Thursday, 24 September 2015

Should the law be used to stop 'Uberification'?

This is the fourth and final debate in this Thomson Reuters series. Having attended two of the others, they have offered an entertaining yet expert view into wide ranging topics such as Right to Be Forgotten, Corporate Crime, and Human Rights. All of these debates can be seen on YouTube and this one will no doubt go up soon. Whether the law should be used to stop 'uberification' was the final motion to be debated and promised to be controversial from the outset.
 
Against the images of Bank being brought to standstill because of a number of striking black cabs during today's rush hour, and claims of exclusion being levelled at Thomson Reuters by the GMB, the actual debate was relatively tame. The proliferation of platforms designed to match those needing services with those offering services is not a modern phenomenon. However it is the ease and convenience that they can now offer which has really caused the explosion in interest; a simple search for a property on the desert island of your choice finds all available places, with filters to find wifi, sea views, washing machine etc, and you can have it booked within the hour/afternoon. A global service, simplified beyond all imagination.
 
It was stressed from the outset that innovation isn't the problem, but unlike traditional business models, the rules governing taxation, consumer protection and safety, and workers' rights can be difficult to apply to these platforms. The scale of the sharing economy has flummoxed law makers and they aren't really sure what line to take. As a complete disclaimer here, when the debate opened the 'noes' were in the lead and I was happy to vote no. I believe that too much company law exists already and the current laws on employment, corporate responsibility, consumer protection, competition, should be enforced properly in appropriate cases, tailored to the particular circumstance. 
 
Tessa Jowell MP opened with 'yes, the law should be used to stop this so called 'uberification''. But as long as it's in the public interest and proportionate, and addresses the transformational effect of global digital with its limitless opportunities. Although Uber is named in the title, and has used tech to disrupt the taxi trade, she made reference to Airbnb, People Per Hour, and TaskRabbit. The final two have the potential to completely reengineer professions and we haven't yet begun to see the effects.
 
Regulation is introduced because of failure. We aren't seeing anything new, but creative destruction can lead to unintended disruptions. When William Lee approached his Queen regarding a patent for his circular stocking making machine, he was denied due to her worries about employment levels and conditions of her subjects. Technology has always been ahead of the law and it's a challenge to keep up in any meaningful way.
 
Regulation would ensure that collective interests are served. Uber is indeed convenient and cheap but there are worries about driver exploitation, a flooded market, and whether they are actually making enough to live on. Incentives are being promised but are they being delivered? Anecdotally, it is suggested, increasing number are earning less than minimum wage. As drivers are self employed, how well are they protected? There are also concerns about Uber's complex tax structure which is currently subject to favourable Netherlands taxation - she suggested that this wasn't particularly good corp citizenship? She then mentioned competition and price cutting.
 
It is time for the law to catch up because if we don't, in five years time we will  wonder what went wrong. Ultimately she wasn't arguing against disruptive tech but they shouldn't be simply allowed the power to run unfettered. It's about preserving standards; nothing to do with freedom but decency.
 
Next up was Spectator Editor Fraser Nelson, stating the No case. He opened by making a plea for freedom. He waxed lyrical about the needs of the poor many versus the wealthy few, and the fact that many people could now afford a cab home after their night out. In the past the options for getting home were rather limited and involved a night bus, an unlicenced car, a mini cab, or an expensive black cab. Uber, he said, has revolutionised the night out by offering a cost efficient and safe way to travel. Quite the reverse from taking away business, they have actually used tech to create opportunities for new markets and drive demand.
 
They have many different types of driver, often better paid than alternative cab companies. They can use the app to find the demand and make their working time more productive. Ultimately lives are enhanced. He dismissed the accusations that costs are passed on to drivers, saying that black cab drivers are also imposed upon in a similar way. They shell out a lot of money for licenses, the knowledge, the black cab. France has banned Uber which he said is a caving into bullying protesters by the Government. Other countries have made life difficult for Uber by instituting pick up limits and car size.
 
Returning to the idea of freedom and liberty, innovations like trains and cars were opposed and frustrated  by existing technologies. Every time someone comes up with a good idea it's stifled but regulation cannot erase an idea from the mind and this is why cars can go over 2 mph without need for a flag carrying man walking in front. It's a simple battle for Liberty; the consumer being empowered. 
 
I enjoy listening to barristers speak and Jonathan Swift was no exception. He stated the case for the 'Yes' vote fluently and humorously. Uberification - or peer 2 peer - is here. What the law can do is to apply restraint, to protect the consumer appropriately and safely. The 'micro entrepreneurs' should not be exploited. Of course consumers are free to decide and use whatever services they wish. A Google search finds colourful experiences that people have had in Airbnb homes. Hotels and B&Bs, on the other hand, have to comply with standards that the law can enforce. 
 
Uber et al say they provide merely a platform and not the service. However, he argued, we need regulation for the digital age to ensure that we are not somehow returned to 19th century conditions. We have laws which ensure safety nets for people in jobs. Uber must not be allowed to exploit its freelancing, 'zero hours contract' drivers, returning them to bonded labour. Should Uber cause harm to these people, society will have to pay. With great power comes great responsibility, after all, the law should help the common good. In modern times the law has been there as a baseline for safety and employees.
 
He agreed that there is no problem with freelance jobs, certainly these platform trading organisations should be no different from anyone else running a business. It is fiction that they are just information managers - curbing excess shouldn't come in the form of a review of a drunk passenger.
 
Mark MacGann is Head of Public Policy, EMEA at Uber. He took issue with the term 'uberification', despite the negative smeary connotations,  but agreed that airbnbification is much harder to say. So what is Uber? It's an app which brings together supply and demand on both sides of market. Consumers don't have to stand around and cabs don't have to waste time cruising looking for business. It is a means to effectively use a valuable resource. The transaction happens securely in one place and people can get around safely late at night - drivers can be tracked and IDed.
 
Drivers use the app to connect with customers, choosing the hours, flexible self employment like MPs and barristers, he suggested. It is on demand and part of the sharing economy, a business model with different regulatory needs. There is no one size fits all, the motion is phrased wrong. Can a legal balance be right or optimal? He questioned whether change can be stopped just because it doesn't benefit you. If the past is a guide, the black cab was part of the sharing economy and they were pitched against the monopolistic water boat men / sedan chair carriers. If the water boat men had had their way there would no bridges nor taxis. Freezing a market in aspic is impossible and the law is a living and evolving entity. Innovations are linked and take us down a longer path of innovation.
 
Law has to adapt to change not to kill activity. Consumer has to decide. Cabbies will survive if they adapt. Can we say no to consumers! No! They want stuff on demand. London demanded bridges so they got it. Matching consumer demand. He wanted to dismissing myths and stress that he was empowering Londoners. Many journeys take place in  zones 3-6, well beyond the central part of London. He praised TfLs policy. He agreed that the black cab is iconic but it's a rip off. The black cab app is up and running and they are now using tech to their advantage. He ended on the Ronald Regan quote, 'if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it'.

A question from the audience asked for specific figures but apart from saying jobs had been created - 20000 in 3 years - nothing was forthcoming. No allegations of driver exploitation were refuted.
 
What I came away with was the need for a balancing act - the debate shouldn't be polarised between 'banning uber' or 'protecting the status quo'. Rather idealistically, it could be argued, I believe that the law isn't there to stifle innovation, but instead be there to protect the most vulnerable from exploitation. But I strongly believe that people have to take responsibility for themselves and if they are wronged, they need to take action. And sharing platform companies need to look at their own ethics and change from within before the changes are forced on them. 

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