The collaborative economy : what governments are missing

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The collaborative economy is disrupting many industries and governments struggle to manage this transition.

Being in denial is useless, there’s not an industry that is not or won’t be impacted by the deep economical transformation in progress. Digital economy for the ones, collaborative economy for the others, no matter the name, a new normal is emerging. New players disrupt markets, old leaders try to protect themselves and, in the middle, governments try to manage the transition. But, to effectively and productively manage things, one need to understand them, what is seldom the case. Here’s an example, through the case of Uber and professional drivers companies in France.

What did happen ?

1°) Two worlds coexist : one for the large mass that have no other alternative to public transportation systems than taxis and one for a very small part of the population that can use professional drivers and get a higher level of service. The large mass is not banned from such services but they don’t know they can use them and even how to use them.

2°) Uber and its likes launch marketplaces aiming at connecting drivers looking for customers and the large mass.

3°) Considering such platforms as a threat against a kind a monopoly, taxis attack and win. A surrealistic bill is passed which forbids private drivers to use the differentiating services provided by Uber (such as geolocation) and, on the other hand, force taxis to adopt this service. Paradoxical situation : private drivers can’t use some weapons while those who missed the train are forced to adopt them. Ironically, both parts are unhappy, one because they lose a differentiating advantage, the others because they will have to use it. Still ironically, France invented the lack of digital vision insurance, allowing new players to disrupt a market and then moving them out this market to give old leaders their seat back after the job of proof-testing a business model has been done by others.

4°) Some cities like Paris, go further and create their own geolocation platform for taxis, what can be seen as the beginning of new marketplaces.

5°) The conclusion everybody shares is that taxis won against private drivers. Or against Uber. That’s still unclear because if there’s something obvious in this case is that there was a fight against something or someone without knowing exactly what it was. Uber/drivers, drivers/uber…some were hitting the one, the other or both without knowing if both were targeted or if it was the same thing.

6°) My POV : no one, either taxis or the government (and even medias and observers) understood what was happening.

Uber is not a transportation company but a marketplace

Let’s go point by point.

A nearly monopolistic market has been disrupted and those who used to benefit from the monopoly tried to move the disruptor out of the market. But who wa the disruptor ? Uber ? The private drivers ? I’m not sure everybody was shooting at the same target but in the end private drivers lost because they won’t be able to use the geolocation service Uber provided them anymore. At least in theory.

Did taxis win ? No. Did Uber lose ? No.

Contrary to what many think, Uber is not a driver service. It’s a marketplace, a disintermediation service. Private drivers are a business case, not more. But if drivers can’t use Uber anymore, Uber is loosing too, isn’t it ? Wrong. Getting someone out of a marketplace does not kill the marketplace and does not change anything to the disruption in progress.

Let’s state it in a more radical way : within 10, 15 years (or even before), self driving cars like Google cars will be everywhere. One more player that will be able to use a marketplace like Uber’s. Same fight again for the taxis ? No, because there will be a huge difference. Not only they will have a new competitor that will be able to use the same marketplace private drivers did in the pas but, even worse, I have no doubt that taxi companies themselves will think about replacing their drivers with self driving cars.

Meanwhile, other players will be able to use Uber to develop their business. And why not taxis themselves ? By doing so they will be able to get rid of taxi companies and won’t have to choose between being independent or belonging to a network anymore. The same platform could also be used for car sharing too.

In the sharing economy the platform always win

In fact Uber, all those who have copied it so far, those who’ll eventualy beat it tomorrow, are not transportation services but a platform allowing to disrupt the transportation industry. No matter who transports, what is transported. Believing that status quo can be protected only by dealing with the visible part of the iceberg (private drivers in this case) is the evidence that something is missing in the understanding of new economic models. Neither the platform economy no the sharing economy won’t be affected by a law that only only addresses superficial issues and won’t prevent what’s inescapable.

Another evidence that public authorities are missing the point. The City of Paris, for instance, developed its own geolocation service to help taxis to offer the same service as uber. Reinventing the wheel with public fundings is a choice…but Uber could also propose its platform as a white label to all municipalities.

In the sharing or collaborative economy, the platform always win in the end. Until everybody understands that, expect lots of political posturing and public money waste.

Image credit : Collaborative Economy via Shutterstock