This article is more than 1 year old

Uber, Lyft and cutting corners: The true face of the Sharing Economy

Casual labour and tired ideas = not really web-tastic

The RyanAir of taxis?

But what the gimmick allows Uber to do is indulge in radical de-risking, which is what RyanAir and EasyJet did to air travel. Yes, they use virtually empty airfields often far from their passengers' ultimate destinations to cut costs, as this didn’t require buying expensive landing slots at established airports and the newer airports were glad of the business. That was certainly part of the "innovation".

But what they largely did was increase the inconvenience and uncertainty – the risk – that passengers must endure as part of a low margin, no frills rides. Want a guaranteed seat? Go with BA, they’ll be happy to see you. Want a snack? Pay or bring your own. Want to get there with your luggage? You’ll have to trust us on this…

In the same way, Uber and Lyft can cut corners that private licensed firms – or even Addison Lee – can’t really cut. They do background checks on the drivers – but the "crowd" does a lot of the rest of the checking. They don’t check how clean the cars are. They don’t appear to fire drivers for unreliability, and they can’t reward their reliable ones.

Ah, you say, but Uber is a technology company because it’s using a new dispatch method – the internet. But if this is really a new dispatch method, it’s already being used by both private firms and the Hackney carriage end of the market too.

Kabbee, for example, provides a list of well-known private firms (although funnily enough, my preferred local firm isn’t on it – and that’s always cheaper). Hailo began life as a way for London’s black cabs to compete with Addison Lee, until it expanded to include private hire firms – and the cabbies gave it the bum’s rush.

So there are two trends here: increasing casualisation of the labour force, and new dispatch methods. And Uber is distinguished only by its reliance on casualisation.

That puts the car-ride firms' aggressive recruitment into a useful perspective. Uber has nothing unique to offer, just a distinctly brutal approach to its labour supply. It knows it.

What about regulation?

As I wrote recently, I don’t have an ideological objection to unused resources being priced and marketed. If you instinctively reach for a ban – where were you in 1994 when eBay launched, putting reputable toyshops out of business with their second hand tat? Today, nobody would seriously call for eBay to be banned – trade just goes on. But perhaps there should be an objection when a business appears to misrepresent itself. There’s no new, magical "sharing economy" here. Yet some areas of government are so stupid, Uber finds itself pushing at an open door.

For example, the European Commission’s "Commissioner for a Digital Agenda" Neelie Kroes appears to take its arguments at face value. The Commission’s office has talked itself into the ludicrous position (because it must) that every “digital startup” is morally superior and socially benevolent, whereas another kind of startup - an organic butcher, say, or a cleaning company - isn’t.

So it must advance the cause of anyone who claims to be a digital startup, particularly if they’re “disruptive”. Here’s Neelie’s representative on Earth fighting in Uber's corner:

“Because the disruptive force of technology is a good thing overall.”

Hook line and sinker.

The Hackney Cabs vs Uber dispute was presented as one of the stick-in-the-mud Luddites trying to fight change. And yes, the Hackney carriage end of the market is uniquely privileged by regulatory mandate. But the reality that Uber is simply a cheap taxi company that doesn't bother with the whole "get a licence from the pesky municipal authorities" thing seems to have been overlooked, and should be mentioned.

What should also be mentioned is its reliance – in common with so many "disruptive startups" – on cuddling up to regulators to get the law changed to enable their own businesses (or Bongonomics, as we call it). ®

*Hat tip to Dave Mandl for that description.

More about


Send us news

Other stories you might like