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New Economy, Meet Old Continent

In the latest setback for Uber, an advocate at the ECJ argued that:

Uber should be considered a transport service. But even if it wasn’t, he still thinks the French law at issue didn’t have to be notified to the EU, because it affects digital services "only in an incidental manner"

Uber has always argued that it is primarily an app facilitating connections between users and independent service providers - who are certainly not employees, no sir, and therefore not owed health insurance, pensions, or indeed much of anything.

Given that the supposedly independent service providers are often full-time drivers, and that the car itself is also often leased from Uber, this claim was always somewhat disingenuous. It is of a part with other examples of "sharing economy" (scare quotes very much intended). Very little of Airbnb is people renting out their spare rooms; much of it is people renting out stables of properties, purchased for the explicit purpose of renting them out through Airbnb. There are even companies like Airsorted that will take care of the whole process, letting landlords sit back and take in the proceeds - while conveniently forgetting to pay taxes on their earnings.

This is not "sharing" economy; these are fully professionalised marketplaces. The real sharing economy equivalents are BlaBlaCar or Couchsurfing. These offerings really do enable non-professionals to share something.

I love the services offered by both Uber and Airbnb, and they both filled gaps in their respective markets. Before Uber, getting around a strange city was an exercise in frustration, dealing with unfamiliar currencies, unpredictable waits and routes, and general uncertainty and unpleasantness. Now, I can summon a car to my location and pay through my phone, without any worry about whether I have enough local currency or whatever.

In the same way, I booked my entire summer holiday (except for two nights) via Airbnb. Travelling with two kids is an exercise in expensive frustration, if you are looking at standard hotels. Most places will let you put one cot or foldaway bed in a double room, but when you are travelling with two kids, they want you to book two rooms or bump you up to an expensive suite. Airbnb is a lifesaver, giving a huge supply of inexpensive accommodation for larger groups, all easily accessible and searchable in one location.

If these new services are to have a future, though, they have to comply with laws and regulations, including new rules that might need for these new centralised platforms.
The EU defining them as full services that are mediated by apps, rather than simple apps with no responsibilities, is an important step in that process.

Law in the Time of Google

It’s quite amazing how people misunderstand the intersection between the Internet and the law.1 A case in point is this article from Reuters, describing the likely consequences of the €2.4B fine that the EU Commission has slapped Google with.

It starts off well enough, discussing how being under the spotlight in this way will probably limit Google’s freedom of movement and decision in the future. Arguably, one of the reasons why Microsoft missed the boat on mobile was the hangover from the EU’s sanctions against them for bundling Internet Explorer with Windows.

However, there is one quote in the article which is quite remarkably misguided:

Putting the onus on the company underlines regulators' limited knowledge of modern technologies and their complexity, said Fordham Law School Professor Mark Patterson.

"The decision shows the difficulty of regulating algorithm-based internet firms," he said. "Antitrust remedies usually direct firms that have violated antitrust laws to stop certain behaviour or, less often, to implement particular fixes.

In the past, Google has shown itself to be adept at rules-lawyering and hunting down the smallest loophole. They are of course hardly alone in this practice, with Uber being the poster-child - or the WANTED poster? - for this sort of arrogant Silicon Valley, “ask for forgiveness, not for permission", attitude.

In light of that fact, it is quite smart for the Commission to make Google responsible for working out the terms of enforcement.

Of course I fully expect Google to appeal this ruling - but I also expect them to lose. It is far too late for the various shopping comparison sites whose business was sucked dry by Google, but it does underline that regulators are far more willing to intervene in the construction of these types of "platform" businesses.


For more thoughtful and detailed commentary, I suggest Ben Thompson’s take, where he provides some useful background, as well as answers these key questions:

  • What is a digital monopoly?
  • What is the standard for determining illegal behavior?
  • What constitutes a competitive product?

I do not quite agree with his conclusions, which reflect a US-EU divide in the very conception of competition and monopoly. To generalise wildly, the EU focuses on long-term market structure, where the US focuses on short-term consumer benefit. A superior user experience is good, in the American conception, even if competitive businesses are crushed to deliver it. The European conception is that it is important to foster competitive offerings, even at the expense of the user experience.

Where I think this falls down is that, with Internet products in particular, it is relatively easy for users to create their own experience based on their particular requirements. When Google just spoon-feeds everything from the same search box, the initial baseline experience may be better, but the more specialised tools that satisfy specific requirements suffer and die, or never get developed in the first place.

Another problem is that the Internet giants who concentrate power in this way are all American companies, and often their offerings outside the US are limited or crippled in important ways. I live in Italy, and from here many of Google’s suggestions and integrations don’t work or provide a sub-standard experience.

I want a healthy market of many providers, including sub-scale regional ones, so that I can assemble my own user experience to suit my own requirements. Trusting huge organisations with their own motivations leads to weird places.


  1. I should specify at this point that I am not a lawyer (IANAL), and I don’t even play one on TV, so I won’t comment on the finer legal points of the decision or on whether it is justified according to different definitions of "competition". 

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