Unshared profits in shared economies

Unshared profits in shared economies

The global gig economy has largely been facilitated by ‘free’ access to browsers, search engines, online market places and network transportation/delivery services software and mobile apps.

While much has been written about the anti-competitive and privacy-violating advertising practices of Google, Facebook and Amazon, there has been less focus on the equally unwelcome ramifications of the services offered by transportation, delivery and lodging networks such as Uber, Ola and Airbnb.

The enormous profits generated by Google, Facebook and Amazon stem from revenues generated by individual-specific advertisements based on the 24/7 tracking and analysis of the online behaviour of users.  The behavioural data provided by the user is an intangible asset. On the other hand, the profits accruing to companies such as Uber, Ola and Airbnb are based on tangible assets — vehicles and real estate.

In the Uber/Ola economic model, anyone who owns a vehicle is a potential cab driver. The owner of a vehicle who subscribes to providing rides via Uber or Ola is responsible for paying any and all costs associated with owning and maintaining a vehicle (gasoline, inspection, registration, repairs, etc.), obtaining the necessary permits and being subject to an extensive, often intrusive, background check. Note that neither Uber nor Ola own any cars (or autos or motorcycles) but get a significant commission on each ride.

In the Airbnb economic model, every home owner is a potential inn-keeper. Airbnb does not own any real estate but offers lodgings to potential renters and gets a commission on each rental. Here too, the home owner bears all the costs and responsibilities associated with temporarily renting out rooms — the payment of property taxes, fulfilling municipal requirements on fire codes, sanitation codes, etc. 

In both economic models, essentially all risks and costs are borne by the owners of the tangible assets and none by the companies themselves. Based on their past rental records or social media postings, troublesome subscribers are automatically removed by these companies from their subscriber base. Remarkably convenient and extremely profitable with few or no laws to regulate their operations, this is unbridled capitalism at its very best.

Owners of vehicles who sign on to networked transportation companies do so with the hope of either supplementing their income or being the primary source of their earnings. However, this can no longer be assured in the future once self-driving vehicles flood the streets. Taxicab drivers, whether professional or amateur, will no longer be necessary.

Likewise, as more and more home owners sign on to networked home-sharing services, traditional hotels and motels and their professional service staff will be severely impacted. The real estate on which these no- longer-profitable hotels/motels stand can then be purchased at bargain basement prices, the buildings torn down and converted into parking lots for the self-driving vehicles.

Valuable commodity

According to a March 10, 2019 article in the Guardian, the combined wealth of the founders of Facebook, Amazon and Google [Zuckerberg ($62.3bn), Bezos ($131bn), Brin ($49.8bn) and Page ($50.8bn)] is larger than the combined wealth of the bottom half of the American population. Soon, the founders of Airbnb and Uber, both of which will go public, will join their ranks.

Curiously enough, companies such as Airbnb require their subscribers to authenticate themselves through Facebook, LinkedIn or Google+ accounts. Even though one may not have a social media account, one is forced to enrol in one if only to obtain accommodation. Providing one more avenue for the already data-rich Google and Facebook to exploit.

Since data has replaced oil as the most valuable commodity on earth, by all measures, India will be the second richest country in the world next only to China, ripe for exploitation by IT companies in the futures market.

Countries across the globe levy taxes on income, property and the sale of goods to support a variety of government functions, most of which exist for the benefit of the ordinary citizen. Unlike Uber and Airbnb whose commissions (i.e. ‘taxes’) are designed to enrich companies under the pretext of providing convenience services. And the common man will be left to pick up the pieces.

Perhaps, it is time to consider the subscribers of social media and online transportation network companies as shareholders of these companies and have dividends paid to them on a regular basis.

After all, it is their physical, mental and behavioural resources made freely available that have enabled these companies to become enormously profitable.

(The writer is a computer science and IT specialist)