We have all succumbed to the “digital age” with constantly-updated technology, easy-to-use consumer applications, and click-of-a-button, to-your-door shopping options. How did we get here? Well, platform firms of course. Platform firms rely on the technology of the “digital world” and operate on Apps. These platform firms have absorbed and overtaken many key industries such as taxi, retail, and hotels. The most common forms of platform firms are Uber, Google, Meta, and Airbnb. In recent years, it is obvious that these large firms have been immensely successful; however, they are moving aggressively through our economy. These powerhouses account for twenty percent of the United States stock market, and studies are showing that they are becoming unprecedentedly powerful. So, you are probably thinking…what’s the problem? The main issues arising out of these platform giants are rooted in the corporate governance and regulation, specifically in the labour sector, of these industries.
Uber has been extremely popular for multiple years, and many have taken time to critique its business model. Platform firms and “digitally enabled” workers rely on quick and easy side hustles like Uber when they fall on employment hardships. Unfortunately, Uber has capitalized on their business model to hire drivers to be “independent contractors.” This means that Uber serves no obligations to provide unemployment insurance and do not assist in bearing any additional costs (insurance, maintenance of vehicle, gas, etc.). Uber also sets the types of fares, how much the fare costs, and then proceeds to take a commission from the ride. Eric Tucker analyses Uber in comparison to traditional taxi services. At the end of the day, traditional taxi drivers and Uber drivers make around the same amount of income.
Due to great outrage in several countries where Uber operates, many drivers have banded together to fight this exploitation. A landmark case was set in New York where Uber drivers were ruled eligible for unemployment and worker’s compensation. Fortunately for this taxi giant, stagnant regulation and legislation policies enable them to operate around these obligations. Many of these claims are still being litigated today with no light at the end of the tunnel.
The rise of platform firms has morphed drastically from the traditional business model. The entrepreneurs who start these businesses create unstable environments for regulatory bodies and lawmakers alike. The “gig” economy calls for innovation in social policy, mainly to protect workers who rely on these services for basic survival. However, due to the popularity and downright dependence society has on these firms, their power soars higher than the government can go. This allows for a new form of corporate governance to emerge, with unstable and toxic conditions of management styles. This not only poses a problem to society, but the concentration of power among a few can dictate new market controls with the click of a button.
While on the job working for these platform firms, employees are also under the scrutiny of surveillance. Platform firm employees, specifically Uber, are constantly critiqued by the algorithm. As soon as a driver logs onto the app, drivers are watched. It is obvious that the Uber app relies on GPS awareness to locate customers, but it has more of a depth effect when put in the driver’s position. When the driver is offered a fare, it is time sensitive. If they do not respond, the fare gets passed onto the next available driver. If the driver were to decline multiple trips in a row, they would be forced out of the app for a set amount of time. These controls allow Uber drivers to feel vulnerable and exploited compared to traditional taxi services. This is not fair in terms of employment, as these drivers depend on any ride that comes. Now, if you are thinking “just take the ride,” there are many factors as to why the driver will not. First, it may be a lengthy drive for the fare price. Second, it may be inefficient to take the ride (for example: having a trip from downtown Toronto to the suburbs of Vaughan, just to go back downtown again). Third, it may be that the driver does not want to take the ride due to the riders’ rating. Uber thrives on this – their goal of efficiency enables control over drivers. This is a system that demands regulation.
Therefore, the idea of regulating platform firms is mission impossible…even corporate governance is out of the question. Platform firms’ corporate governance model is to expand and keep shareholders happy. But what about the employees who keep it going? It is evident that law and regulation alone cannot address the dynamic sphere these firms have presented, but policymakers need to use these specific sectors into consideration when creating policies to protect who matters most: the employees who serve the industry. It may seem as if these ideas are far-fetched; however, it comes down to basic employment regulation standards which are non-existent in platform firms.
Source: Tucker, E. (2018). Uber and the Unmaking and Remaking of Taxi Capitalisms: Technology, Law, and Resistance in Historical Perspective. Retrieved February 8, 2023, from https://www.jstor.org/stable/j.ctv5vdczv