Uber, platforms and regulation

The employment tribunal ruling that Uber drivers have won the right to be classed as workers rather than self-employed is not particularly surprising when viewed from the platform perspective.

I’ve written previously about the way that so-called innovators such as Uber might more accurately be viewed as modern pyramid companies whose overall shape and motivation appears little different from, say, the nineteenth century railroad tycoons.

Ironically, the tribunal ruling would probably not have been made if Uber were a true platform provider. If it provided a genuinely neutral multi-sided platform and left passengers and drivers entirely free to interact in the way they want, the ruling is less likely to have gone against them. But Uber is also controlling the platform in very specific ways, setting pricing for example, deciding what information to pass between drivers and passengers, the preferred routing, handling of passenger satisfaction and complaints and so on.

By inserting itself in this controlling way, it is shaping and owning the market, setting the terms of its operation and the relationship with drivers and passengers alike. This is ultimately the reason the tribunal ruled it exhibited sufficient characteristics to be regarded as an employer, and the drivers its employees.

The main issue for me is the continuing lack of consistency and clarity about the appropriate role of regulation in the twenty-first century, and the role of such regulation when it comes to platforms. Get it wrong and we have the Uber versus black cab trade debate, creating distorted and uneven markets (with some players regulated, some not) and potentially a brake on innovation.

Regulation is an essential lever for both ensuring efficient, open and competitive markets – but also for social good. We have grown accustomed to the significant social upsides from the regulated black cab trade – one able to accommodate a representative and inclusive society, including those using wheelchairs. Such social good and inclusiveness is not something we should casually set aside on some arbitrary notion that regulation stifles innovation.

The true purpose of regulation I see as ensuring a level playing field, and in doing so to ensure that wider social and societal obligations are met. When I called in my earlier piece for the rise of the platform mutuals it was this mix of innovation, social goodness and light-handed regulation that I wanted to see happen. It was an idea that I was surprised to see Computer World report was taken up and used in Jeremy Corbyn’s Digital Democracy Manifesto.

Rather than seeing the Uber issue as solely one of whether drivers are employees or not, it needs to become part of this wider debate about the way in which regulation can best be applied to modern digital platforms.

A good model of regulation is not one that creates a weighty dead hand, stifling innovation and perpetuating expensive monopolies (as some try to paint the “Uber versus black cab trade” issue). It is in fact precisely the opposite: ensuring markets work in genuinely open, free and competitive ways, whilst also meeting important social obligations that prevent deliberate or unintentional discrimination or bias.

Whilst Uber is likely to appeal against the specific tribunal ruling, it’s this wider issue of updating regulation in a world of multi-sided platforms that we really need to be discussing and implementing. Government has a unique and essential role in setting the right balance here – encouraging innovation and the growth of new business models and opportunities whilst ensuring a level playing field for all, and in particular that no-one is exploited or left behind.

No responsible business should expect to operate outside of a fair, balanced regulatory framework – one that ensures open markets and open platforms, balanced with the need to meet essential social and legal obligations. Any business that thinks it deserves to be an exception is not so much an innovator as an exploiter – and proves once again the timeless justification and need for appropriate regulation.

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