Magazine, Vol. 3: Digital Transformation
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“He who controls the algorithm has the power”

Grauverlauf #1 © Max Dauven

Platform Capitalism: When Side Hustle Becomes Main Business 

 

The digital transformation has given rise to platform companies like Uber, Airbnb, and Deliveroo. Although they present themselves as mere intermediaries between supply and demand of services, they also engage in the large-scale aggregation and mining of data produced by workers and consumers alike. Dr Karen Gregory, lecturer in Digital Sociology, explains how these companies operate, how they have changed the nature of work, and finally, what they are really up to.

This year marks the 200th birthday of Karl Marx. Let us assume that the old man strolls about the streets of today’s London and encounters an Uber driver, a Deliveroo rider, and a TaskRabbit worker. What would his thoughts be?

I think he would ask the same questions that he did in his time and think about working conditions. One thing that Marx would immediately be aware of, is that this is a form of labour – and not a new one. Cities have always been places that gave rise to complex divisions of labour. Seeing someone like a Deliveroo rider, or TaskRabbiter, or an Uber driver would probably not have been that much of a surprise to him. Markets have always created spaces for new forms of work. In cities there have always been people who deliver food, take in lodgers, and transport other people. In some ways this would not surprise Marx that much. Moreover, these people are often working in dangerous, unprotected, and unorganised conditions, similar to the workers in his own time.

However, I think he would be curious to learn that these workers are not given the designation of an employee: The companies organising these new forms of work do not recognise these workers as workers. Marx might even be a bit shocked that there are people doing jobs that are clearly value-creating but have been excluded from the category of “worker”.

Could you unpack that a little bit? In which ways has the emergence of these digital platforms changed the traditional roles of employers and employees?

I don’t think we can say that platforms like Airbnb, Uber, and TaskRabbit are responsible for a changing relationship around work contracts. These platforms are the logical extension of phenomena that have been happening for thirty, forty, or even fifty years. We are talking about a long trajectory of outsourcing labour, increasingly precarious work, casualising work itself and also privatising work and pushing the responsibility for work back on to workers. Some scholars talk about the demutualisation of work, meaning that the employer and the employee do not have a mutual relationship anymore. However, that is not really a new thing and is many years in the making, already. This development is also related to the decrease in unionised and organised worker power. All these factors have created a situation where a company like Uber can “disrupt the market” and set itself up as just a broker for labour rather than having to call itself an employer.

Why are platform workers not represented by trade unions? Traditionally it would be their role to protect workers’ rights. Where are the trade unions in all of this?

The fact that platforms specifically claim that they are not employers is provoking a number of legal battles. In the absence of the designation of employees, workers do not have the rights to organise. However, this does not mean that people are not organising at all. There are institutions like the IWJB (Independent Workers Union of Great Britain) or the IWW (Industrial Workers of the World) that do not consider themselves as formal trade unions in the proper sense. They see themselves as worker-organising entities. Their goal is to organise and to agitate towards direct action. These informal organisations are making tremendous progress in the Uber and Deliveroo world. Most Deliveroo workers I have spoken to know about labour organising or are involved themselves.

It is a bifurcated situation where the formal trade unions have not quite gotten into the whole issue, but there are certainly a lot of activities happening. Workers have been on strike in Bristol and in London. We have seen nascent organising in Edinburgh. Wherever the platform economy has shown up, there has been an unrest among the workers. The narrative around the platform of capitalism is preceding it now. People who sign up for Airbnb or became Deliveroo riders are aware of the labour problems of this business model even if they are not interested in organising themselves.

Could you elaborate on the term “platform capitalism”?

Platform capitalism is a rather new sociotechnical arrangement that is – as some scholars would put it – acting as an intermediary. It allows groups of people to meet: “Would you like to buy my service? I would like to sell my service”, so we are simply using this platform, which is a website, a database or a forum to make that possible. A platform is a multisided market, that allows multiple groups to come to a specific place to trade with one another. At first glance that sounds very simple. However, the ramifications of doing business through this digital multisided market are quite complicated. It changes how we consume, how we produce, how we work, how we will be visible as workers – if at all – and how we get paid. The other side of platform capitalism is that companies claim to be mere platforms and thus have no responsibility for the social effects of their doings. At the same time, they have a tendency of becoming monopolies and there in lies the tension.

That sounds like platform companies do not create any new jobs but rather reorganise and manage demand and supply of services. Why are they so valuable?

Platform companies are particularly valuable because they attract venture capitalists, not only because of the companies’ potential growth, but also because they are data aggregating systems. Everyone has heard the phrase that data is the new oil. What all these platforms are doing, regardless of whether they are delivering your food or helping to clean your house, is not only to aggregate data but also to generate new forms of data that have not existed before. Airbnb, for instance, has one of the world’s largest databases of interior photographs. That is valuable to advertisers, architects, and city planners.

If a company like Uber, Airbnb or Deliveroo goes bust tomorrow, it will still be valuable to civic and urban infrastructures because they will have data that cities want and need. Uber data, for example, is often relied on for making inferences about city traffic or even metro planning. The metro of Washington DC has consulted Uber data in order to understand what happens when the metro collapses. Thus, these platforms should primarily be thought of as data aggregators.

What are they doing with this data?

I think their long-term vision is that this data will help to build the so-called “smart city.” As city governance increasingly starts to look at data driven initiatives, these companies will be the people holding that information. Uber does not necessarily want to be voted into a city council. They do not want to be a utility, something you would have control over. They are aiming for soft power in cities which will allow them to set agendas and establish themselves as private owners of aggregated data.

At least we are really starting to see that platforms have an interest in understanding the future of cities. One of Deliveroo’s recent pitch decks, these decks that you would take to an advertiser or potential investor, lays out the future vision of the company. They claim that they will have infinite amounts of data on food consumption, food delivery, and basic eating patterns in cities. Their long-term vision is to control the entire chain of logistics: how food is generated and how it arrives at your place. It is a grand vision indeed.

That is a dystopian vision, isn’t it?

Definitely. And one that is actively trying to build itself in the absence of any kind of democratic or transparent politics. We are not only talking about the diminished agency and quality of life for workers. We are also talking about real long-term investments in city planning with actors who are not democratically oriented.

Since your research focuses on Deliveroo at the moment, could you give us some more insight into what they are doing?

Deliveroo is essentially a data science company. It is very interested in your consumption patterns: the time you ordered, what you ordered, how much you ordered. The whole business model relies on an algorithm that deploys workers when they are needed and removes them when they are not. In fact, if you talk to Deliveroo riders, their biggest complaint is that there is no transparency. They do not understand how the company is functioning and how the algorithms work that govern their lives.

On some day there are jobs, on others there are none. Nothing is predictable. The company keeps tweaking and changing how it operates. The one thing I took away from interviews with Deliveroo riders is that from their perspective the company actually sounds like a scam. It sounds like a chaotic, fly-by-night pop-up shop that you would not sign up for in any way. However, from the perspective of the consumer side it is obviously convenient. You can download this app and five minutes later you can order food from any restaurant and it is going to arrive at your door. I think the trade-off for your data is what is driving a large proportion of the digital economy. If you thought about it, you might not want the company to have your data, but you definitely want that cheeseburger and you would prefer it to be convenient and easy.

The companies portray these platforms as impartial extensions of the free market. But the question is of course: Who has the power? A platform cannot hire and fire people. The Deliveroo riders of Cologne recently tried to establish a work council. What happened then was that the work contracts of all the involved riders were miraculously discontinued. Who is responsible for that? An algorithm?

The case you mentioned is not the first time that organising Deliveroo riders have just suddenly been dismissed – or deleted – from the app. There is no transparency around the algorithm or what is actually driving management decisions. That is very stressful for workers day-to-day, because you cannot plan on anything. You do not know whether you are going to make money that day or not, whether it is worth going out. It is hard to plan your life around that kind of inconsistent income.

On top of that, it only takes a couple of people around you to be deleted for you to start worrying. Am I doing a good job? Are these decisions based on job performance? Or is it the algorithm that suddenly decided that it just does not need the people? Have I done something wrong? Can this app actually access things on my phone where I have criticised the company in an e-mail? All this creates stress, but also paranoia because the workers do not and cannot understand the rules of the game.

This insecurity is the reason why the whole sector is often called the “gig economy”. The phrase suggests a form of work that takes place occasionally and is typically not the worker’s primary income. Is that the case?

Recent surveys suggest that most platform workers are not entirely relying on income made through the platform. However, that does not mean that they are not relying on that source of income. They often have multiple part-time jobs. In Edinburgh, there is a clear bifurcation. On the one hand, there are student labourers, which I think most people are not paying attention to. These are young people and they do not necessarily think through the risks they are undertaking. Being rider for Deliveroo may seem like a great job when you are riding your bike anyway.

They tend not to see it as work and are not particularly worried about getting hit by a car. One may call it “the exploitation of an eighteen-year-old person’s interest in being healthy, fit, and attractive”. On the other hand, there are people who are really struggling and that are fully dependent on these platforms. However, for these companies, the ideal worker is someone who does not need a job, and that is highly problematic. This also makes the organisation very challenging, because only a part of the work force is in a desperate situation. A good portion of the people would say: “I don’t want this to be regulated, I don’t want to be called an employee, I just want to hop on my bike and make twenty-five pounds when I want it.”

 

“What does it really look like to have nothing but a gig economy running things? From my perspective, that looks like chaos”

 

The companies thus rightfully argue that many platform workers actually appreciate that freedom. Technically, most of them are self-employed. But are they really? And what about social security?

This is an intractable problem. We are either going to decide that these platforms need a form of state regulation and that the status of the employees is actually bogus self-employment. That would mean that these people are workers and that companies owe them higher wages, pensions systems, and sick pay. On the other hand, there could be a continued push that the notion of this free market, flexible worker wins out. The long-term problem with that is social security. What does it really look like to have nothing but a gig economy running things? From my perspective, that looks like chaos. I just do not believe it to be a sustainable model. Imagine the health care sector, for example, reshaped as a platform. An NHS (National Health Service) according to the gig economy model sounds to me like a lot of people dying.

Being technically self-employed, platform workers are also responsible for their own hardware. Uber drivers have to provide their own cars. Deliveroo riders have to maintain their own bikes. If we return to Marx, the irony of the situation is that, in a way, these workers do own the means of production. Is that not a form of empowerment?

We have to ask where to locate the real value of these companies. Investment is not flowing into Deliveroo or AirBnB because they deliver food and allow people to rent living space. It is because they are also data aggregators. He who controls the algorithm and the data science has more power in a work relationship than the person actually doing the labour.You can be the best craftsman or the best bike rider, but that will not help you if you are subject to a whole new form of management which is entangled in data science, and you cannot understand or even access the algorithm. There are no choices of opting in or out. That also applies to consumers. Maybe you still want to use the service, but would you not want to have more control over the variables that you offer up? None of that is on the table for consumers or workers. You can either hand over all your data or not use the service. There is definitely more going on than just the bike riders on the street and a lot of it is completely obscure and proprietary.

 

“What you need is a sense that what is creating value is not just your own embodied“

 

Does that mean that both workers and consumers will have to acquire a basic understanding of data science in order to regain control?

You do not necessarily have to be a data scientist to understand all that. What you do need is a sense that what is creating value is not just your own embodied labour. You have to understand that you are generating data yourself by simply riding a bike. It may appear that you are simply delivering pizza to a customer. However, you have had this app on your phone the entire time and what you really have been doing is mapping the city for Deliveroo. You are teaching the algorithm how to maximise profit. People have to be able to see those data infrastructures in order to ask good questions about them. They should be transparent in a civic society. We have lived through the process of building a digital economy, and we take it for granted that companies have proprietary resources that we do not have access to. However, I think we should really regard these algorithms as something we have the right to look at, to critique, and make choices about.

So far we have talked about the negative effects of the digital transformation on work. What are the good sides and what possibilities do they offer?

We have to remember that the internet itself was born of incredible enthusiasm for access, participation, and non-hierarchical networks. That also applies to many of the newly emerged platforms. Airbnb, for instance, comes out of the couch surfing movement, where people were excited about new forms of sharing and peer-to-peer production. The sharing economy, in the original sense, could open up new ways of sustainable consumption and production. With it comes the narrative that sharing might equal more sustainability or more equitable social practices – and fair enough, those are great ideas.

If we look at the precursors of some of these platforms we can see that they really created new and interesting arrangements. However, once venture capital flows into something that subsequently needs to scale and actively desires a monopoly, we are no longer in a simple sharing or barter economy. We are looking at new, sophisticated financial instruments for extracting profit from both people and cities. The positive aspects of the digital economy open themselves up to exploitation almost immediately. The capital is much faster than we are. If it sees a chance to make money and create new markets, it does so. We find ourselves in a kind of contradiction: The digital transformation could change the way we life and work for the better, but instead we are now deeply entangled in a new nefarious capitalism.

Interview: Jonas Hermann

Translation: Hannah Riegert-Wirtz

 

Digital-Transformation-and-Employment

Dr Karen Gregory is a lecturer of Digital Sociology at the University of Edinburgh. Her research is mainly concerned with the digital economy and its effects on society. Recently, she has been conducting interviews with Deliveroo riders in Edinburgh about their work experience.

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