The issue with players who describe themselves as platforms, or part of a new sharing economy, is that some of their claims are exaggerated. They have no contractual obligation toward the public. What this means is that they do not have an obligation towards customers, they simply claim to provide a platform where buyers and sellers meet. Consider app-based taxis—they do not take any responsibility and effectively indemnify themselves against the driver. Should something go wrong, the entire burden of regulation is borne by one suffering individual.
So, the platform economy essentially boils down to a numbers game. A game of how many customers, services, products and so on are on their platform. It is also not clear if they have the large number of products and services they claim. Seen another way, the customer goes to these platforms because it appears to promise a very high standard of quality and services. But is that really the case? It appears that there are overstatements about what is available, of what quality and at what price.
Indemnity from responsibility ensures Uber need not give quality at low rates.
For taxi services, there are worse consequences in such a numbers game. Taxis are a regulated sector worldwide and when you come into it, are you creating a market as safe as it ought to be? This is the big issue. Here, the Ubers indemnify themselves from responsibility, saying they are simply a platform.
You see, you give people the impression that they will get the high quality service or product at a lower price, but the indemnities ensure they don’t have to do so. You end up not with a better version of a global-standard product, but something far less than what you already have. In the process you create a market less safer than it ought to be. Related to this is the problem that there is no or little data to check exactly what is going on, even after they get access to a large market. I’m not sure laws need to evolve to “suit” technological developments. Regulations, in fact, need to evolve to take into account new players in the market, and whether they offer what’s promised to customers.
As told to Pragya Singh
Narendar Pani, economist, NIAS, Bangalore