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II. Research hypothesis

The “Uberization of the economy”, as the head of Publicis Group Maurice Lévy called it in a now famous article from the Financial Times, is nowadays undeniable. The rapid transition from a local industrial goods model to a more global on-demand service one, by the means of the latest digital disruption, is patent in a world in which Internet platforms coordinate hundreds of thousands of freelancers to drive cars, rent rooms, deliver food and other goods as better alternatives to the classic service providers. What most of us visualized as another step towards the construction of a more collaborative economy, is actually turning out to tap all the resources that not long ago were efficiently organized by methods of mechanization or intensive labor. Being optimistic in regards of what there is to expect, it could be said that the exposition of the markets to this new trend will only result in the secular deflationary effect in favor of consumers. A more pessimistic scenario, in contrast, would also reconsider the detriment caused on the supplier’s side in terms of competition. A realistic analysis, like the one that will be presented here after, will modestly aim to recognize that employees will end up being those most affected.

Indeed, much is the anxiety and few the certainties for a generation of employees that see the end of the nine-to-five and the long-term contracts as the new normal. Centuries of individual struggles and social turmoil to claim personal prerogatives and collective rights swept away in just a matter of decades. Most of societies still being regulated by obsolete labor codes and legislation: a century of rough technological Darwinism while we are still unable to counterbalance it with the original idea of a social contract. An “Uberized” economy requires that we all ask ourselves several important questions like: What results should we expect when some of the most basic notions of socialism or capitalism, for instance private property and salary, public health and retirement are transformed by the effects of the new technologies and the on-demand economy? What would be the advantage for the modern companies to keep assets and recruit new employees, when a huge number of freelancers are offering similar and sometimes better services at a lower cost without asking for any kind of social security? Or, event more relevant, how the States will finance itself without a taxation plan that effectively targets these new enterprises, business models and digital employment?

In order to try to answer these and other basic questions it is necessary to announce at this stage, at least three main hypotheses:

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- The Uberization of the economy is, for good or wrong, a revolution that has already taken place and will not wait for any individual, organization country or government to catch up with it;

- The consequences of this revolution may take us to a scenario of even more extreme social contrast and economic inequality if global measures are not adopted and implemented in the short and medium-term;

- In the long-term, employees and the society in general will have to specialize more in tasks that are more “particularly human” and learn to work with new technologies instead of trying to “race against the machine”; likewise, governments will have to adapt and legislate accordingly.

III. Literary review and methodology

This paper will follow a methodology that consists of three sections or chapters: in the first part, the basic concepts of on-demand and collaborative economies or Uberization will be described and differentiated; disruptive technologies and technological displacement, among others, will be defined to facilitate the analysis of the main hypotheses in the subsequent parts.

In a second time, a broader critical historical review of the political economy and the evolution of technologies will be offered, so as to clarify what’s the current situation and understand the major implications to be faced. For this section, we will constantly refer to several books and scientific papers to announce the main theories –pros and cons; thesis and antithesis–, from renowned experts in both the economic and technologic fields.

Finally, several propositions will be given to try to answer some of the questions listed before; propositions that will be inspired from conferences, symposiums and interviews made in the context of the topic Uberization of the economy in France, as well as articles and blogs that relate to the matter. All the unquoted sources and references in the body of the text are to be consulted at the end of this paper in an alphabetic order.

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1. Conceptual framework

I. The economic, managerial & technologic terminologies.

a. Economy

From a Business Insider article dating from mid 2013 we learn that the “on-demand economy is defined as the economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services.” Furthermore,

“supply is driven via efficient, intuitive digital mesh layered on top of existing infrastructure networks”1. The revolutionary aspect of this peculiar kind of economy is thus a combination of two important realities that characterize the way in which individuals and companies have been doing business for the last 5-10 years: immediacy (high speed) and intuitiveness (or cognitive ease). Some critics could of course oppose to this view the fact that the on-demand economy is not that recent a reality, and retrace the financial failure resulting from the .com bubble that busted in the late 1999-2000 as a milestone. Other experts might insist on the fact that regardless of when it started, the future of our economy is now dependent on the evolution of the Internet of things and the development of a high number of companies in this field that have been expanding at an unprecedented pace since the Third Industrial Revolution took place.

Indeed, this concept of economy à la carte traces its origins back in the 90s when companies such as Webvan and Kozmo were pioneers in attracting important funding and being valuated in millions in a surprisingly short period of time. Some of these companies, startups that may or not reach the dreamed status of unicorns (surpassing the threshold of $1 billion dollars), are still with us today as it is the case of the e-commerce platforms eBay and Amazon. Modern leaders of the on-demand economy have been successfully creating

“business models that can satisfy the needs of consumers in a more cost-effective, scalable, and efficient manner than their predecessors [by] leveraging on technology while utilizing existing infrastructure”. According to the strategist Mike Jaconi, the on-demand economy’s framework consists on the best of the old and the new worlds of Information and Communication Technologies (ICT):

1 http://www.businessinsider.com/the-on-demand-economy-2014-7?IR=T

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However, the most influential sectors within the on-demand economy are not limited, as some may believe, to the IT category. The peculiarity of what Mr. Maurice Lévy also called the “digital tsunami” 2 is that it encompasses a plethora of sectors and industries that go from the provision of simple services such as food and package delivery, to the more popular accommodation and transportation services; and from the more complex banking and financial services, to the more sophisticated law advisory and accounting consultancy. Another article from the weekly magazine the Economist also dating from mid 2013 tells us, for instance, how by march of that year 40,000 people rented accommodation from a well-known application that offers more than a quarter million of rooms in approximately 30,000 cities, in almost 200 countries around the world. The service provided is well known for its method of putting in contact guests who chose their rooms or spaces among the 250,000 possibilities and pay in advance for the entire service. This service, instead of the classic hotel chain or private hostel, is provided by particulars eager to make full use of the limited assets they possess3.

Private rides through the use of a second leading platform had grown in an even more remarkable way if taken into account the awareness and potential of this à la carte ride service. The figures are more eloquent in this case, so according to calculations also dating

2 http://www.ft.com/intl/cms/s/0/377f7054-81ef-11e4-b9d0-00144feabdc0.html#axzz47Ww9XFCk

3 http://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy

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from 2013: “over $4.8 billion in capital have been invested in on-demand companies, with

$2.2 billion invested in the previous 12 months [of 2012]4”. The riding industry alone amassed over 40% of that amount, from which almost 60% or “$1.2 billion were destined to finance the last round” of the transportation platform that barely 3 years ago was valuated only at less than

$20 billion (the updated figures will be presented in the third and last section of this paper).

When the startup revenues finally leaked at the end of 2013, its CEO stated to the newspaper the Washington Post Journal that the young company would be “at least doubling every six months”. What this data actually shows is that the transportation and accommodation industries are becoming economic giants in a still relatively adolescent on-demand economy.

It’s just a matter of time to find those new champions in other sectors, willing to capitalize on new technologies that will keep helping them to reduce transaction costs, make sharing assets cheaper, and easier than ever at a much larger scale.

A third, more general example of industries that have been empowered thanks to technological innovations in the on-demand economy is food delivery service. Historically limited to the needs from regular customers that would have to be met in a particular restaurant, another large group of entrepreneurs is attacking the more than $700 billion US restaurant industry with non-less negligible success. The supply options have been recently expanded beyond the traditional physical locations, to reach demand coming from basically the remotest point of any city. The main difference between the delivery service applications and the transportation and accommodation giants portrayed before being that competition is harsher for the former than for the latter, it is nevertheless true that early and adopters have been able to keep capitalizing on opportunities in the market, given the extension of the submarkets themselves and the wide set of tailored options that the restaurant industry has to offer.

A second concept that comes out almost invariably when economists and business journalists talk about some of the services previously listed, and which is as important for the purpose of this paper, is that of collaborative economies. Better known in English as sharing economies, the term, according to a Financial Times article of July 2015 “is turning out to be many things, [including]: a way to turn more areas of human existence into ad hoc marketplace;

a form of regulatory arbitrage; and an informal economy that facilitates tax evasion5”. To make

4 http://theweek.com/articles/538659/hidden-cost-ondemand-economy

5http://www.ft.com/intl/cms/s/0/a90562aa-20c4-11e5-ab0f-6bb9974f25d0.html#axzz42FoXdgVE

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a difference with the previous concept, the on-demand economy simply means a service that lets its users to access value immediately, in an easy, intuitive way. The most distinctive factor of the sharing economy would be, in contrast, that it is a disruptive economic form that unleashes various sources of supply that range from those underused assets just mentioned (cars, houses, restaurants, etc.), but also the labor force to ultimately tap as many resources that would otherwise be underutilized. What is mine is yours: for not for free, prays the new logic.

So it is important to keep in mind from now on that the spirit of collaboration behind this idea of peer-to-peer economy relates more to a tacit consensus among the bottom segment of owners and users –in need to create value from shared spaces, goods or their own personal talents– than to an actual and uninterested social friendly gesture.

As it was the case while defining the on-demand concept, we likewise learn that the notion of collaborative consumption is not new. “The sharing of resources is for example well known in business-to-business (B2B) […] as well as in business-to-consumer (B2C) 6”.

Three major drivers enable sharing of resources for a broad variety of new goods and services as well as new industries. “First, customer behavior for many goods and services changes from ownership to sharing. Second, online social networks and electronic markets more easily link customers. And third, mobile goods and services make the use of shared goods and services more convenient”. Besides these three major drivers that would help us to distinguish the second from the first concepts so far defined (i.e. collaboration from on-demand economy), what really rules the former one is the real –even if not totally uninterested– desire of its adherents to share access to products or services, instead of just claiming individual use for themselves.

What might complicate the distinction though, is when we read that the collaborative economy model is used to describe online “marketplaces such as eBay, but also other emerging sectors such as social lending, peer-to-peer travel experiences, peer-to-peer accommodation, peer-to-peer task assignment or travel advisory, car sharing or commute-bus sharing.” A very interesting article by Harvard Business Review will help us to elucidate the confusion and facilitate the transition to the third and most important concept in this section:

Uberization. It’s author, Arun Sundararajan, argues that the collaborating economy marketplaces that derive from the need of immediacy and intuitiveness of the on-demand economy, “transcend the simple trade conduct on eBay and are instead inventing an entirely

6 https://en.wikipedia.org/wiki/Sharing_economy

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new asset-light supply paradigm7”. According to this hypothesis, the initially well intentioned collaborative consumption would “enable the disaggregation of physical assets in space and in time, creating digital platforms that make these disaggregated components –a few days in an apartment, an hour using a Roomba, a seat in your drive from Berlin to Hamburg– amenable to pricing, matching, and exchange”. Therefore this reengineering of the entire traditional economy into a sharing stereotype is nothing else than a misnomer: the correct definition for the activity should instead be access economy.

The reason being that when collaboration is market-mediated –which means that a company becomes an intermediary between consumers who don’t know each other– the whole idea of sharing losses its essence because consumers end up paying for the right to have access to anyone else’s goods or services. The “someone” (the idealized sharing partner) transforms into “anyone” (the conventional economic entity) who offers anything for a price regulated by the classic forces of offer and demand; with the only difference that the intermediation is done through more effective tools that have been systematically replacing the usual providers. Many are the watchers believing that this radical phenomenon, which combines all that has been described until now –speed and cognitive ease to reach instant gratification, as well as a more social motivated ideology of sharing goods and services by the means of applications that connect millions of users globally–, “is just the beginning of a technologically-driven economic shift, an on-demand revolution that will end up encompassing the entire economy”.

The Huffington Post business blogger Sunny Freeman is probably the journalist who hast most accurately defined what Uberization means, when she stated that the formula currently being touted by a deluge of tech startups seeking to convince investors to adhere to the next revolutionary billion-dollar idea was: “take the power of Uber and apply it to X”. The Uber application, which most of us know as the leading platform that connects drivers and passengers through smartphones, is today known as the most highly valued tech startup worldwide: its estimated worth by late-2015, early-2016 being more than $62.5 billion. And yet even if the company still has to prove whether it is worth its multi-billion dollar valuation or whether it is just destined to become the most representative startup leading to a new .com crisis, the Uber –and the other Silicon Valley darlings– effect on the entire economy is undeniable. Amazon and eBay were among the first models, along with companies like Google, Apple and Facebook, that are not only growing in economic importance and highly influencing

7 https://hbr.org/2013/01/from-zipcar-to-the-sharing-eco

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social habits: they have transformed the old ways of doing business. Some specialists even suggest that the data collection giants are reconfiguring sectors beyond those of technology, economy and labor, and Uberizing education, medicine, art, leisure and even war industries.

For the last three to four decades, ever since the Internet was invented, Economists have been talking about the idea of deploying unused assets into the economy, which has finally happened in a massive, unregulated and unpredictable way. This movement that we now popularly know as Uberization, has the potential to disrupt every industry. The risk of an accelerated continuous renewal is so palpable now a days that even companies like the San Francisco startup whose name inspired the concept have been experimenting with Uberizing its own services since its arrival in 2009. From picking up people on the streets and dropping them off in a designated address, to delivering gifts and Christmas trees on holidays or food and dessert to wedding parties. As Nick Waddell, a specialist in the IT domain tells us in his blog Cantech Letter: “Technology is removing barriers, and sometimes those are really painful barriers for the stakeholders […] Some of these industries that have been protected by regulation have grown lazy, and, as they’ve grown laze, it’s been really bad for consumers.” So traditional players find themselves forced to incessantly adapt or die, and the effect of this dilemma is the creation of winners and losers, removing the middleman from the buyer/seller equation.

Other specialist –tech savvies and free-market economists– may argue that removing the middleman from the economic equation could allow each employee (driver, concierge or restaurant manager) to become his or her own boss and work independently of a central company, depending only on an Internet connection, a personal computer or a simple smartphone. In the same Huffington article quoted before, Sunny Freeman also explains that

“the current labor climate, in which the job market is shifting away from traditional employment and towards part-time and temporary work, self employment and alternative working arrangements, actually creates a perfect recipe for the Uberization of labor8”. This might of course be good news for high-skilled workers who don’t feel confortable with the idea of having a formal employer or boss, and somehow for low-skilled workers as well who are simply looking for better alternatives to inflexible schedules or location constraints. Now, it is important to keep in mind that the only predicable thing about Uberization is precisely its unpredictability, and that as it will be said explained here after, there’s a risk in the medium

“the current labor climate, in which the job market is shifting away from traditional employment and towards part-time and temporary work, self employment and alternative working arrangements, actually creates a perfect recipe for the Uberization of labor8”. This might of course be good news for high-skilled workers who don’t feel confortable with the idea of having a formal employer or boss, and somehow for low-skilled workers as well who are simply looking for better alternatives to inflexible schedules or location constraints. Now, it is important to keep in mind that the only predicable thing about Uberization is precisely its unpredictability, and that as it will be said explained here after, there’s a risk in the medium

在文檔中 經濟體Uber化與Uber化經濟、起源、演進與勞動市場的後果:對法國的整體影響效果 - 政大學術集成 (頁 8-0)