Digital Transformation and a Bump In the Road for Uber
“Defendants are in business to provide transportation services to passengers. … Plaintiff did the actual transporting of those passengers. Without drivers such as Plaintiff, Defendants’ business would not exist.” What does this mean? It means Uber has lost its California court case. In other words, Uber users need drivers to be users, so drivers are why Uber exists. All their drivers are exactly that: Their drivers. Employees.
There is an internet meme saying the largest taxi company doesn’t own any taxis (Uber), and the largest hotel chain doesn’t own any real estate (Airbnb). While I’m sure that meme didn’t impact the ruling, Uber’s defense included the idea that they were not a regular taxi company and should not be judged as one. Not owning the goods isn’t different enough, and the decision hinges on the integral relationship between the business and service provided. Airbnb beware!
When writing Journey 2018 we included a lot about new business models, multi-sided markets, and how platforms are changing IT. Uber is an example of those new IT business models – in their case a company that runs an IT platform using geolocation data to match supply and demand. But the trick is that Uber and Airbnb platforms also allow just about anyone to turn their goods into services. Excess capacity in your flat? Turn it into a service. Excess capacity with your car? Turn it into a service. With this logic, drivers are just as much a customer of the platform as the passengers are. Considering drivers pay 20% of the fair to Uber, it seems to me like they are customers and not employees.
Let’s try the following logic: What if your business is to provide content about people to your users? Users need content about people, so there is an integral relationship between the business and providers of the content ... so content writers are employees. If this is the case, the courts have now catapulted Facebook to the world’s largest company. Those 1.2 billion worldwide users supplying content about people (themselves) are now 1.2 billion employees.
Is this just another bump in the road of digital transformation? It’s great that IT can help change business models so quickly, but what are the implications of supplying IT platforms these days if the legal world isn’t keeping up? Maybe just a simply rewording of the Terms and Conditions for drivers solves the issue? But what do you think is a fair transition between traditional company definitions and new digital business models? And what is your company doing to transition into that new digital business - because there is no doubt that Uber is successful at being a new digital business.
Note to Zuckerberg: Atos would be happy to create and operate your new payroll system for you. Just give us a call.