Tech and the Fake Market tactic

Insightful essay by Anil Dash on how the internet went from opening up new free markets to creating a series of fake markets that exploit society, without most media or politicians even noticing:

Uber‘s promise is simple: you use their app to hail a car, and one driver from a pool of independent drivers agrees to pick you up, and everybody’s happy. In their formulation, they’re a neutral marketplace connecting customers and service providers — kinda like eBay!

But unlike competitive sellers on eBay, Uber drivers can’t set their prices. In fact, prices can be (and regularly have been) changed unilaterally by Uber. And passengers can’t make informed choices about selecting a driver: The algorithm by which a passenger and driver are matched is opaque—to both the passenger and driver. In fact, as Data & Society’s research has shown, Uber has at times deliberately misrepresented the market of available cars by showing “ghost” cars to users in the Uber app.

It seems this “market” has some awfully weird traits.

  1. Consumers can’t trust the information they’re being provided to make a purchasing decision.
  2. A single opaque algorithm defines which buyers are matched with which sellers.
  3. Sellers have no control over their own pricing or profit margins.
  4. Regulators see the genuine short-term consumer benefit but don’t realize the long-term harms that can arise.

This is, by any reasonable definition, no market at all. One might even call Uber a “Fake Market”. Yet, by carefully describing drivers in their system as “entrepreneurs” and appropriating the language of true markets, Uber has been welcomed by communities and policymakers as if they were creating a new marketplace. That has serious implications for policy, regulation and even civil rights. For example, we can sincerely laud Uber for making it easier for African American passengers to reliably hail a car when they need a ride, but if persistent patterns of bias from drivers arise again in the Uber era, we’ll have a harder time regulating those abuses because Uber doesn’t usually follow the same policies as licensed taxis.

This is a very useful set of metrics to evaluate new services.  Regulators please note.