A recent controversy about the high-end ridesharing service Uber highlighted the dual-sided tensions between institutions and collaborative consumption business models.Uber
is a service that allows owners of luxury cars to provide rides to potential clients, just as taxis or limos do. It has been lauded for its efficiency but questioned for its politics and social implications. As it is a more expensive service than traditional taxi systems, Uber’s claim that it genuinely aims to “disrupt” an obsolete institution - taxi cabs - for the public good sounds like legitimate marketing varnish. But there is more. Uber justifies its prices by the margin that drivers eventually receive. According to the company, this margin is greater than for traditional cabs, since Uber's business model bypasses many middlemen. Nonetheless, the company has been harshly criticized for raising its prices when hurricane Sandy was about to reach New York. Uber justified the premium as an incentive for drivers to help people reach secure locations, but many saw in this move a misguided attempt at increasing profit.
Disruption - an ideology?
The politics of the company have also been questioned to a larger extent. Paul Carr, former Guardian columnist and now Silicon Valley reporter, drew a parallel between the ideology driving Uber - and particularly its CEO Travis Kalanick - and an extreme and possibly dangerous libertarianism inspired by the writer Ayn Rand. According to Carr, the nearly religious quest for Disruption often mentioned by entrepreneurs building innovative services is sometimes used in a blind legitimation of a pure market society. This can be detrimental to institutions that have been developed over many years to guarantee public good. Now, the debate is more nuanced than that. In a marathon interview that lasted nearly three hours, Chris Sacca, a venture capitalist who invested in Uber – and is by some considered to be the most influential businessman in America – justified the negotiations that Uber has been leading with the Taxi and Limousine Commission of New York (TLC). Sacca is very active politically: he is known for having significantly helped Barack Obama get elected for both his mandates by raising millions of dollars for his campaign. He says he is not in favor of a pure market society and he invests in companies that, in his eyes, add value for the general population. Sacca explained that Travis Kalanick is frustrated by the corruption that has persisted due to the TLC being a monopoly for years. This is not corruption per se, but a more general self-justified existence that some institutions enjoy. According to Sacca, the TLC refuses to grant Uber drivers the right to operate in New York in the sole aim to perpetuate its monopoly over the taxi business.
Institutions don't like disruption
This is not an isolated institutional challenge: AirBnB is not seen with a bright eye by the hotel industry and its regulators. This tension between disruptive start-ups and established institutions points towards one of the larger questions that the “collaborative economy” faces. On the one hand, public institutions can be seen as obsolete organizations only trying to perpetuate their comfortable position. But on the other hand, by deregulating traditional business practices, disruptive start-ups often get rid of the social benefits these institutions are here to guarantee. Uber drivers, TaskRabbit workers, AirBnB owners are all individuals, sometimes microentrepreneurs, who rely on a company that sets the rules and modalities of their business relationships - without receiving health insurance or other benefits that a full-time job would offer. These platforms are not in this context responsible for what could happen to their users’ apartments, cars or even bodies. Airbnb is aware of this challenge and is working on the issue, but recent cases show that the space in which the company and its users operate in is still a legal grey area. It is yet to be seen how dependent the users (not the end consumers, but the resources providers) get on the income they generate by using such marketplaces. While it is too early to reach a conclusion on the matter, we can already assume the response is different for each service: renting out a long-term asset such as a flat might be easier to leverage for your profit than offering your own time or car. Until we know what models work best, it is important not to condemn too easily public institutions that are hampered by their heavy bureaucracy. Their management may be obsolete or inefficient, and in some cases disrupting their processes may be legitimate. But one should be careful in confusing the processes of institutions with their purposes. Entrepreneurs enjoy a flexibility that makes it easier for them to build efficient services than it is for public institutions. For this debate to reach a productive level, it will be necessary for both companies and institutions to collaborate and make compromises. photo credit: