of the company, and claiming to have done a "deal" with the Cabinet which will help the company establish itself in France. As well as the legal complaint, UNT are calling for a parliamentary inquiry. “The active and assumed involvement of the former Minister of Economy and Finance in the establishment in France of the VTC company Uber, has aroused deep indignation within the entire taxi profession," Rachid Boudjema, president of the UNT, said. Macron has been dismissive of criticism in wake of the Uber Files, telling journalists: "I congratulate myself on what I have done." Click here to read more.
- BOLT DRIVERS AND RIDERS IN KYIV CONDEMN 60% CUT IN WAGES: Drivers and riders for Estonian platform Bolt have protested outside the company's offices in Kyiv after the company cut wages by 60%, despite the ongoing war in the country. The workers are demanding higher pay per-order and per-kilometre, with one driver stating that "they are trying to force us to work for pennies. It is almost impossible to feed one person on such a wage.” Another added that he has to “work 14 hours a day, 27 days a month” to survive. The workers also want Bolt Food to provide free or low-cost maintenance for their vehicles. The protest comes after Bolt Food riders in Lviv, a city in southern Ukraine, raised similar demands earlier this year. More than a third of jobs have been lost in Ukraine since the war began in February. Click here to read more.
- CATALAN PARLIAMENT PASSES "HISTORIC" PRIVATE HIRE LAW: Alberto 'Tito' Alvarez, leader of Elité Taxi Barcelona, has hailed the new law regulating private hire (VTC) platforms like Uber and Cabify in Catalonia as "historic". The new law restricts VTCs to limousines and passenger vans, in order to establish a clear separation between taxis and VTCs in the city. The number of VTC licences in Barcelona is set to be reduced from around 4,000 to 1,000. Alvarez, who was in attendance in the parliament as the law was being passed and was clapped by MPs in support of the Law, said that it was "an example to be followed by society and all the groups that are fighting, such as health workers or the 'riders'". Cabify's head of public affairs, Javier Dorado, said that he believes the VTC Decree law is "unconstitutional", and that they are considering present an appeal to the Constitutional Court on that basis. Click here to read more.
- PODEMOS PROPOSE INVESTIGATION COMMISSION INTO UBER FILES IN SPANISH CONGRESS: The left-wing Podemos ('United We Can') group, which is the junior partner in the Spanish coalition Government, has proposed a special investigation commission into the Uber Files, after the revelations last week following the leak of 124,000 documents. The party wishes to investigate the techniques used by the company to enter the Spanish market, including the pressure that was applied on politicians and regulators. The remit also includes analysing "the weaknesses of the Spanish and European legal system to face the abusive practices of transnationals that seek to enter the market against the regulatory framework". Rafa Mayoral MP, deputy of Podemos and the party's transport spokesperson, said the Uber Files was "a scandal of tremendous proportions that puts at risk the legal order of the world's democracies. We believe that it is time for this not to go unnoticed, it is necessary to investigate." Click here to read more.
- DUTCH COURT RULES UBER DRIVERS COVERED BY COLLECTIVE AGREEMENT: Uber has suffered another legal defeat in the Netherlands after a court ruled that the company must abide by a taxi collective agreement covering the sector. The US ridehail giant had lost a case last year which found that Uber drivers are employees not self-employed, and the loss of this second case means that Uber drivers will be entitled to all the associated rights of the agreement, such as collectively agreed wages, protection against dismissal and protection in the event of illness. Uber will also have to pay social security contributions. The company had argued that the collective agreement should not be generally binding across the whole sector because it believed just 48% of drivers were covered by it, but the Judge ruled in favour of the government, which said that over half of drivers are covered by the agreement. Uber is appealing last year's case on employment classification, it's as yet unclear if they will appeal this case as well. Click here to read more.
- BARCELONA RIDERS COMPLAIN OF "DEHYDRATION, FATIGUE AND SUNBURN": Riders in the Catalan capital of Barcelona have said they are having to ride in a heatwave with next to no support from food delivery platforms to cope with the extreme temperature. The CGT and CCOO unions have told 'El Periodico de España' that the subcontractors of Uber Eats do not provide sunscreen or places where riders can take refuge from the heat. At grocery delivery firm Getir, riders do not have a summer uniform and have to cycle wearing the Getir jacket, and that they can be reprimanded or sanctioned for taking it off, according to the CCOO. A rider for Glovo, which still hires on a self-employed basis despite the 'Rider's Law', said that the company gives the highest bonuses at the hottest part of the day, from 1pm to 5pm, making it difficult for riders to avoid working at peak temperatures, which have been as high as 40 degrees over the past two weeks. "Dehydration, fatigue and sunburn are usually the most frequent adversities that we see ourselves in these hot days," one Glovo rider, called David, said. Click here to read more.