Is GMV another Uber?
I don't think it is. But it did make me think.
Saw this article about LA court case:
https://www.msn.com/en-au/news/other/all-hail-the-california-court-that-put-the-brakes-on-uber-and-co/ar-BB18g7LO?ocid=BingHPCThis “economy” is neoliberal because it embodies the idea that society consists only of markets and individuals. In the Uber/Lyft case, there is a market for rides and there are individuals who can drive. So a software platform is built to connect said individuals with those needing their services. The owner of the platform has no obligations to the atomised individuals who provide the service: they are free to work (or not) and are “managed” by an algorithm and drivers have none of those expensive rights that come from being a normal “employee”. Pricing of the services is decided algorithmically: when there’s a thunderstorm, the cost of a ride goes up; when there’s a lull, they go down. Truly the gig economy is a Hayekian wet dream.
The lengths to which gig economy companies go in order to pretend they’re not employers are comical. A while back, the Financial Times got hold of a Deliveroo internal manual. Never say “We pay you every two weeks”, it advises; instead, it’s “Rider invoices are processed fortnightly”. Never say “Yesterday, you were late to start your shift”; instead, it’s “Yesterday, you logged in later than you agreed to be available”. And of course never mention “uniforms”: they’re “branded clothing”.
So much for the neoliberal lexicon. But the gig economy is also a racket because it’s based on a dodgy business model. Many of the companies burn money like it’s going out of fashion. Uber lost $8.5bn in 2019, for example. “We have incurred significant losses since inception, including in the United States and other major markets,” the company wrote in its SEC filing. “We expect our operating expenses to increase significantly in the foreseeable future and we may not achieve profitability.”
The reason Uber isn’t profitable is because its rides are cheaper than those of conventional taxi firms. And that’s a feature, not a bug: it’s a strategy to drive conventional firms out of business. The money it’s burning belongs to investors (such as the Saudi sovereign wealth fund) who are betting that once the company is the only one left standing, they will have a monopolistic asset on their hands. This is “creative destruction” at its most vicious.
None of this means that the services gig economy firms provide aren’t useful or valuable: if nothing else, the pandemic has established that. But, like the more conventional tech giants, they have grown exponentially in a period where relevant laws have been behind the curve or, in some cases, not enforced. The significance of the Californian judgment is that that is finally beginning to change. And about time, too.
