Internet has enabled a new type of business opportunity where an internet based “business system” is used to collect, organise, manage and market a lot of small and local businesses or individuals, across boarders. Popular examples today are taxi, food delivery and renting of private homes. This is obviously a very efficient way of re-organising a business (think replacing hundreds, thousands or millions of business systems and people) and it provides the users with some really neat new features (think use the same taxi app wherever you go, get rated drivers and pay automatically from your credit card). It also provides the people who actually deliver the services advantages (think efficient marketing, rated customers and maybe low barriers to start their business). The most common issue raised by Uber drivers and hotels that I have been talking to lately is that the commission is high (maybe 20-25%). No wonder that investors are working hard to figure out who the winners will be in different market segments.
The hotel booking market is another one where the internet giants have added great value and taken over huge parts of the global market. I use Hotels.com and others might use Booking, Momondo, Trivago, Expedia or Agoda to name some. But few are aware that almost all are owned by Expedia or Priceline (Expedia has spun out TripAdvisor to Nasdaq so let’s leave them out for now) who together turn over some $20B with some 40.000 employees. Expedia and Priceline control over 90% of external hotel bookings in Sweden (Sydsvenskan Oct 2017). The combination of price pressure and high commissions makes life difficult for hotel owners and many fear the next recession.
I’m missing a sober debate about these types of businesses because it is easy to see potential problems around the corner. Very successful internet services tend to have very little competition when market dominance is created, and economies of scale and strong internal currency based on their stock market valuation makes it almost impossible to build an alternative. Monopolies or oligopolies and market economy don’t go hand in hand, which is why this is serious. Another area to consider is how these businesses impact the local society. Just because we can create an internet “business system” for renting out apartments globally, it might be that it goes against laws, culture and objectives in a local community. On that note I’ve come across neighbours who find the building they own together almost turned into a hotel, parts of cities where schools, shops and such services have closed since too few locals remain, tax related issues and sometimes very low salaries and poor working conditions. When Uber Pop was shut down in Sweden 2016 at least 60 drivers were reported convicted for illegal taxi driving (I’ve heard some lost their driving licenses) and I hope that Uber helped them in a similar way a local employer would have had to do. A journalist from Breakit worked two weeks in May 2017 for Uber Eats in Sweden and after 18 hours of bicycling and 172 km on his own bike he made around $5/hour before tax (the compensation has been changed after the publicity). Does these internet businesses have the same objectives as we have locally when it comes to sustainability, work ethics, city planning, social responsibility, equality, privacy, tax and so on? Our national tax systems are not ready for global internet companies (Sweden is supposed to lose hundreds of millions of $ from them) and the international bodies including EU have not sorted this either.
Please don’t get me wrong! I love Uber, Hotels and Airbnb and use them frequently especially when travelling between countries. And I love technology driven innovation. But I do believe we have to take control over the society we live in, ask questions, discuss and ensure it becomes and stay what we want it to be. So even if we can, maybe we shouldn’t do everything technology allows us to do.
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