The Sharing Economy Doesn't Need to Be Full of Monopolies

But it is.

Paulo Whitaker / Reuters

The so-called sharing company has made it possible to hail a private taxi via a smartphone and book a room in someone’s private home, and these are the early days: So much more is ready to be turned into a product and sold, via the power of an app.

For partisans of the sharing economy, the result of this privatization will be a dynamic mix of corporate sovereigns, all jostling to better serve the producers and consumers on each side of their platforms. But is competition really all that likely for the major platforms? Things don’t look so good for Lyft, the Uber also-ran, despite what a series of highly visible attacks staged by Uber managers might imply. When a monopolizing firm starts conquering city after city, it looks a bit more like a colonizer than a company competing with other companies.

That would matter less if market share were truly meritocratic. But it’s often the luckiest or most cutthroat firms that triumph. As the sage in Ecclesiastes puts it, “The race is not to the swift or the battle to the strong.” The first platform to gain critical mass can leverage that advantage into massive financing, which in turn can scare away competitors. Matters are particularly dire in two-sided markets such as search or ridesharing, where consumers are often in a rush and don’t care to learn multiple user interfaces so they can find the best deal among multiple providers.

What’s more, these large companies have non-negotiable, all-or-nothing terms. Consider, for instance, the rules governing digital economy platforms, whether in cyberspace or real space. They frame their “terms of service” as contracts, which each user duly agrees to. But there is no way to question even a word of those contracts, or to negotiate for better ones. So “consent” to them is about as meaningful as “consenting” to an administrative agency’s rules. A concerned consumer probably has more of a chance of influencing the rulemaking underway at than he or she does of altering Facebook’s or Uber’s terms of service.

Without checks on their power from consumers, these billion-dollar companies are beholden only to government regulation—and even then, sometimes they shrug that off. Some have claimed, for instance, that Uber does not make good-faith accommodations for passengers with disabilities. To which the company has responded that, because it is a platform—an app enabling others’ activities—it is exempt from the Americans With Disabilities Act.

In that self-deprecating characterization, there is a glimmer of hope. If these companies are really just apps, then other purveyors of connectivity should be able to break into the market—or even redefine the space as a public utility. That, at least, is the aim of many innovators and activists who will be attending a tech conference in New York City on “platform cooperativism.” According to its co-convener, Trebor Scholz, “An app with the basic functionality of UberX can be duplicated and improved upon by independent developers who are working in tandem with cooperatives.”

Earlier this year, the Transunion Car Service in Newark, New Jersey, pioneered this transition. Unionized workers own the service and use an app to coordinate rides. Janelle Orsi, the executive director of the Sustainable Economies Law Center, has mapped out how such a service could democratize room rentals. She observes that an “online marketplace owned and democratically controlled by the people who rent space to travelers” could be beneficial to more people—“Co-BnB,” she calls it. Orsi also raises the possibility that large cities will “collaborate to develop software with all the functionality of Airbnb, and then mandate that all short-term rentals be arranged through the municipal platform.”

As the technological organization of our lodging, transit, and other vital services accelerates, the platform cooperativists offer a hopeful message: The choice does not need to be between ossified, old-fashioned taxi and hotel services and gleaming new Silicon Valley monopolies, nor between streamlined services and the fulfillment of communal obligations. The best aspects of old and new consumption and labor models could be combined. It’s undoubtedly a huge challenge for well-intentioned, small teams to go up against companies with billions of dollars in funds and a track record of aggression toward competitors. But fair rules of competition, and an enlightened user base, could bring sharing-economy idealism one step closer to reality.