From Airbnb to city bikes, the ‘sharing economy’ has been bought up by big money
Of all the ideologies spawned by Silicon Valley, that of techno-populism – the making of empty promises on the basis of seismic digital disruption – is the strangest. Promising a world of immediate and painless personal empowerment, techno-populism is ambiguous enough to unite big tech firms, startups, cryptocurrency aficionados and even some political parties.
The history is murky, but we do know the date when it went mainstream. It can be traced to Time magazine’s selection, in 2006, of “You” – the millions of ordinary people behind the user-generated web of the 2000s – as its Person of the Year. That choice ingrained techno-populist themes deep into our collective unconscious.
While actual contributors to sites such as Wikipedia or Flickr were relatively few, the celebration of them delayed and deflected questions about corporate power and the durability of the emerging digital utopia. Just a few years later, that utopia was no more: highly centralised and dominated by a handful of platforms, the web was a shadow of its former eccentric self.
In 2018, the omnipotent creative user of 2006 has become a zombie-like content junkie, lethally addicted to scrolling and liking, forever trapped in the invisible cages of data brokers. A noble effort to make everyone an honorary member of the Bloomsbury group has instead condemned all of us to the eternal rosters of Cambridge Analytica.
So the myth of the user-as-an-artist is gone. But today the spirit of techno-populism thrives on two subsequent equally potent myths: those of the user-as-entrepreneur and the user-as-consumer. They promise a lot – more decentralisation, efficiency, informality – while concealing the actual dynamics of the digital economy. As a result, the digital future that does await us – one of centralisation, inefficiency and control – is harder to discern.
When Uber, Airbnb and similar platforms were young and tiny, it was easy to believe that a global revolution would liberate more informal economic activity. Out with professional drivers, limousines and hotels; in with amateurs, bicycles and shared couches!
It was an appealing vision, rooted in the countercultural rebellion against authority, hierarchy and expertise. That vision, however, lacked one thing: backing from political parties or social movements. Those parties, once in power, could have ensured that local platforms had adequate public funding not to be subject to the brutal laws of competition, protecting them from deep-pocketed commercial competitors.
A similar effort in the previous century, a political project par excellence, gave us the welfare state. Instead of opening the provision of education or healthcare services to private providers, we deliberately sealed those domains from the pressures of the market.
The welfare state that emerged had some hierarchical excesses, but it was a reasonable compromise, given the political and technological limitations of that era. Today, one can imagine a more horizontal provision of such services, more respectful of local autonomy, democratic decision-making and individual idiosyncrasies. The same goes for the economy as a whole.
Digital platforms, as intermediaries of interaction between citizens and firms, and also citizens and institutions, should be of great importance to this transformation. However, no similar political project – aimed at keeping the newly democratised state and economy decommodified – emerged. As a result, the laudable aims of empowerment, localism and horizontalism were to be achieved by cosying up to a mighty but treacherous ally – by synchronising the heartbeat and needs of digital platforms with those of global capital.
It worked nicely, at least in the beginning. Car-sharing, bike-sharing and flat-sharing all exploded, thanks to huge injections of capital, much of it from sovereign wealth funds and venture capitalists. How nice it was of Saudi Arabia to pour its oil revenues – through deals with Japan’s SoftBank – into subsidising ride-sharing and food delivery all over the world.
Those offering services or goods on digital platforms, as well as those buying or renting them, had reasons for jubilation. The former got a way to monetise their idle resources, from vacant apartments to free time. The latter got discounts on rides, meals and bookings. Many struggling municipalities could now count on digital platforms to extend or replace crumbling infrastructure and facilitate tourism.
This fairytale has come to an end. The year 2018 is to the sharing economy what 2006 was to user-generated content: it can only go downhill. Platforms won’t disappear; far from it. However, the initial lofty objectives that legitimised their activities will give way to the prosaic and occasionally violent imperative imposed by the iron law of competition: the quest for profitability.
Uber may help some make ends meet through occasional driving gigs. The need to achieve profitability, however, means that it will have no qualms about ditching its drivers for fully automated vehicles; a company that lost $4.5 bn in 2017 alone would be silly to do otherwise.
Airbnb may have presented itself as an ally of the middle classes against entrenched economic interests. But the drive for profits already forces it to partner with the likes of Brookfield Property Partners, one of the world’s largest real-estate firms, to develop Airbnb-branded hotel-like residencies, often by purchasing and converting existing apartment blocks. Few entrenched interests – save, perhaps, for the tenants who see their apartment blocks become Airbnb-run hotels – get disrupted here.
Given the huge sums involved, the most likely outcome of current battles in sectors such as ride-sharing will be more centralisation, with just one or two platforms controlling each region. Uber’s surrender – in China, India and Russia, as well as much of southeast Asia and Latin America – to local players, many of them also backed by Saudi money, suggests as much.
And the old and hierarchical industries will not stay idle for ever, as the experience of the previous digital revolution teaches us. Just look at the recent acquisition of Spin – a promising electronic scooter startup – by Ford.
Such developments contradict the techno-populist rhetoric. They also generate a lot of waste, with piles of abandoned bikes proliferating across the globe. Increased traffic on clogged streets – the consequence of letting global capital conquer ride-sharing instead of developing far more efficient public transportation – is already here.
Mountains of waste generated by delivery startups is hardly the sustainable future advertised by techno-populists. The heavily subsidised fares and meal prices – the temporary consequence of intense competition – will not last; heavy losses will need to be recouped by the few winning firms – most likely, via higher prices.
Today’s myth of the omnipotent consumer-entrepreneur is dead. Techno-populism, however, will survive, making sweeping promises about the blockchain, artificial intelligence or the smart city.
Many of these promises will look appealing. But without a robust political agenda – an agenda that harbours no illusions about the ability of global capital to promote social emancipation – they will produce the opposite effects. We can’t buy our way to a more democratic society – and certainly not with Saudi money.
• Evgeny Morozov is the author of To Save Everything, Click Here