Sharing economy companies like Uber and Airbnb aren’t helping local economies — they’re just helping themselves.

Tom Slee reports on the dubious PR maneuvers of the Uber and Airbnb. Head on over to Jacobinmag for the full scoop.

Silicon Valley “sharing economy” darlings Uber and Airbnb raised mad money in 2015. Dwarfing other “unicorns” (startups whose valuation reaches a billion dollars), Airbnb is now valued at $25 billion — rivaling the largest US hotel chains — while the market puts Uber’s value at $65 billion, similar to major car companies. Last year alone Airbnb raised $1.6 billion to push its total funding over the $2 billion mark, and Uber raised almost $5 billion, for a total of more than $6.5 billion.

The two companies were busy with more than raising cash however. In 2015 they intensified their lobbying, PR, and customer mobilization efforts to create a regulatory landscape that embraces their business needs. One of the most potent arrows in the companies’ lobbying quiver is that legislators and the public can be swayed by the apparent inevitability of a technology-driven future: “Don’t be left behind!” is a clarion call that few can resist.

In just two examples: last July Uber quashed Mayor Bill de Blasio’s plan to cap the number of cars on New York City streets, and in October, Airbnb fought off Proposition F (an initiative to restrict short-term housing rentals) in San Francisco, out-advertis­ing its opponents by a ratio of 100 to 1.

Mobilizing cash and mobilizing votes go hand in hand: investors only profit if the regulatory landscape is changed, not just to be tech friendly, but to support the specific business models that companies like Uber and Airbnb have put in place.

But the sharing economy also exemplifies another corporate maneuvering tactic: both Uber and Airbnb remain private companies, and neither is in a rush to go public. By postponing their initial public offerings (IPOs), the companies give themselves maximum flexibility: they don’t have to please shareholders or report short-term profits. They publish no prospectus, there is no independent audit, and we can’t see their accounts.

This tactic isn’t new, but in today’s financialized economy it creates a perfect storm of bad incentives. Investors are looking for an “exit” (a successful IPO) so they can cash in; fortunes will be made or lost depending on rewriting laws around the world; and at the same time, the companies operate as what Frank Pasquale calls “black boxes” because they don’t have to submit public, auditable business reports.

Staying private is particularly appealing in technology sectors where competition is intense and expectations are high. Take a company like Theranos, a privately held health care company. It gained investment based on its innovative blood-testing technology, but was immediately under the gun to prove that it was a game changer.

When its new technology ran into problems it simply covered them up, resorting to traditional methods of blood testing instead to sustain the image of success. Ashley Madison is another example; it created thousands of fake accounts to make it seem like men were meeting women on their site. And in hindsight, companies like WorldCom and Enron were just early examples of a common practice.

Simply put, there are huge rewards for companies that can fake it until they make it, and bankruptcy for those who air their dirty laundry honestly. And tech start-ups are the biggest fakers of all.

Read the full article at Jacobin Magazine.

Image: “Toronto traffic” by Katrin Shumakov

The post The Sharing Economy’s Dirty Laundry appeared first on P2P Foundation.

At this year’s White House Correspondents’ Dinner — the annual opportunity for the President to engage directly, and humorously, with reporters who cover him — it was expected that most of the jibes would be aimed at Barack Obama. Sure, he gets the chance to defend himself, but it’s pretty much a roast: A leading comedian is invited every year to make jokes, while the commander in chief tries to laugh instead of squirm.

Maybe that’s why I was so jolted when this year’s headliner, comedian Joel McHale of TV’s “The Soup,” took such a hard swipe at Google. “America still has amazing technological innovations. Google Glass has hit the markets. Now, just by walking down the street, we’ll know exactly who to punch in the face.”

It got a pretty good laugh — perhaps because both the press and the politicians in the room were relieved to have been spared for at least one joke. But the violence of the imagery, and the intensity of the rage that it expressed, gave me serious pause: Are we in the midst of a new kind of tech industry backlash? And is it for something these companies are actually doing, or have they simply lost control of the technology story?

This is more than the traditional sort of commentary and critique of a new form of culture that we’ve seen waged against everything from television advertising or fashion iconography in the past.

When the artists called Like4Real rebel against the ubiquity of the Facebook “Like” by holding a funeral for the thumbs-up symbol, it comments effectively, if acerbically, on the changing nature of social relationships in a commercial space. Meanwhile, artists from KillYourPhone.com are encouraging people to make special pouches for cell phones and PDAs, which prevent them from receiving signals. Again — agree with them or not about the need for an occasional digital detox — it’s clever, provocative and memorable satire.

But the notion, even expressed jokingly, of punching people in the face for wearing Google Glass — as if the device somehow signals a traitor to the cause of humanity — pushes things over the top. Yes, we can all imagine how people wearing an augmented reality device might be annoying: They can surf the Web while pretending to converse with us or, worse, record us when we don’t know it. No sooner had the very first prototypes been spotted last year than TechCrunch reported a new, purely apprehensive moniker for its wearers: Glassholes. But it’s as if the public is now being primed to go after early adopters — almost to a point where one might be reluctant to put on the device.

Are technology companies such as Google shouldering the blame for too much? It seems as if they are bearing responsibility not only for people’s fears about the future of technology but the excesses of corporate capitalism.

Consider the hullabaloo now centered on the buses that convey Google employees from San Francisco to Silicon Valley. This winter, protesters waylaid one of the Google shuttles, going so far as to hurl a brick through one of its windows in protest of what they see as the tech giant’s gentrifying influence on the city. When San Francisco introduced the new Muni 83X bus line, locals were quick to point out that its sparsely utilized buses run suspiciously close to Twitter headquarters. More protests, and more vitriol ensued.

Of course, in reality, Google’s buses spare the highway a whole lot of traffic, and the atmosphere from countless tons of carbon emissions from what would otherwise be an extra few thousand cars on the highways every day. And suspicions about local government adding commuter lines to accommodate Twitter appear to be unfounded.

The deeper angst in San Francisco appears to be over the way each new tech initial public offering creates another few thousand millionaires who want to buy apartments, jacking up the real estate prices for everyone else. But even this local economics issue seems unlikely to be motivating such widespread disdain for tech business. Besides, there are a number of corporations with much worse records of displacing locals or hurting business than the new tech giants.

No, I think the reason these young corporations are getting so much pushback is that they were once seen as the upstarts — as the companies on the people’s side of things. Digital technology was supposed to disrupt business as usual, create new opportunities for both self-expression and small business, and — perhaps most of all — change the very nature of the corporation and its relationship to real people and places. They’re being held to a higher standard than companies of previous generations.

Now that these little garage businesses are some of the biggest companies in the world, it’s a whole lot harder for them to exhibit the qualities that once made them the darlings of the culture and counterculture alike. Yes, digital companies are being held to a higher standard than companies of previous generations. But this is largely because we all understand that they are building the infrastructure in which our economics, culture and perhaps even a whole lot of human consciousness will take place.

That’s why they have to pay more attention to communicating their intentions than might otherwise seem justified. Steve Jobs was famous for keeping great secrets, but Apple is largely a consumer electronics firm. We like being surprised about the features on our next phone.

A company such as Google can’t be as secretive when it purchases a military robotics firm. Without clear messaging about the reasons for such acquisitions, the public mind reels, particularly in the wake of National Security Agency disclosures, jobs lost to automation and movies from “Her” to “Transcendence.”

Instead of balking at our widespread suspicions, the leaders of Silicon Valley must begin communicating honestly and effectively about what they hope and dream for. If people are scared of Google’s Glass, of Facebook’s purchase of a virtual reality company or of Twitter’s use of big data, then it’s up to those companies to explain loud and clear how these developments will serve us all.

For once, protecting strategy secrets has to take a back seat to clear communications. If these companies really are building the world we’re all going to be living in, they have to let us in on their plans. Otherwise, we’re going to feel like we’ve been left off the bus.

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