We have been making the point in this newsletter that monopolisation is bad for platform workers (see here and here). Market concentration makes it easier for platforms to reduce pay rates, because workers have nowhere else to turn. This form of corporate power has a name, 'monopsony'. Helpfully, Uber CEO Dara Khosrowshahi has proven our point, in his response to a question in Uber's Q2 earnings call last week.
Asked about competitive pressures in Brazil, here's Khosrowshahi's response:
"What we're seeing that's new and different in Brazil is there is an enormous amount of competition as it relates to the food business. Didi's introduced DiDi Food, Meituan has gone in there going against iFood, which is the incumbent in Brazil as well. All of them are going after two-wheeler delivery supply, and that same two-wheeler delivery supply will switch off between delivering food and also moving people as well.
"The cost of securing that supply has gone up pretty significantly. We're moving incentives that we kind of put on the consumer side, we're moving it to the delivery side to counteract that, if you will."
This is a significant admission. Khosrowshahi - for the first time, as far as we are aware - is directly stating that competition, or a lack of it, is what drives pay rates for Uber's workers. The idea that Uber's success (i.e. domination) will lift up all boats, leading to higher pay for drivers and couriers, should be put to rest by these comments.
This should be kept in mind when we consider Uber's takeover of Delivery Hero. The $14.8 billion deal was agreed in July and is expected to go through in the second half of next year, pending regulatory approval. It will make Uber Eats a dominant global delivery platform, operating in nearly 100 markets. That is significant market power, one which Uber will undoubtedly take advantage of to squeeze its couriers.
A more concentrated food delivery sector also increases the political power of platforms, as they have bigger lobbying budgets, as well as significant leverage over politicians due to their market power. For any government, there is a big difference between introducing worker protections which could lead to one platform of many exiting a market, and introducing worker changes which could lead to half or all of the country's platforms upping sticks and leaving.
Uber has sought to anticipate an anti-monopoly intervention by regulators in relation to its takeover of Delivery Hero by siphoning off 14 brands of the Berlin-headquartered company to an American private equity firm, SSW Partners. These brands are in markets where Uber Eats already operates in. But that shouldn't be the end of the matter. Regulators are still well within their rights to say that this deal gives Uber overweening market control, a market power that poses risks for both consumers and workers. Khosrowshahi's comments to his investors last week adds to the evidence base of any regulators which are willing to take anti-monopoly rules seriously.
Ben Wray, Gig Economy Project co-ordinator
