Taxi driving past Uber sign

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Governments are lagging behind digital entrepreneurs

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Big tech firms are using sophisticated backroom tactics to disrupt markets and embed their platforms before regulators catch up. It is time for more transparency.

The recent “Uber Files” revelations confirm what we already knew: online platforms are not only shaking up the industries in which they operate, they are also shaking up legislative systems. Beyond these obvious facts, these revelations tell us two things. Firstly, governments are lagging far behind digital technology entrepreneurs.

Our political leaders and officials are not familiar with these new technologies and their impact. We cannot blame them: who could have anticipated, when Uber first established in France in 2011 and in the UK in 2012, the colossal impact it would have on our modes of urban transport and conception of work? Who, in 2012, had realized the impact of Airbnb on the tourism industry and real estate market?

People waiting for an Uber

Besides, no leader wants to miss the boat when it comes to a major innovation, especially one that appears to offer job opportunities. To understand what is at stake with these new models, they put their trust in what entrepreneurs are telling them, either in select committees or by inviting them to take part in think tanks.

This is what President Nicolas Sarkozy did in France with the Commission for the Liberation of French Growth, known as “Attali Commission”, in which Emmanuel Macron was involved. In 2007 and 2008, this commission listened to what major Internet players at the time had to say, including the Californian firm eBay. In the UK, the Uber files have revealed that a series of meetings were arranged in 2014 at George Osborne’s request when he was Chancellor, as well as with former Health Secretary Matt Hancock and several No 10 advisors.

Tipping the scales

Once they have the ears of political leaders, all that entrepreneurs have to do is find the right pitch, the narrative that will tip the scales in their favour. Silicon Valley companies, like many others before them, routinely develop so-called “non-market” strategies to promote their business models and grow their business in often ill-suited or downright hostile legislative environments. As a result, these platforms have developed avoidance and persuasion tactics aiming to circumvent obstructive legislation and encourage legislative changes to accommodate their model.

How do they do it? The culture in Silicon Valley is libertarian and elitist. Entrepreneurs there are suspicious of governments, usually seeing them as incompetent. However, they do have absolute confidence in technology, and see it as a vehicle for progress and social development. When they start up in a country or region, they do so without asking anyone’s permission. The innovation they have to offer will meet with immediate success from those using it as it makes their lives easier.

Pierre Omidyar
Pierre Omidyar, the founder of eBay, talking in 2010

After a year or two, the government will finally wake up and see, usually spurred on by established corporations who have become disgruntled (e.g. auctioneers during eBay’s expansion in France, cab firms during Uber’s expansion in the UK and France, etc). They will then try to understand, albeit belatedly, what these innovations “mean,” how they change the game, and whether they represent a risk or an opportunity.

This is where entrepreneurs have an advantage: they have a blank page before them on which to write a story – the story of what their platform is, and what it means to the country’s economy. They will hit back against hostile legislation by providing a definition of their business that enables them to get around the law.

For instance, in the UK, Uber was quick to present itself as a technology company and not a cab firm, while eBay in France initially defined itself as a broker rather than an agent (allowing it to evade auction rules). Bear in mind that all this can be justified: the creators of Uber had no ambition to set up a cab firm, but to write an algorithm for sharing available cars. Similarly, Pierre Omidyar, the creator of eBay, had no desire to create an auction house, but a perfect marketplace between individuals.

Willing to listen

Very quickly – and this is what the “Uber Files” have revealed – digital economy entrepreneurs go looking for leaders who are more willing to listen. They seek out those who, like them, trust new technologies and have a more liberal approach to economic and social issues. They come up with narratives that explain how their business is in the country’s interests. While the definition phase aims to defend the platform’s activity in the face of hostile legislation, the narrative phase seeks to encourage legislative change.

Entrepreneurs are by and large convinced that they are on the right side of history: it is the law that is backward-looking, while they are looking out for a vision of the future. For example, eBay initially presented itself as a vector of social reintegration, manifesting how disabled people and the long-term unemployed had found paid work through its platform. In France, the bosses at eBay had pushed the cause of these new “entrepreneurs” and the auto entrepreneur status (or self-employed entrepreneur earning money on the side) was soon recognized.

Likewise, Uber in France found an attentive ear in one minister of the economy who was open to libertarian digital technologies, drawn in by a narrative based on emancipation by turning those often banished from the labour market into entrepreneurs: the minister was Emmanuel Macron. In the UK, Uber similarly found an attentive ear in George Osborne.

The “Uber Files” open the doors to the backroom where the platforms’ non-market strategies are applied. The problem is not so much that digital companies are trying to defend their innovation, or that our leaders are listening to them and trying to keep abreast with technology, but that it is all happening behind closed doors.

The next step for these digital platforms would be to play a transparent role in democratic life. This involvement will be all the more crucial with the expansion of “super platforms” such as Metaverse, the repercussions of which are even more complex.

This is an updated version of a piece that appeared in Le Monde on 20 July 2022.

The views expressed in this article are those of the contributors, and do not necessarily represent those of the University.

Picture credits: taxi – Sean Gallup/Getty; people getting Ubers – Scott Olsen/Getty; Pierre Omidyar – Brian Harkin