NYCers have a new ridehailing alternative to Uber: The Drivers Cooperative is a driver-owned, app-based ride-hailing service that pays drivers more, charges riders less, and pays out any profits to driver-owners as periodic dividends.
Platform cooperativism is a powerful antidote to app-based gig work: a way to provide customers with the convenience that made app-based services so popular while putting workers in control of their days, schedules and conditions.
It's particularly buoying to see a platform co-op challenge Uber, a company that started as a way to funnel Saudi royals' billions into a bid to dismantle public transit and worker protections in a single fell swoop.
Uber is especially vulnerable. It's losing billions of dollars, and it had to pay a group of suckers $400m to relieve it of its failed, $25b self-driving car unit whose product couldn't manage a single mile on its own.
Uber's main project has always been regulatory, not technological: that's why it funneled hundreds of millions of dollars into passing California's Proposition 22, a law that legalized worker misclassification and banned unionization.
After years of losing billions, Uber's original investors exited through an IPO that brought in suckers who bought in on the premise that a pile of shit as big as Uber *must* have a pony underneath it somewhere.
Now those investors have to figure out how to recoup the billions that Uber squandered on subsidizing rides, suborning regulators, and staging elaborate long cons like its self-driving car unit.
It must pay drivers less and charge riders more than a new market entrant that has none of this baggage. That's why a drivers' co-op is such a big move.
But I fear that Uber has one enduring advantage that the drivers will struggle to overcome: the network effect.
Drivers and riders are already overwhelmingly on Uber. If you're a rider, trying to hail a Drivers Coop car is likely to result in a longer wait because fewer drivers have the app installed. So fewer riders will try, and drivers won't have an incentive to sign up.
Both critics of tech monopoly and apologists for it zero in on this network effect as the key driver of market concentration - but this analysis misses a far more important factor: switching costs.
That's not because of any technological barrier - it's trivial to build a service that hails your driver as an Uber, then automatically checks whether they have Drivers Coop running as well, and, if so, cancels the ride and rebooks it as a Coop ride.
That would be fully in keeping with Uber's fiction that drivers are "independent contractors" and not employees, but Uber's got a powerful tool to prevent drivers and customers from evading high switching costs.
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