2.2.1
The rise of the digital platform economy
By the late 1990s, the growth of the Internet enabled a distributed form of work, where many individuals could make a small contribution to a larger project online. At first, this was seen as comparable to the invention of print- ing in the original medieval Renaissance (DiBona et al., 1999), but a more critical perspective then prevailed (e.g., Ettlinger, 2014). By the mid 2000s, access to the Internet became ubiquitous enough to enable crowdsourcing (Howe, 2006), where companies like iStockphoto, InnoCentive and Amazon Mechanical Turk solicited contributions from amateurs in the fields of pho- tography, research and administration, undercutting professionals in those fields. Despite this de-professionalisation, crowdsourcing was still generally viewed in a positive light, with authors such as Brabham (2008) claiming that the ‘web provides a perfect technology capable of aggregating millions of disparate, independent ideas’ which could develop skills and confidence in participating individuals, while conceding that these individuals were paid less than professional designers would be. While these and other authors have emphasised the positive effects of the collaborative economy, the same technology has been used to create new forms of paid work, raising concerns about erosion of worker rights.
Baldwin and Woodard (2009) highlight that the term “platform” was adopted by industrial economists to describe a system or institution that mediates transactions between agents. Later writing by Baldwin (2012, p. 7) highlights that ‘a system with undivided ownership of the core will at- tract more outside investment in innovation than one with divided owner- ship’, a key factor in the development of the platform economy. With the
2.2. RESEARCH PROBLEM 37
rise of digital platforms in the 2000s, several writers have used the term “platform economy” to distinguish a growing trend towards monetisation of the digital platforms that people use to communicate and increasingly gain employment. Kenney and Zysman (2016, p. 61) define digital platforms as ‘multisided digital frameworks that shape the terms on which participants interact with one another’. In this view of the platform economy, platforms can include social media such as Facebook, marketplaces such as Ebay and services such as Uber.
2.2.2
The role of workers in the platform economy
Other writers take a narrower view of the platform economy, focusing on the role of workers. De Groen et al. (2016) frame the platform economy as involving the main actors of the companies that own the platforms, such as Uber, Airbnb or Deliveroo; the customers, who receive goods or services via the platform; and the freelance workers who provide the goods or services. Coase (1937) defined a firm as where an entrepreneur protects workers from fluctuating markets, in which workers would otherwise have to trade their labour individually. By working within the firm, the workers get a regular wage, while the entrepreneur gets the assurance that they will have labour when they need it. If everything works well, the entrepreneur makes a profit, the workers get a regular wage and the market gets less expensive products through reduced transaction costs.
During the 20th century, firms tended to get larger due to factors such as the telephone and the telegraph which reduced the cost of organising (Coase, 1937). In the digital platform economy, the firm (or corporation as it is now more commonly known), still acts as an employer in a market where trans- action costs approach zero. The platform operator creates an algorithm that matches workers with customers, but the workers don’t benefit from regular employment, they take on tasks as and when they are given them. Although the platform operator might claim not to be a firm in the traditional sense (Kenney and Zysman, 2016), they are still directing resources, which is how a firm overcomes transaction costs (Coase, 1937), even if this allocation is indirectly through an architecture that enables a specific kind of interaction (Srnicek, 2016).
Castells (2011) highlights that in a networked society, power is exerted primarily through the network rather than through traditional institutions. Reinforcing this perspective on the power of the network, Fuchs (2014) high- lights a darker side to the collaborative economy, where the writings of Marx
38CHAPTER 2. RESEARCH PROBLEM AND RATIONALE FOR STUDY
take on a renewed relevance in a networked world where users must com- municate (coercion) through commercially owned networking sites (alien- ation) in their everyday lives, in the process creating content that is used for profit by these companies (expropriation). These digital labourers end up being the new proletariat, or “precariat” (Bradley, 2014), reflecting their precarious position in the gig economy Kenney and Zysman, 2016). This pre- carious position is due to digital platforms which allow exertion of asymmet- ric power, leading to the “taking economy” rather than the sharing economy (Calo and Rosenblat, 2017).
Freelance workers now perform a range of tasks in the platform econ- omy that include transport, household repairs, information work and domes- tic service, but in doing so they take on the risks of self-employment while the platform owners take a steady commission from operating the platform (Smith and Leberstein, 2015). The Frankfurt Paper on Platform Based Work (2016, p. 2) makes a similar point, highlighting that these workers as inde- pendent contractors are ‘typically excluded from the legal and social protec- tions established for employees over the last hundred years’. These issues are about stakeholder power in firms, where a stakeholder is “any group or individual who can affect, or be affected by, the achievements of an or- ganization’s purpose” (Freeman, 1984, p. 54). Later writing by Freeman, however, took a different perspective, defining stakeholders as participants in the ‘human process of joint value creation’ (1994, p. 415). However, par- ticipants don’t always get the share of the value they create, due to power imbalances.
2.2.3
Issues for policy in the platform economy
In the platform economy, employers hold far greater market power than workers, including unilaterally setting wages for each task (Kingsley et al., 2015), and finding the lowest payment through the global network, which favours the work going to low-wage economies (Irani and Siberman, 2013). The Taylor Report (Taylor et al., 2017) calls for two-way flexibility in how workers engage as “dependent contractors” with these platforms rather than the current one-sided flexibility of the platform operator who can control pay rates and availability of work. Weber (2004) highlights how the centralised steam engines that powered the Industrial Revolution were mirrored in the publicly traded firms and the view of capital that went with them, which continue to the present day. The term “platform capitalism” has been used to describe firms who use the platform economy to gain private profit (Bauwens