Showing all posts tagged eu:

Water Wet

Well, the EU has come out and said what we all knew already: Uber is a taxi firm, not a tech firm.

This is of a place with the decision by Transport for London to revoke Uber’s license to operate, which is currently under appeal. There are a few important things to say about the EU result in particular.

Love Uber, Hate Uber

First of all, there is a distinction to be made between Uber the service and Uber the company. The service is incredibly convenient, and has in many ways completely superseded traditional taxi services, especially when travelling. Instead of a myriad of taxi firm numbers for each city that I visit regularly, and the requirement upon arrival to make sure I have enough local currency to get wherever I need to go, I can just whip out my phone as soon as I’ve cleared customs, and usually arrive at the meeting spot around the same time as the car.

When I reach the destination, I simply get out of the car and walk away, and my receipt is emailed to me automatically. This is pretty much the Platonic ideal of a taxi service.

Uber the company - well, that is a different story. From untold counts of sexual harassment (which are now to be made into a movie), to active evasion of regulators in the Greyball programme, to the actual matter of this case - claiming that their drivers are "independent contractors", rather than employees - this is not a company that anyone should support.

Let’s Get Some Perspective

Sure, capitalism is always pretty red in tooth and claw, and the various regulators that Uber has been doing battle with have hardly covered themselves in glory over the years. The taxi drivers trying to present themselves as innocents who have been hard done by could have implemented something similar to Uber years ago, but preferred to continue operating vehicles that were hazards to safety and hygiene, claim that the credit card machine was perennially out of order, refuse to provide tax receipts, and offer to fill in vastly inflated amounts on an expense slip as compensation.

There is also an argument that Uber increased provision of transportation services in previously under-served areas, and even provide a cheaper way to get to hospital than an ambulance1.

All of this is true, but we cannot overlook how these results were achieved.

Remember, too, that what we have seen until now is Nice Uber. This is Uber still operating in a mode where they are willing to burn their investors’ capital to capture market share, funding up to 40% of the cost of a ride. Assuming that they are successful in capturing a monopoly, that subsidy would presumably end shortly afterwards, and in order to keep fees to riders down, the payment to drivers would surely take a hit. Nasty Uber looking to monetise its monopoly and cut its stupendous losses ($2.8B last year alone) would surely start cutting corners elsewhere, too.

The Code Of Law Is Not A Code To Be Broken

This ruling brings to light once more a common tech fallacy. The tech world runs on codes. Success can be had by operating precisely within the codes, or by finding ingenious loopholes that let you do something unexpected. Confusion sometimes occurs because the law is also a code. Some techies misinterpret the code of law as being similar to the codes and specifications that they are used to, and think that they have identified a cunning loophole that nobody else has thought about and which allows them to route around some provision of law that they do not like. For instance, they might decide to start a taxi firm, except - aha! - the drivers are not employees, but "independent contractors" who operate their own vehicles (which are in turn leased from the totally-not-their-employer taxi firm). And the best part is, it all follows the letter of the law!

The thing is, computer code is not at all the same as a code of law. It is true that regulation moves slowly and can become outdated, and there is significant abuse because of that. In Italy, for instance, the German low-cost bus booking app Flixbus is in trouble with the law (link in Italian) because incumbents have managed to get laws proposed that would ban bus companies from operating unless they own their vehicles. That requirement is obviously a problem for Flixbus, a booking platform that aggregates across multiple bus operating companies, but does not actually run any buses itself.

This is precisely the sort of situation that the "app economy" is supposed to disrupt: instead of a Balkanised patchwork of bus companies, have a single multinational app platform through which passengers can book trips in more comfort - although perhaps at the expense of a comfortable status quo for incumbent local bus operators.

This is how Uber would like to present itself too - as plucky David taking on established Goliath, or as an underdog going up against The Man, who is also hand in hand with City Hall. However, there is a fine line between opposing laws and regulations, and working actively to evade them. In the latter situation, once the law does catch up, it will shut down whatever loopholes were being used, and then the consequences are far more grave than if a technical loophole were closed through a software update. Not only does the cunning hack to the law code no longer work, but the would-be law hacker may now find themselves subject to penalties far more draconian than for violating the GPL.

Welcome To Europe

Lately American firms have been unpleasantly surprised to find that the EU’s bark does in fact have a bite behind it. They had generally ignored the EU as being toothless and slow-moving, but activists and politicians have goaded the behemoth into motion, and the $2.4 billion fine against Google was only the start. Margrethe Vestrager, the current European Commissioner for Competition, is outspoken and determined to enforce a particularly European vision of competition. Given that Neelie Kroes is now on Uber’s Public Policy Advisory Board, perhaps this is a sign that Uber’s leadership recognise this fact, and will move with more tact from now on.

I Come Not To Bury Uber

It is true that getting a taxi used to be a hassle and now it’s mostly not, and that fact is largely thanks to Uber - but we cannot simply accept Uber's culture of "ask for forgiveness rather than permission - in fact, forget forgiveness, we’ve done it and that’s that". I hope the service can continue while the company is reformed under new leadership, but that will have to be done without this figleaf that Uber is a technology firm or part of the sharing economy or whatever. It’s a taxi firm, it owns vehicles and employs drivers, and it had better apply its substantial and undoubted ingenuity to working out what that means.

Photos by Peter Kasprzyk and Samuel Zeller on Unsplash.

  1. As a European, this story has any amount of WTF to it. Sorry, America, but your healthcare industry is utterly bananas, and you need to fix it. Single-payer systems have their flaws too, but they absolutely beat the alternative. 

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 be needed 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".