Yesterday in Airbnb

First, this report on Airbnb in Los Angeles, by the Los Angeles Alliance for a New Economy (LAANE), is fantastic, especially compared to Airbnb’s own study from December. It mixes data with thoughtful commentary with investigative work that could only be carried out by someone who knows the city. (I did contribute a bit of help in the data collection area, but had nothing to do with writing or the report itself.) Here are some highlights.

  • Airbnb’s report has this to say about its impact on neighbourhoods (in total):

Airbnb distributes economic impacts to neighborhoods that have not traditionally benefited from tourism spending. With Airbnb properties in more than 80 Los Angeles neighborhoods, Airbnb visitors are staying in and exploring places they might never have otherwise visited.

The LAANE report shows that the Airbnb business is, in fact, concentrated on areas that are already heavily affected by tourism: while “AirBnB has units listed throughout Los Angeles, but just nine of the City’s 95 neighborhoods are responsible for generating 73 percent of the company’s revenue.” In tourist hotspot Venice, one in eight units are now Airbnb rentals.

  • 1010 Wilshire is a high end apartment building with 227 units in Downtown Los Angeles; but 20% of its units are now listed as tourist accommodation on Airbnb.
  • The host you see on the site, with a photo and personal note, may not actually be the host. “Danielle and Lexi” were two young women with “verified ID”, but it turns out that they are just a front for Ghc vacation property rentals.

And there’s a lot more. Worth a read if you have any interest in the subject. The report has been picked up by the LA Times, Curbed LA, and more.

Elsewhere, Inside Airbnb has extended its beautiful maps to Portland. They have also collaborated with Willamette Week to chart the shape of Airbnb’s business in the city, and the results will be familiar to readers of this site: Airbnb’s story of being a site where “regular people occasionally rent the home in which they live” is misleading.

The real Airbnb story is gradually getting out there, of a site that uses the heartwarming stories of a few of its hosts to provide a cover for a growing cadre of professional renters using the site to avoid municipal regulations around safety (no fire inspections), zoning (driving gentrification of tourist areas), and taxes. It’s good to see diligent, talented people like LAANE and Inside Airbnb push the debate forward.

Going quieter for a while

This blog will be going even more quiet than usual for the next few months. The reason is a good one, which is that I have a contract to write a book on and around the sharing economy. As the writing has to be done in and around my actual job and home life I will have to put any and all available time into it for a while.

The Airbnb coding and analysis turns out to be a great way to procrastinate from actually writing, so I will have to put it to one side for now.

In the meantime, anyone interested in the issues raised here may like to look at the following:

  • Henry Farrell’s “Dark Leviathan” in Aeon Magazine is one of the best things I’ve read in ages on issues of trust, governance, and digital technology. Plus it’s got lots of juicy details on Silk Road.
  • Murray Cox has put together a beautiful site called Inside Airbnb, which maps the New York data in more detail than I do here. It’s invaluable. Plus it has led to other analyses, like this one here by Ben Wellington, which delve further into the specifics of New York.

See you back here before too long, I hope.

Roman Holiday: Airbnb and Gentrification

I’m a very lucky person.

For example: while I live in Canada, my birth family lives in the UK, and while I was visiting them last year my sister and I got to take a trip to Rome for a few days. It was a great trip (we stayed in a rented apartment, in case you were wondering, but not rented through Airbnb), and one of our favourite parts of it was spending an afternoon in the Trastevere district. While Trastevere doesn’t have the big sights, it has many cobbled streets, charming restaurants, a beautiful square, and one of the oldest cathedrals in the city. It’s a more artisan, bohemian atmosphere than some of the other areas of the city, and that’s part of its appeal.

So like many other visitors we loved Trastevere, and like other tourists we brought money with us, and spent some of it there, so in a way our visit was good for the city too. But of course our presence is a mixed blessing: too much tourism can erode the very things that make Trastevere so atmospheric and special — especially when those things are the “authentic” life of the locals — raising the cost of living, and putting pressure on property prices. In the end, as tourists you have to hope that the city of Rome and the neighbourhood itself find ways to balance the various pressures acting on the place where they live.

Not surprisingly, Trastevere does have conflicts over gentrification and the impact of tourism. Here‘s a story from last September. In 1956 a cinema opened in Trastevere called Cinema America, and it was a feature of the area until it closed, sometime around 2000. In 2004 it was bought by a new set of owners who literally wanted to pave it and put up a parking lot, along with some apartments. There was local opposition to the plan, and stalemate until in November 2012 a group of young people occupied the cinema. By all accounts, they turned it into a focal point for the community and also attracted some big names of Italian cinema and the arts. In September 2014 the occupiers were evicted by the police, but they have apparently set up elsewhere in the neighbourhood and the campaign continues.

What does all this have to do with Airbnb? Well, this…

Here’s a map of the 8,000 Airbnb rentals in Rome as of last May, coloured by price (red is the most expensive, then yellow, green, blue and violet). You can see that the rentals are most dense and most expensive in the middle of the city.

rome1I use the number of reviews as a proxy for the number of visits, and so I can estimate which listings are the most valuable to Airbnb. Here is (by this estimate) the most valuable listing in Rome — the one with perhaps the highest rental income of any in the city. It’s the red dot in the map below.

rome2If you look just south of this place, you can see “Basilica di Santa Maria in Trastevere”. This listing is, you will not be surprised to know, right in Trastevere. So what kind of a place is it? Well, here is what it’s listing page looks like today (January 2015).


It’s a beautiful looking place, no doubt — although not exactly cheap at $700 Canadian per night. The listing text says that it has been “Selected by the airbnb staff who stayed and filmed here for the upcoming airbnb hosting in Rome video” so its charms have been noticed by the company too.

Airbnb, of course, says that its host “are regular people who occasionally rent out their homes and use the income they earn to pay the bills.” So who is the host for this particularly successful rental?

Well, it turns out that Martin is not so much a regular Trastevere resident. In fact, he is a Harvard-educated tech entrepreneur from Austin Texas who is “rent[ing] out the places I bought with the proceeds from my last software company.” He is now CEO of Vreasy, a “novel software platform” which is “a growing force in the tourism and travel market.”


Martin is listed as an Airbnb “superhost”. In addition to the Historic Nobleman’s Loft he has four other listings on the site – one more in Rome (an “Ultimate Panoramic Roman Penthouse”), two in Barcelona, and one “Seaplane cabin” that he will fly to any legal European lake so that you can use it as a hotel.

Now I don’t know Martin and have made no effort to talk to him, because this is not really about Martin. It’s about Airbnb, and the gap between the sepia-tinted “regular people” they often talk about, and the reality of multiple-property owners. It’s the gap between their message of caring for neighbourhoods and the reality of gentrification driven by uncontrolled tourism, which they are playing a big part in accelerating. It’s the gap between their claim to care, and the reality of callous profiteering. Airbnb’s true business in Trastevere seems to be gentrification personified, and it’s exactly the kind of business that the locals of Trastevere are protesting.



The Sound of Silence, or What Uber and Airbnb’s Missing Data Tells Us

Episode 1: May 2014

Last May, Uber wrote this in a blog post:


UberX driver partners are small business entrepreneurs demonstrating across the country that being a driver is sustainable and profitable.  For example, the median income on uberX is more than $90,000/year/driver in New York and more than $74,000/year/driver in San Francisco.

There are all kinds of issues with the claim, but put them aside for the moment. Instead, here’s a question: assuming the claim to be true, what does Uber’s post tell us about the income of uberX drivers in cities other than New York and San Francisco?

One obvious thought is that it tells us nothing, because it only makes claims about NYC and SF. Another is that we could extrapolate from these numbers as if they were randomly chosen, and guess that the income in other cities is somewhere in a distribution centred around $82K. That’s what the Washington Post did by implicitly comparing the Uber numbers to a national average for taxi drivers:

Estimates of the typical cab driver’s salary hover around $30,000. According to Uber, the median wage for an UberX driver working at least 40 hours a week in New York City is $90,766 a year. In San Francisco, the median wage for an UberX driver working at least 40 hours a week is $74,191.

But Uber’s blog post actually tells us something different about driver income in other cities: it tells us that it is less than $74,000. How come? Simply because this is a blog post from Uber. Uber wants to make a compelling case to the media and to the public, so if drivers in Chicago or Los Angeles were making more money than those in NYC or SF they would have appeared in the post instead of those two cities. So we don’t know how much drivers elsewhere make, but we can be pretty sure that it’s less than $74,000.

Episode 2: Oct 2014

In October 2014, Uber published another blog post saying that drivers in New York City take an average of $36.16 per hour in fares, and make $25.17 per hour after Uber’s cut, but before expenses. (That’s about $50,000 per year for a 40-hour week, by the way.) What does this tell us about driver income in other cities? Again, it tells us that it’s probably less than $25 per hour because otherwise they would not choose New York City for their blog post.

Episode 3: January 2015

So last week Uber posted both a survey of its drivers and a report (PDF) by eminent economist  Alan Krueger and Uber Head of Policy Research Jonathan Hall. The main things to come out of the report were that Uber is growing really quickly – impressive, but no surprise — and that Uber drivers are paid better than taxi drivers. That conclusion comes from Table 6:  uberwages

The table confirms what I was saying above: earnings in New York City are 50% more than anywhere else apart from San Francisco, and San Francisco is the second highest earning city.

As several other commentators have pointed out (eg Ellen Huet at Forbes, Jacob Davidson at Time, Andrea Peterson at the Washington Post), the comparison between Uber “earnings per hour” and taxi “hourly wages” is apples and oranges, because the report has nothing to say about Uber driver expenses. Krueger and Hall have this to say in their defence:

A detailed quantification of driver-partner costs and net after-tax earnings is a topic of future research. Nonetheless, the figures suggest that unless their after-tax costs average more than $6 per hour, the net hourly earnings of Uber’s driver-partners exceed the hourly wage of employed taxi drivers and chauffeurs, on average.

(Oh Alan Krueger: you were given a set of data and “full discretion over the content of the report” but you come out with this? I’m not angry, I’m just disappointed.)

So what do we know about driver expenses? The Sound of Silence rule tells us that, if expenses made a good story for Uber, the company would have included expense data in the data set given to Krueger. In fact, if expenses made a good story, they would have been included in the earlier company posts as well. So we can be pretty sure that the expenses of drivers are $6/hour or more in most cities.

Is $6/hour expenses reasonable? Certainly: the Washington Post’s Peterson notes that the IRS estimate of costs is 57.5 cents per mile, but that Uber don’t include distance driven in their report. Still, 12 miles an hour (including driving to pick up a fare and driving back to a good spot afterwards) is not implausible. And then there is the thorny question of commercial insurance, which would be an additional cost. It seems likely to me that Uber drivers are getting about the same as taxi drivers.

Episode 4: January 2015

Just to finish off, here is another sound of silence. Thanks to the efforts of Share Better, my data on Airbnb rentals got picked up in New York City last week when City Council held hearings about short term rentals. That data suggests that the percentage of illegal rentals in Airbnb’s New York listings has decreased only slightly since a year ago, and that the decrease has been swamped by an increase in the overall number of listings. There is not enough firm data on the Airbnb public web site to be absolutely solid on this, but that’s how things look.

What did Airbnb have to say? Their response is that the data is “flawed” and “inaccurate”, and that is literally the extent of what they have to say. So it’s kind of a joke. This piece in Mashable by Jessica Plautz includes Airbnb saying they don’t really know anything about their hosts, and Josh Dzieza in The Verge includes more of Airbnb’s exchange with the council in which the company says, well, nothing.  Airbnb executive David Hantman’s testimony ‘acknowledged that his company did not keep track of the number of users who are renting out their apartments illegally. “We don’t research that,” he said during the hearing.’

Sometimes I wonder if I’m doing the right thing going after Airbnb, because there is a role for occasional casual short-term rentals. Maybe the company’s heart-on-its-sleeve attitude is for real? But then I realize that in the last year they could have put out realistic, convincing numbers at any time (and saved me a lot of work) but they haven’t. And like Uber’s silence on driver expenses, Airbnb’s silence speaks volumes: if the data were good for the company, they would have made them public. The fact that they haven’t (and their content-free responses to people trying to piece together a picture of reality) makes me more convinced than ever that they have things to hide.



The 2001 Anthrax Deception

I may be biased, but I believe my friend Graeme MacQueen has written a brave and important book in his newly-published “The 2001 Anthrax Deception“, which he subtitles “The case for a domestic conspiracy”. It’s a book that takes on new importance in the light of the CIA torture report.

If you’re like me, you won’t have thought about the anthrax attacks in some time. Remember: these were the letters containing spores of anthrax sent through the US mail to media companies and to selected politicians in the immediate aftermath of the 9/11 attacks; letters that killed five people. During October 2001 there was a widespread belief that the letters were a follow-up to the 9/11 planes, carried out by al-Qaeda with the help of Iraq, which was supposedly one of the few actors with the expertise and capacity to produce this biological weapon of mass destruction. That theory was disproved in late October and the FBI began hunting for a domestic “lone wolf”, initially pursuing one Steven Hatfill and then, when this avenue also proved to be a dead end, going silent. Six years later the FBI and the Department of Justice announced that they had a new suspect in Dr. Bruce Ivins, who worked on anthrax vaccines for the US army. Ivins died – said to be suicide – shortly before he was to be charged. In 2010 the Department of Justice closed the case, releasing a report that laid the blame at Ivins’s door.

MacQueen’s book (I think of it as “Graeme’s book” of course, but for the sake of style I’ll call him “MacQueen” here). As I was saying, MacQueen’s book is brave because any attempt to question official stories of events surrounding 9/11 get labelled as “conspiracy theories” which are, after all, taboo in polite society. Questioning of the official story of the anthrax attacks has been made to seem tantamount to a belief in the Illuminati and a conviction that the moon landings were faked, but MacQueen refuses to back away from the word. It’s to his credit that he puts the word “conspiracy” right there on the cover. And after all, as he says, it is nearly universally believed that the 9/11 attacks were a conspiracy.

It should be uncontroversial to question the “official story” of the anthrax attacks. There was no trial, no opportunity for a defence by the man deemed guilty; the official story has not been tempered by the heat of public interrogation and debate. Released years after the events, the appetite for challenging the report has never been a strong one. In short, as official stories go, it’s not well established; its status is more like an arrest than a conviction.

And people do conspire, MacQueen reminds us. To use the word need not imply a belief in all-powerful yet shadowy cabals, nor commit us to a conspiratorial view of history; the spectrum of possibilities is broad. Maybe it helps to think of a more distant case. The death of the Princes in the Tower during the Wars of the Roses remains something of a mystery, but most historians lay the blame at the feet of Richard III. Yet to say that “Richard did it” is just the beginning. There’s almost no chance that Richard actually carried out the execution with his own hands. So did he order it directly? Or did he utter an equivalent of the earlier Henry II’s “will no one rid me of this turbulent priest?” and let his councillors take their cue from his frustration? Or did the initiative come from elsewhere in his court, as someone lower down the hierarchy took history into their own hands? All of these are possible. There is a supply-and-demand aspect to political entrepreneurship and to responsibility for heinous acts. Creating the conditions that encourage and reward criminal actions is part of the tangle of blame.

We know that sending anthrax powder through the mail is not so far from confirmed practices of US military and intelligence agencies: Oliver North arranged for arms to be sold to Iran in order to pursue war in Nicaragua through contra proxies; the Gulf of Tonkin incident demonstrated the willingness of the US to deceive the public in order to justify a war. The use of agent provocateurs by official agencies is well established: many of the terrorist attacks supposedly prevented by anti-terrorist agencies were facilitated and encouraged by operatives of those same agencies as they try to establish their radical credentials in the communities they are infiltrating. Here in Canada, Mubin Shaikh was actively involved in setting up training camps that were then used to justify the arrest of the youths who attended them.

All of which is simply to say that there is a case to be made here, and one that should be well within the norms of acceptable debate.

One of the reasons I came into the book in a sceptical frame of mind was that there are no planning documents, no insiders giving compelling accounts of how the planning was done and where. Someone, I thought, would have come out and said something; or someone would have found and leaked some key document. But the report on CIA torture puts those doubts to one side: it shows that illegal actions can be carried on with the involvement of many inside people, that even though there would be tremendous demand for such material from the press no one leaked anything over the years since 2002, and that in the absence of the inquiry we would still not know (as a society) that these events had happened and that the CIA had organized them. So yes, secrets can be held for years.

In all this waffle I realize I’ve not actually said much about the book itself, so maybe I should summarize it at least. Here goes.

MacQueen sets out his aims right at the beginning of the book. He’s out to show that the perpetrator of the anthrax attacks was not a “lone wolf”, that they were carried out by deep insiders in the US executive branch, that there were links to the 9/11 Hijackers, that the goals of the attackers were to redefine the enemy of the west to the Global War on Terror and to weaken the rule of law internationally and within the US: goals that were successfully achieved. He convinces me of the first and of the final two. I’m not quite ready to follow him for sure with the second and third, but he makes a compelling case for both and I am convinced by him that insiders within the US executive branch have responsibility for these attacks, whether or not there was an explicit order to carry them out.

The focus of the book, as the subtitle says, is to make the case for a domestic conspiracy, and MacQueen starts with motive. In September and October 2001 there was a concerted effort to cast the events of 9/11 as an act of war rather than just terrorism. Casting it as war was essential to passing the Patriot Act, to giving the President extraordinary powers, and to setting up military tribunals to try those seized. The case for war was made much stronger by the anthrax attacks, which clearly required capabilities the reach of non-state actors, and which were presented (during the crucial weeks of debate during October 2001) as clear evidence of conspiracy between al-Qaeda and Iraq. If Iraq was involved, then it’s an attack by a nation state, hence war.

In the lead-up to passing the Patriot Act on October 11, 2001, the Bush administration adopted a “strategy of tension”, building up the threat of an al-Qaeda/Iraq axis. Leahy and Daschle played leading roles in delaying the Patriot Act so that it did not pass by an administration deadline of October 5th and then, between October 6 and 9, letters were sent to both of them containing anthrax. Sure enough, on October 11 the act was passed. When it was signed into law on October 26, George Bush specifically invoked the anthrax attacks as a justification for curtailment of civil rights, in a chain of events that led straight to the now-exposed NSA surveillance practices. There is no doubt that the anthrax attacks gave the Bush administration exactly what it needed in order to achieve its legislative goals.

The central chapter of the book is an investigation of the four possibilities for the attacks: (domestic/foreign) (individual/group). The early focus was, as I’ve already said, on a “foreign group” and it’s important to remember just what happened at that time. On the basis of flimsy and ultimately false information, conjecture, and circumstantial evidence (at best), there was a major part of the US (and international) political and journalistic establishments who proclaimed, with sufficient certainty to invade countries and kill large numbers of people, that the verdict was in and the attacks were the responsibility of a “double perpetrator”: al-Qaeda and Iraq. It is at the very least inconsistent to dismiss those, like MacQueen, who suggest that a domestic group perpetrator was responsible when those who propagated and used the “double perpetrator” hypothesis continue to enjoy prestige and respect. The “conspiracy theorists” have a right to be taken seriously in this debate.

The double-perpetrator hypothesis gave way in the face of the revelation that the anthrax was weaponized and featured an aerosol additive that indicated it came from US military laboratories. A foreign individual was clearly out of the question, so that leaves two options. All efforts were devoted to tracking a domestic individual, first Steven Hatfill and then Bruce Ivins, efforts that concluded with the publishing of the Department of Justice report in 2010 and the closing of the case.

The main focus of the book is not to attack the case against Ivins, but MacQueen does highlight two events: the publishing of the National Academy of Science report in 2011 that said the physical evidence tying Ivins to the mailed spores was inconclusive, and researchers who published scientific papers showing that the spores could not have been prepared by an individual, and probably came from a lab other than the one where Ivins worked.

I found this central chapter very strong. The case against Ivins is far from compelling, the absence of a trial is remarkable, and there has simply been no public attempt to assess guilt or innocence. MacQueen makes a very strong case that there is no obviously true official story, and that attempts to establish alternative theories are valid and should be taken seriously.

I was less convinced by the following chapter, which is about advance knowledge of the attacks. Certainly there was much discussion of the possibility of anthrax attacks, and of dirty nuclear bombs, in the media during September 2001, after 9/11 and before the actual anthrax attacks became public in October, but I’m not convinced that such discussion necessarily derived — as MacQueen suggests it does –from the perpetrators of the attacks or that it showed foreknowledge or an attempt to prepare the ground for when the attacks actually happened.

That said, there is, again, a spectrum of possibilities. MacQueen’s claim that top officials used the chatter and amplified it at politically useful times and that the chatter was part of a conspiracy to justify war is convincing, as is his claim that the double perpetrator hypothesis was “false, known to be false, and flowed from repeated acts of deception by the US Government”.

If anything does make me consider the possibility of foreknowledge it’s MacQueen’s account of an exercise called Dark Winter, carried out at Andrews Airforce base on June 22-23 2001. The exercise simulated a biological warfare attack by terrorists in which anonymous letters containing smallpox virus are sent to media outlets. The simulation evolved in striking parallel to the actual events of September and October 2001. The participants in Dark Winter included Judith Miller (New York Times journalist who played an important role in promoting war on Iraq), James Woolsey (director of the CIA under the Clinton administration) and Jerome Hauer (a member of the neoconservative Committee on the Present Danger and also the director of the Office of Emergency Management of New York City until early 2000).

What do these parallels tell us? They don’t prove that the team organizing the Dark Winter exercise carried out the anthrax attacks (and MacQueen doesn’t claim this), but they do tell us that there was a well-established script which gives the attacks meaning and purpose from a conservative point of view. They show that the people involved in Dark Winter, together with others in the Bush administration and in the conservative media, fostered a climate in which the anthrax attacks played a politically useful role, creating a context which encouraged a “false attack” by anyone who would want to see an attack on Iraq happen. Such an attack took place, and played the part required of it. Whether it was actually executed by a lone wolf or by a group is perhaps not the most important question.

MacQueen is interested in the anthrax attacks for their own sake, but he is also interested in 9/11, and he sees connections between the two. Robert Stevens, the first casualty of the anthrax attacks, was an employee of Mike Irish at Boca Raton newspaper The Sun and a friend of his wife, real-estate agent Gloria Irish. Gloria Irish found houses both for Stevens and, in the summer of 2001, for two of the 9/11 hijackers (Marwan al-Shehhi and Hama al-Ghamdi). The official explanation for this is that it’s a coincidence. Beyond this, Hijacker Mohamed Atta made attempts to buy crop-dusting planes which made sense only for an anthrax attack (which al-Qaeda had, we now know, no capability to execute). It does seem likely that there was an attempt to tie the anthrax attacks to the 9/11 attacks, and so to present al-Qaeda as likely anthrax attackers – but by whom? Bruce Ivins could not have known (MacQueen shows) of the connections between Stevens and the Hijackers.

The Bush administration undertook a wide range of deceptive actions – lying, making false implications and more – to present anthrax, al-Qaeda and Iraq as a powerful and threatening combination. These actions culminated in Colin Powell’s UN Security Council presentation at which he held up a vial of simulated anthrax. So just how far did they go? How much did they push, cajole, and encourage their organizations to produce evidence to back up the stands they were taking? And if they were putting a lot of pressure on their organizations to provide the proof of al-Qaeda/Iraq mendacity that they knew was out there, would it be surprising if a group somewhere undertook to provide the nudge that was needed, or took the pragmatic shortcut of just doing it themselves? Because surely, you can imagine them thinking, even if this attack was fake, it would be done with the best of motives, to draw attention to a greater danger that they knew was there in Baghdad. Will no one rid me of this turbulent priest?

The book gets, for me, at least 80% of the way to the author’s goals. He reminds us of the lengths to which powerful organizations go to achieve their aims. He reminds us that such organizations are not all-powerful, but make mistakes. He shows us that the constellations were aligned by the Bush administration in such a way that the anthrax attacks (by domestic actors supportive of the Bush administration goals) would be an understandable action. He shows us that there is a plausible connection between the perpetrators of the anthrax attacks and the 9/11 Hijackers. If he doesn’t pull me the last mile to being convinced that the attacks were executed by people deep within the US executive branch I am a lot more open to the possibility than when I started. It’s a brave and necessary book and it matters that dissident voices such as his are demanding that questions continue to be asked about this important recent history.

Why Canada should de-activate Uber

A long post collecting together a number of arguments and resources about Uber and why it doesn’t belong in Canada. If you want to print it off, here is a PDF.

An updated version of this page is maintained here, which you can access through the menu above.

In September, Uber introduced its UberX service in Toronto as part of a broad expansion across Canada (among other countries), and the City of Toronto is now seeking a court injunction to stop the company. Back in December 2012 the company was chased out of the city, but now some journalists, business professors, and even the mayor (not that one) think it’s time to disrupt the taxi industry, ignore the city licensing and standards process and let Uber run its taxi alternatives.

You’d think, reading these articles, that customer service is the only issue at stake here. But there’s more to it than that: the decision about Uber is also a decision about the kind of jobs we want to have, about accessibility, and about the kind of city in which we want to live. It’s about us as consumers, but also us as citizens, us as Canadians, and us as employees.

Uber is not “the future”, it’s “a future”

Contrary to the way some articles are written, we do have a choice here. A lot of the links above talk as if Uber were some kind of inevitable future (“The Ubers are destined to win the taxi wars”); here is an example from Todd Hirsch:

It’s an economic tale told time and again. Camera film makers. Video stores. The music recording industry. Perhaps most famously, the Luddites – those textile labourers in 19th century England who protested against the introduction of mechanized looms by smashing them. Many of them failed to adapt to new, disruptive technologies and went extinct.

Next on the list may be the taxi industry…

Conflating Uber with the broad advance of technology is just wrong, and it’s also exactly what Uber wants us to do. After all, if you’re the future, who can argue against that? But thousands of new technology businesses start every year, and many of them fail. Groupon turned out not to be the future of shopping. Mayor John Tory wants to “sit down with the Ubers and the Hailos and others of the world”, but Hailo has already folded its North American operations. Paris has turned down UberPop, but it has Autolib’, which may be the world’s most successful electric-car sharing program. There are many roads to the future—many innovative roads to the future—and the best of them don’t involve Uber.

The Uber controversy is not just—or even mainly—a technology story, it’s fundamentally a deregulation story; the story of a uniquely American fundamentalist free-market worldview being sold to us in the name of “car-sharing” and innovation.

Two cheers for regulation

Uber CEO Travis Kalanick’s says that his company is engaged in something like an election race in which

Uber is the candidate and [its opponent] is an asshole called Taxi. I’m not totally comfortable with it but we have to bring out the truth of how evil Taxi is.

Kalanick also referred to “Our opponent – the Big Taxi cartel” when he hired former Obama strategist David Plouffe to run its political lobbying efforts.

It’s worth reflecting for a moment on the fact that cities all around the world, with many different political and economic traditions, have decided independently that taxis need some regulation; and there is no “Big Taxi cartel” coordinating these decisions. Taxi firms are generally city-wide, at least until Uber itself came along.

Cities have had their own reasons for regulating taxis. As McGill University Law Professor Paul Stephen Dempsey wrote in a 1996 paper, regulations typically include:

(1) limited entry (restricting the number of firms, and/or the ratio of taxis to population), usually under a standard of “public convenience and necessity,” [PC&N] (2) just, reasonable, and non-discriminatory fares, (3) service standards (e.g., vehicular and driver safety standards, as well as a common carrier obligation of non-discriminatory service, 24-hour radio dispatch capability, and a minimum level of response time), and (4) financial responsibility standards (e.g., insurance).

It is not a coincidence that, all around the world, taxi regulation happens at the city level rather than at a national or provincial level. Different cities have different needs. The one-size-fits-all model that Uber wants to roll out treats Tokyo the same as London the same as Windsor, but as Dempsey (see link above) writes:

In the final analysis, the suitability of taxicab service and pricing is a peculiarly local issue, best tailored by local governments based on their unique populations, spatial densities, road congestion, air pollution, and airport and hotel traffic.

Meanwhile, for all its attempts to conjure up an underdog image, Uber has funding from (among others) Google, Jeff Bezos of Amazon, and Goldman Sachs.

It’s also worth remembering that taxi deregulation has been tried and failed in many places. For example, Seattle deregulated in 1979 but found that “service quality declined and rates were often higher”; and a 2004 US report noted that

…several studies, including a 1993 Price Waterhouse study, found that overall, in many cities that deregulated, the supply of taxicabs increased, fares increased, service quality declined and there were more trip refusals, lower vehicle quality, and aggressive solicitation of customers resulting from a higher supply of taxicabs.

So taxi regulation is imperfect, but the solution to that imperfection is not to walk away from it. Taxis are part of city infrastructure, like buildings, buses, and subways, and serve a valuable public service. Taxi regulation provides a way for the public and for our elected representatives to have a say in how the taxi industry works, so that (for example) Toronto can demand that the entire taxi fleet must be wheelchair accessible, rolling in over the next decade, or London can introduce a zero-emission Metrocab to address environmental concerns. The taxi industry may be a flawed part of our democratic institutions, but the solution to flawed democratic institutions is more and better democracy, not the American rejection of government and of democracy’s role in the economy.

Despite claims of technological inevitability, saying No to Uber is perfectly compatible with innovation and forward thinking. If Canadian cities such as Toronto do say No to Uber, they would be joining cities around the world such as Berlin, Seoul, Madrid, and Paris in refusing to roll over and hand the responsibility for their taxi service to Silicon Valley.

Uber corporate culture

Digital platforms are governed by network effects, which is why Uber’s massive funding rounds (having raised $1.5 Billion, they are now looking to raise another $1 Billion) and rapid global expansion are so important to the company’s future. They and their investors know it’s a winner-take-all game; that’s why Uber CEO Travis Kalanick admitted this month that he undermined the fund-raising efforts of his main competitor, Lyft. The decision facing Canadian cities is not about permitting a smartphone app, it’s about handing a large part of Toronto’s taxi service over to Uber.

So what kind of company is Uber, that people want to put aside taxi regulation and hand control over to them?

It’s a company in the middle of controversy, as executive Emil Michael muses about digging up dirt on (female) journalists who criticize the company. It’s a company that spies on its customers using what it calls its “God View” of company data for party tricks or for blog posts. It’s a company whose top New York exec is being investigated internally for tracking a female journalist without her consent. It’s a company whose employees have warned another female journalist that “company higher-ups might access my rider logs”.

I emphasize “female journalist” here because the culture of the company is a big part of the problem. Do we want to hand over Toronto streets to a company whose CEO wisecracks about women on demand (“Yeah, we call that Boob-er“)? Which “can and does track one-night stands” and posts a blog entry about the data called “Rides of Glory” (now removed)? Which, more damagingly, ran a campaign in France (now also removed) called “Avions de Chasse” to pair Uber riders with “hot chick” drivers? As the company posted on the English version of its website:

“Avions de chasse” is the French term for “fighter jets”, but also the colloquial term to designate an incredibly hot chick. Lucky you! the world’s most beautiful “Avions” are waiting for you on this app. Seat back, relax and let them take you on cloud 9!

This is a company that responded to a complaint by a female customer that she was driven 20 miles out of her way to an abandoned lot by saying it was an inefficient route.

It’s also a company that coaches Miami drivers how to circumvent laws. It’s a company that ordered and cancelled over 5,000 rides with its main competitor to interfere with their service. It’s a company that sets out to dupe newspapers with fake PR, and which now talks of “weaponizing facts” in its PR campaigns (this company really likes its military analogies). In short, it’s a company that reflects the worst of the macho culture of some parts of the technology industry.

In among all the privacy problems, it is worth noting that Uber has one privacy policy for the US, but has no Canadian privacy policy. That’s how much Uber is thinking, for all its massive funding base, about privacy issues for Canadian riders.

Drive income: the Uber unicorn

What really appeals to people who have used Uber (and I am not one of them) is the smooth efficiency of the service, an efficiency that relies on drivers to be in place, ready to take you where you want to go.

According to Uber, efficiency and affordable pricing is combined with fantastic pay for drivers. In May 2014 the company posted a claim on its website that the median uberX annual income is $90,766 in New York City and $74,191 in San Francisco. The claim was hailed (hah!) by Matt McFarland of the Washington Post with the headline Uber’s remarkable growth could end the era of poorly paid cab drivers. Noting that “estimates of the typical cab driver’s salary hover around $30,000”, McFarland acknowledged that “Uber’s numbers don’t account for the costs a driver incurs to own and operate a vehicle. Still, the gap in compensation for providing similar services is astounding”.

The claim is indeed astounding. How could Uber pay its drivers three times the pay of a taxi driver, charge riders less, and still be profitable? The initial explanation was that taxi medallion owners in many cities suck all the money out of the taxi system (see financial journalist Felix Salmon here and here for example).

I took a look at the claim when it was made and compared Uber’s estimates to taxi reports from three different cities. It was clear that Uber was taking out about the same percentage of each dollar of fare from the system as do medallion owners (20% of the fare at the time, plus a $1 “safety fee” per ride), so there was no magic there after all. The company admitted that it was looking only at drivers who logged over 40 hours a week which, given that most drivers are working longer than they are actually “on the app” means that the average is highly selective of the top end of drivers. Finally, Uber massively underestimated the costs of gas, maintenance, insurance, and other expenses (such as tolls) that drivers incur (uberX drivers must drive their own cars).

Since then, the claim has become less and less plausible. Felix Salmon toned down his praise here. Seattle Uber drivers protests in April and August, San Francisco drivers protested low income in May, Los Angeles drivers protested in September, New York drivers protested in September (Uber backtracked over new rules it had introduced) and again in October along with San Francisco and London. Low income has been a consistent complaint, including on the active Uber driver forum UberPeople and at Reddit. Reports from individual Uber drivers failed to come near to the income figures that Uber claimed (for example this report from Fort Worth (strong language!) or this report or this report from Boston).

Meanwhile, Uber has been taking a bigger and bigger slice of the consumer dollar. The $1 per trip “safety fee” was a start, then they started charging drivers $10 per week for use of a smartphone, and more recently they increased their commission for new drivers in San Francisco to 25% of the fare.

Finally, multiple rounds of fare cuts have put pressure on driver income. Uber insists that a greater number of rides per driver makes up for the price cuts, but drivers themselves dispute this claim and there are few numbers from Uber to back it up.

The $90,000 claims have been re-investigated in recent weeks by two of the most consistently informative journalists covering Uber. Johana Bhuiyan of Buzzfeed looked at eleven Uber drivers’s pay slips here; and Slate’s Alison Griswold called the $90,000 driver Uber’s Unicorn, saying “In several months of reporting on Uber, I have yet to come across a single driver earning the equivalent of $90,766 a year.” She asked Uber’s Lane Kasselman to introduce her to one and concludes: “Last I heard, they’re still looking.” Meanwhile, the New York Post concludes that “their take-home pay is closer to the average that yellow cabbies make.”

Rating systems and vulnerable drivers

Money is, of course, one of the main points of contention for many jobs, but Uber is not just another employer. In fact, it’s not an employer at all: Uber drivers are “partners”, self-employed entrepreneurs who choose to work on the platform. The model of “micro-entrepreneurs” who can choose when to work independently is what makes Uber part of the booming “sharing economy” along with others such as Airbnb. What seems at first like a light-weight and flexible model of work turns out, in Uber’s hands, to be another way for the company to have its cake and eat it too.

Uber claims its drivers are not employees, but has been exerting more and more control over their behaviour.

Uber makes it easy for new drivers to join up: it publicizes what many drivers describe as unrealistic earnings to attract interest (see above) and encourages drivers to take out what amount to subprime loans in order to buy a car. Then, of course, the driver has to put in long hours to pay off the purchase, and being kicked off the platform becomes even more of a threat.

Uber has taken advantage of the vulnerability of its drivers by imposing more and more strenuous rules. Driver acceptance rates (when the app assigns them to a customer) have to be up around 90% or you get a notification to “Please improve your acceptance rate if you want to continue to use the Uber platform”. Drivers claim to have been deactivated for being critical of the company on Twitter. Drivers on the premium Uber Black service (I have mainly ignored the complexity of the different Uber services here) were suddenly forced to take requests for the lower pay uberX service. The company tracks driver locations and complains if they are not to the company liking.

But at the heart of the control is the rating system that permits riders to rate drivers. Most riders give their drivers five stars out of five as a courtesy, but if a driver’s rating slips even slightly – below 4.7 in many cities – they can be “deactivated” or kicked off the platform. The system makes drivers vulnerable to the most demanding of riders, as a small number of complaints can lead to the driver losing their way of making a living. And of course there is no appeal, as the driver isn’t an employee and the contract is not a work contract. The reports of happy and friendly Uber drivers (see the Globe and Mail articles at the beginning of this post) take on a different meaning once you know the precariousness of Uber drivers’ situation. As Forbes’ Jeff Bercovici reported, “Uber likes this system because it enjoys being able to say all of its drivers have near-perfect ratings. But it’s a harsh one for drivers, and also for customers, who find themselves repeatedly forced to choose between guilt, spite and ignorance.”

While Uber gets to dictate the behaviour of its drivers in more and more specific ways, it still takes none of the responsibility when things go wrong. Section 230 of the “Communications Decency Act” may seem like an odd law to protect the company, but here’s how it works. The law was initially introduced to say that blog sites and other user-content sites such as YouTube were not responsible for content posted by its users. Fair enough. But now Uber says it’s not a taxi company, it just runs a web site and an app, and puts drivers in touch with riders. Anything that goes wrong is not Uber’s responsibility, it’s the driver’s. The law is an American one, but challenging Uber is going to be expensive and maybe prohibitively so for Canadians too, especially given the company’s formidable bank account.

Uber’s rules seem to step over the line regarding whether a driver is, or is not, an employee according to Canada Revenue Agency rules. Sharing economy workers are facing this issue with other companies too, such as cleaning/odd-job service Handy. It’s an issue that other industries face, such as construction, and the root cause is always the same: classification as an independent contractor relieves the hiring company (Uber in this case) from having to pay EI premiums, and from having to abide by employment standards. The risk is pushed entirely onto the subcontractor. When Toronto mayor John Tory says that Uber should be allowed to operate, he’s implicitly approving of these arrangements, and allowing bad labour practices to intrude further and further into Canada’s workplaces. It’s bad for the drivers, and it’s bad for our society.

Customer issues

Among all of these problems, the customer is the one who does well (putting aside the problems with sexism and privacy violation listed at the top of the post). Uber is keeping the prices low, pushing drivers to accept all the rides they are assigned whether or not it makes them money, and is using the rating system to ensure that the drivers put on a friendly face. It’s relying on these customers to push cities into permitting the apps.

But even here there are concerns: issues of race are complex: some people of colour report a dramatically better experience than with taxis but others are concerned about customer profiling, and potential for discrimination. Disability access is more troubling: blind riders are suing Uber and disability activists are filing lawsuits.

Summing up

This post is already too long. I could have written about the occasional horror stories of accidents and abusive behaviour from drivers, but they happen with taxis too. And I’ve not covered the dubious screening process that Uber uses, or the lack of proper mechanical inspection of the cars, or the difficulties with insurance: these have all been covered elsewhere.

The list of problems with Uber is long. The existing taxi industry is not perfect, especially in big cities, but it is a part of the democratic fabric of the country, and we need to address its problems by better democracy, not by throwing democratic accountability aside for the promise of self-regulation by an unaccountable company with an arrogant, sexist corporate culture, which treats its drivers badly, which walks away from its responsibility when things go wrong, and which is importing an American anti-democratic attitude into this country.