Is the digital economy in danger of becoming the taking economy?
Sharing economy firms like Uber and Airbnb may be leveraging their access to information, gained by facilitating trusted transactions between strangers on a digital platform, to disadvantage their participants and avoid regulation according to a new research paper co-published by a law professor and a technology ethnographer at the University of Washington.
Sharing economy platforms and other new business models have received their fair share of scrutiny, particularly when it comes to employment and how they classify the workers on their platforms. Meanwhile, the perils of an information age where an ever increasing number of connected devices can be exploited to breach fundamental privacy rights have also been covered extensively.
It all comes back to information and the difficulty in quantifying its value, or even understanding the entirety of its impact. Companies have longed used information gained through transactions with their customers to shape behaviour and maximise their own profits, but there are deliberate regulatory measures in most countries to restrict exploitation. Sharing economy businesses sit between the customers and the providers of the services, giving them a new advantage with the potential to monitor and impact all participants.
Algorithms enable digitised businesses, like Amazon, Google and Facebook, to effectively monetise the data they receive from use of services to serve various content and promotions in a targeted fashion. That may make some people feel uncomfortable, but Calo and Rosenblat argue that sharing economy businesses are in a particularly unique position with many people dependent on the platforms for their livelihoods.
There are many cases where the companies are the only ones in possession of the required data to understand whether the platforms are performing justly, the report authors Ryan Calo and Alex Rosenblat argue, for example, Uber is the only company that can verify if it applies trip price increases consistently, or correctly times whether drivers have waited long enough for a passenger before canceling a trip.
Consumer protection law, with an established emphasis on the asymmetries of information and power is relatively well positioned to address this aspect of these new models. Indeed, the US Federal Trade Commission (FTC) already has the authority to request details and data on sharing economy algorithms and how they are used. Meanwhile, companies like Uber have had to work harder to navigate regulatory contexts in Europe. However, in more cases than not, regulatory bodies are taking a wait-and-see approach to the industry.
What the paper illuminates clearly is that information is a key profit and power mechanism in the market. It’s an important factor to be considered by proponents of a more regenerative economy, which is often viewed as being enabled through digitisation and the evolution of intelligent algorithms. The potential influence and power of information is only likely to increase, and questions over access and equality must be asked and answered to ensure that the emerging new economy works to benefit a larger portion of society.
Read Calo and Rosenblat’s full paper: