From The Guardian:
Hardly a day goes by without some tech company proclaiming that it wants to reinvent itself as a platform. Back in March, when South Korea banned Uber, the company promised to let local taxi drivers use its platform – along with its matching services.
Facebook pulled a similar trick in early May: having run into trouble with its pseudo-humanitarian effort to provide free internet access via a project called internet.org, it, too, promised to turn it into a platform. Now, internet.org users, most of them in the developing world, could also enjoy free access to apps other than those developed by Facebook.
Some prominent critics even speak of “platform capitalism” – a broader transformation of how goods and services are produced, shared and delivered. Instead of the tired conventional model, with individual firms competing for customers, we are witnessing the emergence of a new, seemingly flatter and more participatory model, whereby customers engage directly with each other. With a smartphone in their pocket, individuals can suddenly do things that previously required an array of institutions.
Such is the transformation we are witnessing across many sectors of the economy: taxi companies used to transport passengers, but Uber just connects drivers with passengers. Hotels used to offer hospitality services; Airbnb just connects hosts with guests. And this list goes on: even Amazon connects booksellers with buyers of used books.
. . . .
[I]nstead of adhering to a precise and rigorous code that spells out the rights of customers and the obligations of service providers – the cornerstone of the modern regulatory state – platform operators rely on the widely distributed knowledge of participants in a service, hoping that the market will eventually punish those who misbehave.
In the free-market utopia of thinkers such as Friedrich Hayek – the true patron saint of the sharing economy – your reputation would also reflect what other market participants know about you. Thus, if you are a nasty customer or an ill-mannered driver, everybody else will soon discover this, and specific laws to police your behaviour are rendered unnecessary.
. . . .
In reality, though, such a perfectly liquid and dynamic reputation marketplace is nowhere to be seen. A recent lawsuit in the US highlights its absence. Uber drivers have been accused of discriminating against disabled people by refusing to put their wheelchairs in the boot of their car. One would think that anti-discrimination laws that apply to taxis would also apply to Uber. Uber says it has anti-discrimination policies – and that it’s not a taxi company, it’s a technology company, a platform. Here, there is clearly no easy feedback mechanism to assist disabled travellers: this is what consumer protection laws are for.
. . . .
What is it that Uber’s platform offers that traditional cabs can’t get elsewhere? It’s mostly three things: payment infrastructure to make transactions smoother; identity infrastructure to screen out any unwanted passengers; and sensor infrastructure, present on our smartphones, which traces the location of the car and the customer in real time. This list has hardly anything to do with transport; they are the kind of peripheral activity that traditional taxi companies have always ignored.
However, with the transition to knowledge-based economy, these peripherals are no longer really peripherals – they are at the very centre of service provision. Today, any service provider, and even content provider, risks becoming hostage to the platform operator, which, by aggregating all those peripherals and streamlining the experience of using them, suddenly moves from the periphery to the centre.
. . . .
Few industries could remain unaffected by the platform fever. The unspoken truth, though, is that most of the current big-name platforms are monopolies, riding on the network effects of operating a service that becomes more valuable as more people join it. This is why they can muster so much power; Amazon is in constant power struggles with publishers – but there is no second Amazon they can turn to.
. . . .
This, however, still doesn’t address the question of just how much power we should surrender to these companies. A publishing industry ruled by Amazon and Facebook might produce lots of innovations – but is there any guarantee that it would actually produce any significant articles or books?
. . . .
Most platforms are parasitic: feeding off existing social and economic relations. They don’t produce anything on their own – they only rearrange bits and pieces developed by someone else. Given the enormous – and mostly untaxed – profits made by such corporations, the world of “platform capitalism”, for all its heady rhetoric, is not so different from its predecessor. The only thing that’s changed is who pockets the money.
Link to the rest at The Guardian and thanks to Dave for the tip.
Now is a good time for a reminder that PG doesn’t always agree with items that he posts.
PG will point out that nobody is forced to give their money to Amazon or Uber or Airbnb. People voluntarily choose to give their money to these organizations because Amazon, Uber and Airbnb provide something that’s better than the alternatives available.