Commentary

The threat Uber poses to competition and productive capitalism

Publisher
Digital communications Mobile technology digital disruption Sharing economy
Description

Uber and other large technology firms have received their share of both good and bad press for 'disrupting' traditional business models. But what if the game is much larger and these companies are a threat to capitalism itself?

Public discussion about the dramatic rise of Uber is often grounded in the idea of a titanic struggle between old-fashioned expensive taxi companies and a new digital upstart. Uber usually comes out on top because it's new, cool and part of the 'sharing economy'.

But legal academic Frank Pasquale offers a very different perspective. Companies like Uber, he argues, represent a threat to competitive capitalism. Their modus operandi is to use populist discourse—and vast financial backing from venture capitalists—to ignore laws, overwhelm markets and establish monopolies.

Pasquale, who lectures in law at the University of Maryland, says  that while Uber likes to present itself as a grassroots/collectivist organisation, it is in fact a massive top-down, San Francisco-based corporation with a market capitalisation of over US$50 Billion. In that sense, he argues, Uber's claims to be a genuine part of the sharing economy appear to be more than a little disingenuous.

'I think you can look back to the old Craigslist model where people were just putting up ads for free and maybe there was some residual advertising advantage for Craiglist to have this big set of people that wanted to find, say, a place to crash for a night or so or something like that. Yes, that's great, it's great to see the internet enable that type of collaboration,' says Pasquale.

'But what you see in a firm like Uber is an appeal to venture capitalists—speculative capital—that wants to see massive returns via monopolisation. Let's not mistake the business model here. The model here is for one of these firms to come in and to take over various aspects of commerce.'

Publication Details
Publication Year:
2015