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: 1, Insightful) by Anonymous Coward on Monday February 27 2017, @02:58PM (1 child)
A "true" market is decentralized, or at least has its foundation in an inherently decentralized system.
Uber represents the same kind of command-and-control structure around which a government is founded; the difference is that a government is an organization which is violently imposed, and which is usually celebrated as The One True Way as per humanity's ancient, uncivilized, tribal cultural predilections.
Someone should build a peer-to-peer "Uber", whose parameters (such as price) are set solely due to the voluntary participation of every party. It is from voluntary agreement within decentralized participation that Truth of the needs and wants of the market (i.e., of society) can emerge into consciousness and thereby be satisfied.
(Score: 0) by Anonymous Coward on Tuesday February 28 2017, @06:24AM
Uber resembles a pyramid scheme to me in many ways, albeit done legally They don't make money. They sell the promise of making money. Those who started Uber make money. The early "investors" might make money, those who come later are likely to lose money.
In some countries the fares don't even cover the amount the drivers are making (that's not competition that's anticompetitive dumping). It's definitely easier to provide a better service for cheaper fares if you're not expected to make money and are subsidized in the order of billions.
https://www.bloomberg.com/news/articles/2016-12-20/uber-s-loss-exceeds-800-million-in-third-quarter-on-1-7-billion-in-net-revenue [bloomberg.com]
https://www.bloomberg.com/news/articles/2016-08-25/uber-loses-at-least-1-2-billion-in-first-half-of-2016 [bloomberg.com]
(Score: 0) by Anonymous Coward on Monday February 27 2017, @03:22PM (3 children)
Interesting that that Uber has been targeted by the Masters of the Universe. While it raises some questions about employment law, I suppose I don't see the need for 24/7 press coverage. I knew that the Masters of the Universe had taken aim when the sexual harassment stuff started. Now we're suggesting that Uber somehow "strangles" the free market despite the fact that they're opening up the already strangled taxi market.
Call a traditional cab. Call Uber. Call Lyft. There are more options than ever.
I don't use any of those services personally.
Sexual harassment is a serious problem when it happens, and it must be dealt with swiftly and clearly. Yet when the media moves to accusations of sexual impropriety, it's a "jump the shark" moment. On the one hand, a horrible act. On the other hand, it's an accusation where the accused is presumed guilty, and so the Masters of the Universe (who are the true cocaine snorting sexually harassing assholes) know they can use it with abandon. This article is an interesting angle to pile on the accusations, but it really has nothing on the accusation of sexual impropriety.
Overall, this tells me that Uber must be close to rolling out a self-driving car, and it tells me that Uber is not the party the Masters of the Universe authorized to be first to market with a self-driving car.
(Score: 2) by nobu_the_bard on Monday February 27 2017, @03:29PM
The article actually talks about several different markets and Uber is just the example that the article goes into the most detail.
Personally I think Amazon would have been a better target here; they are similar to Ebay in regards to allowing vendors to sell products, but they do not allow individual users to post things to sale, so they are simpler to get into. Uber is less similar to the other examples, the Taxi market is somewhat unique.
(Score: 3, Touché) by https on Monday February 27 2017, @08:11PM
Help, I can't find the "-1, Paid Shill" mod!
Offended and laughing about it.
(Score: 4, Funny) by DECbot on Monday February 27 2017, @10:33PM
I think you're confusing "Lawyers & Media" with "The Masters of the Universe." I understand the confusion as there are some reoccurring trends in both groups, however there is a big difference on how the two groups respond to accused. Lawyers & Media tend to resort to lawsuits and scorn when delivering justice to the presumed guilty while He-man typically batters his foes with a magical sword that expands to his verbal command and grants him additional strength and stamina...
You know what, nevermind. I think you're probably right.
cats~$ sudo chown -R us /home/base
(Score: 4, Interesting) by Grishnakh on Monday February 27 2017, @03:25PM (1 child)
Since this article mentions Ebay, I'd like to give them some free advertising. These days, I've found Ebay to be really invaluable in finding all kinds of stuff, both used stuff and cheap stuff, including cheap junk from China. I do wish there was more competition for them (because competition is almost always a good thing), and their fees were lower; unfortunately that's what we get with one big company dominating a sector like that. But Ebay does have some competition: Amazon. And these days, Amazon has really gone down the shitter, so Ebay looks great (to me at least) in comparison. One big example: cheap Chinese junk. If you want to buy something cheap, you can get it *really* cheap sent directly from China, and it's usually cheaper on Ebay when you do. But what if you would rather buy from a US seller and not wait 4 weeks? On Ebay, this is easy: the location of the seller is made plainly obvious. And you can even filter search results by the seller's location. Eliminating the Chinese sellers is as easy as clicking "US only" or "North America only". You can even filter results by distance from you, so if you only want to see sellers located with 100 miles, you can do that. Amazon doesn't let you do any of this, and makes it somewhat difficult to see where a seller is located; the best you can do is add the product to your cart, go through checkout, and see how long it thinks it'll take to arrive. I used to buy a bunch of stuff on Amazon, but these days I've almost entirely given up on it.
Anyway, enough of my ramblings about Ebay. I also want to address this:
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.
I don't see the logic here. Uber is lauded for making it easier for black people to get a ride, but then they claim that if drivers start exhibiting bias (like the cab drivers are infamous for), that it'll be hard to regulate this. Why is this? Because Uber isn't subject to the regulation that cabs are? This is non-sequitur. Cabs *are* subject to regulation, and that regulation includes rules that they're not allowed to discriminate against black people (or anyone). Yet, cab drivers do this *all the time*. Clearly, the regulation is absolutely worthless. Anti-Uber people consistently bring up "regulation" as one of the plusses of cabs, and that sounds great in theory, but in practice it's worthless, as black people in NYC will happily tell you. What's the point of regulation if it's never enforced? It's just a feel-good measure that gives people a false sense of security and a false idea that the local government is working for them, when it is not. It's better to have no regulation at all than to have regulation that's never enforced.
(Score: 3, Informative) by c0lo on Monday February 27 2017, @09:38PM
Almost there. When aliexpress.com [aliexpress.com] will be more accessible to non-chinese vendors... and they started [gizmodo.com.au].
I'm always double-checking the prices between ebay and aliexpress, sometimes I found the same stuff cheaper on aliexpress, sometimes on ebay.
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 1, Informative) by Anonymous Coward on Monday February 27 2017, @04:41PM
Then boycott Uber. Simple, problem solved.
This is after all a free market and why not give the business to a real cab and not a fake scab.
(Score: 2, Interesting) by khallow on Monday February 27 2017, @04:43PM (6 children)
This is, by any reasonable definition, no market at all.
Let's look at the criteria again:
1. Consumers can't trust the information they're being provided to make a purchasing decision.
That's been true for markets forever. There's never been a time when pure trust in market information was a good idea.
2. A single opaque algorithm defines which buyers are matched with which sellers.
That's irrelevant to the definition of markets. It's like say red herring can't be herring, because, you know, they have this trait of redness that I can't be bothered to think of as being a trait of herring.
3. Sellers have no control over their own pricing or profit margins.
Incorrect. Sellers know ahead of time what their effort would bring. As a result, they can choose to participate or not. Similarly, riders know ahead of time what it'll cost to get a ride. Thus, they have a choice whether to get a ride or not. Both have control over their respective activities. Uber can't force either party to participate in their thing.
4. Regulators see the genuine short-term consumer benefit but don't realize the long-term harms that can arise.
The degree of omniscience of regulators is yet again completely irrelevant to whether a market is a market. And I can't help, but notice a peculiar absence of long-term harms mentioned in the article. For example, we have this serious concern:
This was the start of a subtle but critically important pattern on the web: A short-term improvement in user experience helped a single dominant tech company to take over a legacy market in the long term.
And that is supposed to be bad, why? In the case of Uber, the legacy markets tend to have really bad problems like government-enforced oligopolies. And the "short term improvement in user experience" will still be an improvement in user experience in the long term.
(Score: 4, Interesting) by vux984 on Monday February 27 2017, @05:01PM (3 children)
You seem to have missed the point.
That's irrelevant to the definition of markets.
That's fundamental to the definition of a market. Remember the context here is uber as a market unto itself, NOT uber as single participant in larger market. Uber is a player in the transportation market. Nobody disputes this. However Uber, DESPITE ITS OWN CLAIMS TO CONTRARY IS NOT a creating marketplace.
Contrast uber with ebay... ebay is obviously in the larger market of "places you can order things you want sent to you". But ebay (unlike Uber) is ALSO a market unto itself. There are buyers and sellers WITHIN ebay, that each set their own prices, and buyers and sellers are matched in pretty transparent way. Indeed the differences are so stark that uber drivers are trying (and succeeding) at getting themselves classes as employees -- while it would be absurd on its face for an ebay sellers to claim they are employed by ebay.
However uber goes around talking about its business model as if it were creating a market place like ebay... its not. Its not even close.
Incorrect. Sellers know ahead of time what their effort would bring.
The fact that sellers do have the choice not to participate at all just means that they aren't slaves. It doesn't mean that they control their own pricing or profit margins within the "so-called" uber market.
In the case of Uber, the legacy markets tend to have really bad problems like government-enforced oligopolies. And the "short term improvement in user experience" will still be an improvement in user experience in the long term.
That can hardly be taken as a foregone conclusion.
(Score: 1) by khallow on Monday February 27 2017, @05:18PM (2 children)
That's fundamental to the definition of a market.
You won't find such a definition. Instead, there is a standard terms for markets where some participants have better informational access to the market than others: information asymmetry [wikipedia.org]. And really, why is this opacity even that opaque? Uber is doing this to make profit. That strongly constrains what their algorithms will do in matching drivers and riders.
Incorrect. Sellers know ahead of time what their effort would bring.
The fact that sellers do have the choice not to participate at all just means that they aren't slaves. It doesn't mean that they control their own pricing or profit margins within the "so-called" uber market.
I notice you don't say anything that actually disagrees with my point. Let us also recall here that if there aren't enough drivers collectively to cover demand (and generate profit for Uber, of course), Uber raises the prices to encourage more drivers to join. So this choice to participate or not has consequences beyond just whether or not a driver bothers with Uber. For example, you can chose to drive for Uber only when the prices offered are high. There's a far greater control over profit margins than the article claims.
In the case of Uber, the legacy markets tend to have really bad problems like government-enforced oligopolies. And the "short term improvement in user experience" will still be an improvement in user experience in the long term.
That can hardly be taken as a foregone conclusion.
What other conclusion is rational here? Uber isn't going to revert to the old systems for book taxis. The "short term improvement" is here to stay.
(Score: 2) by https on Monday February 27 2017, @08:20PM (1 child)
The traditional thing to do when you've been schooled is to gracefully say, "your kung fu is better than mine" and sit down.
Offended and laughing about it.
(Score: 1) by khallow on Monday February 27 2017, @10:10PM
The traditional thing to do when you've been schooled is to gracefully say, "your kung fu is better than mine" and sit down.
You could have always just not said a thing. That's traditional too for someone in your circumstances.
(Score: 1, Offtopic) by bob_super on Monday February 27 2017, @07:23PM (1 child)
> That's been true for markets forever. There's never been a time when pure trust in market information was a good idea.
Go repeat that very true mantra to the people who are actively trying to kill the EPA, the CFPB and the ACA, in the name of freeing the market from the burden of excessive regulations, empowering customers to make informed choices.
(Score: 1) by khallow on Monday February 27 2017, @07:43PM
Go repeat that very true mantra to the people who are actively trying to kill the EPA, the CFPB and the ACA, in the name of freeing the market from the burden of excessive regulations, empowering customers to make informed choices.
What do those have to do with making informed choices? EPA and Obamacare are completely irrelevant. The CFPB is just a device for interfering with businesses. It doesn't have a role in informing customers that isn't better served by the SEC, FDA, etc.
(Score: 3, Interesting) by Runaway1956 on Monday February 27 2017, @04:53PM (2 children)
When I was a little kid, late night television was populated by advertisements for junk that nobody needed. "For just 19.99, you can get NOT ONE, but TWO blabbityblabs, and if you act IMMEDIATELY, we'll throw in a third one FREE! That's right, for the outrageous price of 19.99, you get TWO ZILLION DOLLARS WORTH OF BLABBITYBLABS!"
Then came the infomercials. 30, or even 60 minutes of overly buxom women showing off some kind of goods in an overly enthusiastic manner. Mostly worthless, or near worthless, and always overpriced.
Later came the sales channels. More of the same, as near as I could tell. More junk that nobody ever needed or wanted, advertised at unbelievable prices, and you can only get it through this channel.
So, now we have the internet. More fake advertising for bullshit goods.
But wait - all of this is being compared to some illusory "free marked"? Where, exactly, does the "free market" exist? If nothing else, the free market was quashed when insurance companies began dictating what all businesses are permitted to do. Add in the fact that no business can even DO business without insurance, and the entire market is fokked. Regulatory agencies for regulations on companies, some of which make sense, while others are bogus bullshit. (EPA for example, seems to be about 60 to 70% good sense, and most of the remainder is bogus.) All the while, these businesses, small and large, have to compete with foreign based operations, that have no regulation, no worker protection, no unions, nothing.
There ain't no free market with which to compare these fake markets.
(Score: 1) by khallow on Monday February 27 2017, @05:47PM (1 child)
We've always had fake markets
Another example is retail trading stamps [wikipedia.org] which have been kicking around since 1891.
(Score: 3, Interesting) by Runaway1956 on Monday February 27 2017, @06:00PM
Agreed with the fake market in trading stamps. Our local grocer has a bit of a twist on those, though. You get a stamp for every ten dollars spent, you fill up a single paper page with the stamps, bring the page in, and use the stamps as cash for your purchase. They actually make a little sense, in that, you're coming there with a specific goal in mind, and those stamps actually go toward that goal. From his point of view, the stamps help to encourage repeat customers. All in all, it's still "fake" in a way. He had to raise his prices some miniscule amount to cover the cost of the stamps. But, the stamps defray that additional cost, from the customer's point of view.
I guess if you're going to do trading stamps, then this is the way to do it.
I've noticed that WalMart doesn't offer stamps. They cut costs at every opportunity, and they know that the stamps cost.
(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.
(Score: 2) by JoeMerchant on Monday February 27 2017, @08:06PM
How can you leave Amazon off of that list?
Price fixing has never seen a bigger player.
🌻🌻 [google.com]