The Sharing Economy
Earlier this year I asked readers of my social media feeds what they made of the Sharing Economy. To find out more and to answer those questions, I went to visit Uber UK and SharingEconomyUK, an industry body representing companies such as Uber, but also Airbnb, Zipcar, TaskRabbit, Liftshare, Deliveroo, Gumtree and many more.
In this post, I wanted to outline my findings, answer some of the questions you raised and also ask the question, “What next for the sharing economy?”
There are a lot of people excited about the Sharing Economy but there are also clearly concerns. Indeed, over the past 18 months or so, there seems to have been a backlash against tech generally. This has perhaps focused on the use of data, following the scandal around the use of Facebook data by Cambridge Analytica.
We began to wonder if technology firms are taking our privacy seriously? Could some apps be collecting data on other aspects of our lives without us knowing? There has also been a rise in concern about whether companies are paying the taxes they owe, about licensing of staff, employment status and there are clearly many people concerned about the future for existing companies and industries. I am a big supporter of technology and innovation and I know many of you are too but I know there are concerns that also need to be addressed.
Addressing the concerns
It is interesting at my meetings that I also found a serious recognition of these concerns. I know some people argue that until now there has been a bit of a wild west approach to the internet. Many firms tried to get the balance right on their own but as new services have bloomed, competition has put more pressure on existing firms and we are more aware of data privacy issues, more people are arguing for increased regulations.
Remember Sharing Economy/tech firms operate in a very competitive environment where more and more startups have the potential to wipe out existing companies or even sectors. The barriers to entry are much lower than they were in the past. Raising standards and ensuring public support for what they do is therefore essential to their brand and marketing. It’s in their interests to keep up, to provide better services and match our expectations, and they tell me they want to do just that.
When I asked my social media feeds what questions people might have for the Sharing Economy I wasn’t entirely surprised by the responses. Uber, in particular, is such a well known brand that they also attract a lot of attention. The main accusation made against them was that their drivers were unregulated and not checked properly.
This is simply wrong. All drivers go through enhanced checks carried out by the government’s official Disclosure and Barring Service (DBS). Uber also checks how many penalty points drivers have and monitors drivers performance too. There has been some debate over which firm is used to operate these checks. Uber originally used a firm called Onfido. This was accepted by TfL but TfL then made changes which meant the provider needed to change too. In the end, it made little real difference as the actual checks were still being performed by the DBS with the firms simply acted as middlemen.
But let us also not forget how technology has improved our personal safety. If people use the apps, they allow us to know who a driver is in advance, which car they will be in and in turn whether the driver is registered, which route it plans to take, estimated price etc. You can share trip details with friends, track the journey on GPS and there is no cash being handed over either. One attack on a customer or driver is one too many but I am pleased that these innovations provide so many more safeguards than we had in the past.
Another point one of my followers on social media raised was about concerns over loitering drivers who were waiting for trade. Indeed this could apply to any kind of gig economy firm involved in transport. There are no assigned waiting ranks for sharing economy food delivery drivers or cab drivers after all. So I can see how this can happen. I discussed this and I was pleased to hear that firms take this seriously because it’s not how they want people to perceive them. They would like people to get in touch to let them know if there are problems. If you have problems getting a response, let me know and I will chase them up.
Should Uber and other firms competing with existing taxi cabs and mini cab firms be required to offer a certain quota of disabled access vehicles? This was an interesting point one of my followers asked. I discussed this and I take the point that was raised which was that it’s really more about waiting times than the actual numbers of vehicles. This figure I understand is now about 10 minutes wait for a disabled access Uber. Of course, I would like to see this drop further but compared to ordering a similarly priced mini-cab from a local office, this is arguably similar.
Another point on my social media feeds was about taxation and whether everyone in the sharing economy is paying their fair share? When it comes to companies I hear the same message whether a firm is part of the Sharing Economy or not. They all tell me they are paying the taxes the rules state they are required too.
When it comes to individuals in the sharing economy, there is an added question; At what point does someone go from simply selling something they are not using, such as a spare room or old things they no longer need, to when they are treating their involvement “as a business”? For example, when someone buys a building with the sole aim of renting it out on a room sharing site. Again, there is a technological solution here. In my discussions, I heard about ways platforms themselves are looking at collecting tax automatically through apps and working directly with tax offices.
What about the “employment status” of people working in the sharing economy? For many people, being part-time and flexible is something they want. I have spoken to many Uber drivers independently who support this. Some have other jobs, some are starting another business, some are students. It is perhaps inevitable that if you have as many drivers as Uber do, that some will want full time employed status while others will not. That doesn’t mean that all drivers want one thing. I want to ensure firms and users are able to enjoy the flexibility of the gig economy, so I don’t want to see heavy regulation here. We must however always keep a close eye on how these firms are developing and whether they are seeking to exploit potential loopholes in the law.
Impact on established industries
Existing companies and markets understandably feel challenged by the sharing economy. You only have to look at some of the social media comments when I talk about the sharing economy to see that. However, I wonder who sharing economy firms are actually competing against? As Clayton Christensen from MIT once said, “The disruptor is thus competing not against other suppliers, but against “non-consumption.” (https://www.harvardmagazine.com/2014/07/disruptive-genius). That means they are finding a new market or often attracting customers who prefer not to or cannot afford to use existing the services of existing companies.
Of course, there will be some crossover but how many people who use Uber now would have used black cabs in a similar way and as frequently, in the past? Indeed as driving in London becomes more and more expensive and inconvenient, there is an increasing demand for alternative ways of getting door to door. Perhaps services like Uber are even helping to encourage people to give up their cars altogether.
Why did I first use Uber? One evening, I was on my way to a meeting. When I got to the nearest underground station, there were no black cabs at the taxi rank and the minicab firm at the station told me I would have to wait for about half an hour to get to me. An American friend who was with me got his phone out and a car was there in minutes. So this service brought something to me that I had never used. But also, it provided convenience. On more than one occasion, I had arrived at my local train station and tries to take a black cab, only to be told that they wouldn’t accept a card, or that their card machine was broken or that they didn’t have change for the £20 I had just taken out of the cash machine. Uber solved these problems. So I welcome innovation like this.
Could it be that black cabs are over-regulated and so not allowed to compete equally? Should they have less stringent rules? This was another point you raised. When I speak to black cab drivers. Some tell me they would like to be able to set their own prices at different times or to be more flexible while others tell me they think changing the rules would mean changing the nature of their unique service. They argue that Uber is offering a tech-based solution with drivers who haven’t been through the same training as black cab drivers, in vehicles which can vary. You pay a lower price point and get a service that reflects that. Black cabs offer a different service. So to change the rules would mean real direct competition instead of giving both drivers and customers real choice. Others argue that with modern technology and satellite navigation offering real time traffic information, the knowledge that black cab drivers are required to obtain in order to get a licence is obsolete.
Technology is, of course, changing all our lives and that is only going to increase. Some people throw the idea of driverless cars at Uber as an accusation but driverless vehicles are something which is going to transform everything in our society in ways we can’t even imagine yet. It’s not just Uber who are hoping to take advantage of this, but every part of the transport industry, including public transport. But let’s remember that mainstream driverless cars are still a long, long way off.
That said, I do believe we need to provide support for established industries facing these sort of changes. We need to help them avoid getting disrupted “too fast”. I think that means helping existing companies to innovate through training and opportunities. But change is coming. Regulation can’t stop it. If we try, the rest of the world will go on without us, leaving our economy far behind. We as individuals, as companies and industries, have to adapt or we WILL lose out whatever politicians do.
Sharing Economy for good
Let’s also remember the positive effects of the sharing economy too. If you view the Sharing economy through the eyes of a libertarian-minded Conservative like me, then technology offers us huge opportunities to connect people in a way that you couldn’t do in the past and no government could ever hope to achieve. Take poverty or financial hardship. There are people around the world who want to help others through platforms like Kiva. Individuals can give micro-loans to people wherever they are. There are sharing sites for old clothes, furniture, rideshares, the list goes on.
The Sharing Economy then I think offers us many opportunities but like with all tech, has raised questions too. People clearly are growing more suspicious of tech firms and I think that is a shame as the opportunities are enormous. There will always be suspicion of change and genuine concerns, but I am delighted to see that the industry is taking these much more seriously now.
I hope this has helped to answer many of the questions you raised with me and to give you an insight into the meetings I had and my thoughts on the Sharing Economy.
As always, I’m very interested to hear your new thoughts too. You know where to reach me.