Uber’s records have exposed the ugly side of the pioneering ride-sharing company’s global expansion.
Uber is no stranger to controversy. Even given this, the files are disturbing reading as they expose rule breaches, lie about the data and prevent police and regulators from accessing it, aggressive lobbying using influential policy makers to change the rules as a result, bribing academics and politicians, and exposing drivers to violence. It is a model that has already been used. The shock of the files is the justification of what was suspected and which went beyond what was expected.
This presentation asks the question of what is legal and ethical in the desire to expand business by all means. The gains from essentially establishing a monopoly through rapid expansion using an innovative business model were significant. Uber changed the nature of the taxi industry around the world and became a pioneer of the on-demand economy model where workers are considered self-employed and therefore not eligible for benefits.
Is Uber the only transnational company to have done this? The economist Constantine V. Vaitsos had studied the functioning of these enterprises in his remarkable work “Intercountry income distributions and the transnational enterprises” (1974). He referred to these companies as transnational rather than multinational because ownership and control is concentrated in one country rather than distributed among countries. The main objective of these companies, according to Vaitsos, is monopoly advantage either through R&D, managerial skills, advertising and marketing size, or resource monopoly. This advantage could be temporary before other competitors emerge so the objective is to maximize the profit that can be extracted and, as far as possible, to destroy the competition. The way in which the gains will be divided between the company and the host country will depend on their relative bargaining power.
As Vaitsos wrote about the pharmaceutical, textile, and other industries in Latin America, the framework is helpful in understanding Uber’s business. Uber sought to undermine the bargaining power of host countries by influencing policy makers. This is not the only one. Facebook’s parent company Meta has elevated former UK deputy prime minister Nicholas Clegg as head of global affairs. As founder, Mark Zuckerberg says Clegg is “a senior leader at the level of myself…who can lead us and represent us on all of our political issues globally.” Access to ministers, civil servants and other policy makers is important, as shown not only by the revolving door of UK cabinet ministers and the series of scandals in the UK, but also by allegations of pressure in other countries .
As there will always be attempts by companies such as Uber (or for that matter the big tech companies) to tip the scales of gambling to their advantage, there have also been repeated calls and attempts to regulate them effectively. . The two major Western players that can do this are the US and the EU. The EU has taken steps in this direction. However, support for regulation in the United States has waned. There is also tension within the EU as Ireland has fallen behind in enforcing regulations.
By leaving the EU via Brexit, the UK signaled its own regulatory regime. It appears that there are currently no effective regulations in place as the recent regulatory changes merely replicate the lost framework with no power to enforce them. Uber’s records are particularly worrying in this context because they show its power to influence politics through ties to Tory bigwigs and Labor bigwigs. The continuing lobbying scandals in the UK demonstrate the power of money to influence politics. The advisory paper Reforming the Framework for Better Regulation has sparked controversy. The Uber records have shed light on the subversive power of big business and the need to carefully reconsider an effective framework for the future.