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Anil Dash's article discusses how the internet has enabled and encouraged the formation of what he calls "Fake Markets." These Fake Markets have the appearance of a more ordinary free market, but the choices allowed therein are either illusory or can be arbitrarily shuffled or removed without knowledge of any of the parties to the transaction. He traces the changes in business plans of companies such as Uber, Google, and eBay to show how they have evolved from creating new markets to strangling them.
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.
- Consumers can't trust the information they're being provided to make a purchasing decision.
- A single opaque algorithm defines which buyers are matched with which sellers.
- Sellers have no control over their own pricing or profit margins.
- 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.
(Score: 0) by Anonymous Coward on Monday February 27 2017, @06:10PM (2 children)
The whole reason markets are the standard for economic exchange is because they've shown themselves to be the most efficient means of connecting buyers to sellers and enabling the highest quality product at the lowest price. The reason new companies like Uber are "strangling" the old competitors is because these old competitors got greedy and stopped playing by the rules of the market, often because they managed to get rid of competition. If they were still playing the market game and offering the highest quality product at the lowest price while also paying their cabbies as much as they could then services like Uber would simply be dead on arrival. These companies are very much playing by the market rules, but the old dinosaurs in so many industries have fallen so far away from what consumers want (low price and high quality) that actual competition looks like bloody murder.
And isn't it funny too? It's these old "real market" businesses that go crying to the government trying to lobby them to ban these nasty competitors, while even more "fake market" companies spring up to try to outcompete these business. Eg - Uber saw the rise of companies like Lyft, Hailo, and many more who are trying to beat these businesses by offering a better product for a better price and letting consumers, instead of cronyism and protectionism, pick the winner. It seems like unintentionally ironic use of the word "fake" is quite the trend lately.
(Score: 0) by Anonymous Coward on Monday February 27 2017, @09:31PM (1 child)
It's all great until they come knocking on your door. When the ex-cabbies all learn C++, where will the C++ programmers go?
(Score: 0) by Anonymous Coward on Tuesday February 28 2017, @03:08AM
Haha, well that's a different topic altogether. Suffice to say I think our economic system is going to require a bit of a bandage. But technology moving along is a very positive thing even if in the short to mid term I expect we're probably in for a bumpy ride.