The Sharing Economy Is Not Your Friend
Exploring the claims that Uber and Airbnb skirt laws, avoid taxation, and manipulate data for profit, all while claiming to help every day consumers.
Yesterday, a report revealed that Airbnb had removed over 1,000 New York City listings as a way to alter the data in a public report on its user base. The mass removal, the report's authors Murray Cox and Tom Slee alleged, was a "one-time targeted purge" meant to help the controversial service "paint a flattering picture" of itself—specifically, to create the illusion that 95 percent of those who rented entire apartments on Airbnb were only listing one property, presumably the one they lived in. In a statement delivered to the media in response to the report, an Airbnb spokesperson claimed, "The vast majority of our hosts are everyday people who have just one listing and share their space a few nights a month to help make ends meet."
Cox and Slee's data suggests that this purge was an isolated event, meant to combat one of Airbnb's most frequent criticisms—that the site knowingly profits off of landlords who rent multiple properties on the site as a way to skirt short-term rental laws. In addition to being illegal in many of the markets Airbnb operates in, this practice can also drive up rent prices by removing apartments from the long-term rental market.
In an email, Slee—who today published a book critiquing the sharing economy titled What's Yours Is Mine—told me, "When there's a lot of money at stake, there's a strong incentive to bend the truth and to take short cuts. That's what Airbnb did here: It got rid of over a thousand listings so its numbers looked good, and then misrepresented what the numbers said." Slee would know: He's been tracking Airbnb since 2014, collecting data on the company's user base through a self-written computer program (his data is available for perusal on his site).
The report was yet another piece of evidence that the so-called "sharing economy" is often not what it seems. Companies such as Airbnb and Uber often traffic in what Slee calls "the language of empowerment." Need cash and own a car? Well, just sign up for Uber, and now you're a taxi driver. Have a spare room and want to beef up your savings? Congrats, this Airbnb listing means you now run your own miniature hotel. But as Slee points out, it rarely works out this way in reality. As evidenced by its recent purge, a substantial chunk of Airbnb's user base appear to be landlords with more than one listing on the site. And while Uber may very well allow people to turn their blue Prius into a modern yellow cab, it does so while excusing itself from assuming the lion's share of the responsibilities traditionally associated with car services.
Speaking with me over the phone from his Waterloo, Ontario home, the 56-year-old Slee and I chatted about why the sharing economy is a misleading term, his problems with Uber and Airbnb, and why venture capital-backed tech companies are the new neocons.
The interview has been edited for length and clarity.
VICE: Where does your interest in the sharing economy come from?
Tom Slee: I grew up in the UK in a Labor Party family, so that social democratic outlook is in my DNA. And I work in the tech industry. If there's one thing that pisses me off, it's companies that take values and language that I and a lot of leftists really identify with, ideas of community and democracy, and delivering entirely the opposite. They're taking these ideals and twisting them so that they can inject free-market capitalism into every aspect of our lives.
What are the limitations of the sharing economy?
The sharing economy can, in a certain way, be seen as an extension of companies finding ways not to pay people their full value. That also takes form in unpaid internships and using independent contractors instead of full-time employees. It's always been a left-wing ideal that all are entitled to a universal basic income, that we as a collective have a responsibility to make sure everyone at least has something. That idea is now being taken up by Silicon Valley, which would claim its services help people provide themselves with that universal basic income, without actually paying it to them. I think Silicon Valley is going to take that idea and see how far it can run with it.
It seems as if one can really draw parallels between neocons in the 80s and the quote-unquote "disruptors" in the tech industry today.
The neocons used rhetoric that stressed freedom and individual choice. When Margaret Thatcher denationalised the gas industry in the UK in the 80s, she talked about privatising it as "handing it over to the people." The tech industry seems to say, "If we build something into a big enough business, we can say, This is us!"
Something you write about in your book is how a lot of services don't comply with current laws, and these companies argue that the only reason they break the law is because the law isn't modern enough.
It's a very strange argument. What we see is Uber coming into a city, saying, "We don't need insurance because that's up to our drivers. Sales tax... that's up to our drivers too. Inspections? That's up to us, but it's really none of your business. Screening drivers? Don't worry about that one." It's like Uber pretends to objectively assess its own capabilities. The company has all these costs that any business would be expected to carry that it pushes onto its drivers, knowing full-well that most of these drivers just need a paycheck and aren't going to go through with those requirements. On top of all that, Uber is losing huge amounts of money—it loses money on every ride. But the company presents itself as a technology company, and it does a very good job of saying, "We're successful because we've got this new technology that's really efficient." But that technology is only a wedge that lets it get into an industry and build its business model by pushing all the costs and responsibilities onto whoever's out there that's not it.
Talk a bit more about Uber losing money.
Uber is a privately owned company, so we don't know what its books are. But there have been a couple of leaks, insinuating it's losing money—quite deliberately so, because it has the funding to cope with it. Right now, it's not a sustainable business model, but losing money allows the company to say, "Hey! We're cheap! We're efficient!"
That reminds me of a joke from the show Silicon Valley, where a company's main investor tells them, "If you show revenue, people will ask how much, and it will never be enough."
I think there's some truth to that. Certainly here, Uber's goal is growth, not profit. It's possible that it might be using the taxi market to get itself into other markets, such as the delivery market with Uber Eats. The company knows that down the road it has a number of ways to make money, but it has to become the incumbent. So Uber wants to become the big kid on the block, and then it wants to make money.
If Uber keeps losing money, how does it keep sustaining?
Well, Uber has raised $7 billion from venture capitalists and wealthy investors. The message around this is populist—that its taking down yellow cab owners. But compared to Uber's investors, they're small fries. There are a lot of wealthy people putting money into an outfit that will succeed based on whether or not it can change democratically made rules.
Your other big topic in the book is Airbnb.
Airbnb projects a really friendly image. Uber, on the other hand, is really easy to hate. The company is aggressive, overtly in-your-face, and it doesn't mind offending people. Airbnb has an open and friendly demeanour, so it seems like a much harder company to hate. But what gets me about Airbnb is it takes the language of sharing to build a business that's not about sharing at all. I've spent quite a bit of time collecting data from the company and its market, and the contrast between how it presents itself and how its business is really structured is quite dramatic. It's not that Airbnb lies, it's just that it stretches the truth in ways that favors itself. The most obvious example is Airbnb retells the company's founding myth, that some guys were struggling to pay their rent, so they rented out air beds because there was a design conference coming to town, and as people were crashing on their floor, they said, "Hey! Maybe there's a business here." That original model, which it has replicated in its headquarters as a shrine to the company, is now a [small percentage] of its entire business.
What are the other facets of its business?
You can rent out three types of rooms—a shared room, a private room where you have your own space in an apartment, or an entire apartment. Private rooms are maybe 30 or 40 percent of the business. The bulk of the business is people renting out entire homes and apartments. And in the same way that Airbnb talks about, "This is just regular people occasionally renting out the home in which they live," depending on which city you look in, somewhere between 40 percent and 70 percent of its business is people having multiple listings on the site. The reason people like that use Airbnb is because they can get away with not doing a lot of the things you'd have to do if you were listing those homes for rental through a service for professionals.
And Airbnb's argument would be that it's not its problem because it's just a platform.
Airbnb says repeatedly that it has the odd bad apple, and every now and then it'll throw a few people off the platform so it makes the company look better.
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