[Plura-list] The antitrust case against gig companies; Cops prove how stupid the SMART Act is

Cory Doctorow doctorow at craphound.com
Thu Apr 7 15:33:19 EDT 2022

Read today's issue online at: https://pluralistic.net/2022/04/07/moral-hazard-of-filternets/

Today's links

* The antitrust case against gig companies: Either they're violating employment law, or they're violating antitrust.

* Cops prove how stupid the SMART Act is: Blasting Disney tunes as a way to foil accountability.

* Hey look at this: Delights to delectate.

* This day in history: 2002, 2007, 2012, 2017, 2021

* Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading


🐣 The antitrust case against gig companies

Gig work companies like Uber and Doordash are committed to misclassifying their workers as contractors, which lets them escape employer obligations like a minimum wage, health care or worker's comp (driving for Uber/Lyft is one of the most dangerous jobs in America).

These companies spent $225m to pass California's Proposition 22, a ballot initiative that formalized worker misclassification, paving the way for all kinds of companies to convert employees to contractors at the stroke of a pen:


Hilariously, all that money was wasted. Prop 22 was unconstitutional (it usurped the California Assembly's constitutionally mandated duty to establish universal worker's comp), and it was (idiotically) drafted such that if any clause was struck the whole thing would go out the window:


But they'll try again - they already are, in Massachusetts, where the same companies have already poured $100m into "the East Coast's Prop 22":


As venture capital ghoul Shawn Carolan bragged after Prop 22 passed, the point is to create a future in which all labor rights - for nurses, teachers, and all other workers - are incinerated, leaving behind a brittle residue that workers won't be able to rely on:


Labor groups have (rightly) focused on strengthening labor rights so they can fend off these attacks. But in a superbly argued new article for the Law and Political Economy Project, Marshall Steinbaum points out another, devastating weapon to fight off gig companies: antitrust law:


When we think of antitrust law, we usually focus on the way dominant companies abuse their customers: raising prices, lowering quality, locking us in. But a neglected - and powerful - aspect of antitrust is its prohibition on "vertical restraint": when a company seeks to control the business of its suppliers.

If we take gig companies at their word, their workers are all "independent contractors," which means that if those companies take steps to block their "contractors" from working for rivals, or setting their own prices, or otherwise structure their supply chains, they violate antitrust law.

A key vertical restraint tact is "resale price maintenance," which is a fancy term for setting the price that an independent contractor charges its customers. You know how Uber sets the price for a ride, and the driver has to like it or lump it? That's resale price maintenance. If drivers can't choose to offer lower prices, then consumers are deprived of the benefit of bargaining for a discount, and that's illegal price-fixing.

Why would a driver offer a lower price? Maybe there's an Uber competitor that takes a smaller cut of the fare, and the driver could say, "Hey, cancel this ride and rebook it on this other platform: you'll pay less, and I'll get paid more." That's how competitive markets are supposed to work, and by blocking that bargain, Uber creates "walled gardens with high prices, low pay, and little multi-homing or competition."

Vertical restraint theory is very down on "Most-Favored Nation" (MFN) clauses, where a contractor has to promise not to offer their services to a rival at a lower price. That means that if a new platform pops up that offers a lower commission in exchange for a price cut (something that could result in a cheaper ride that the driver earns more on), the driver also has to offer a discount to Uber.

Resale price maintenance is "a super-charged version of an MFN," with the platforms actually setting the price without having to go through the messy trouble of using contract to force the driver to offer their cheapest price to the platform.

Resale price maintenance is an existential issue for Uber and Lyft, since these companies are utterly dependent on "price discrimination." That's when a company uses an algorithm to analyze your misappropriated personal data to estimate how much you'd be willing to pay for a ride and charges accordingly. Famously, Uber jacks up the price if its app senses that you are about to run out of battery:


But that's just one tactic out of many (Uber got dinged by the DoJ for price-gouging people with disabilities on the grounds that they take longer to get in and out of cars). Price discrimination only works if you can't shop somewhere else for an equivalent product - such as the same ride, in the same car, with the same driver, but via a different app.

If drivers and passengers can negotiate to use a different app to complete their transaction - that is, if Uber was forced not to engage in illegal resale price maintenance - price discrimination would be effectively impossible.

Beyond these obvious vertical restraints, Steinbaum reveals some of the more esoteric (but no less illegal) tactics that Uber and Lyft deploy. For example, Uber offers "bonuses" to drivers who take a certain number of rides, but also prices rides such that many of them are net money-losers for the driver. Without the bonus, drivers can't earn a living wage. What's more, if a driver turns down too many rides, Uber deprioritizes them when offering out new rides, which can make it impossible for them to meet quota and get the "bonus."

That means that drivers have to both accept many rides, but also be very careful about *which* rides they take - putting them in an impossible (and illegal) bind. As Steinbaum writes, this system lets platforms "line up their workforce in advance, based on their forecasts of demand, without bidding against one another in the moment for drivers’ time."

Just for an added layer of fuckery, the longer a driver stays on the platform, the lower the bonus gets - the platforms are betting that once a driver is hooked on working for them, they will be reluctant to leave, even if their pay drops. After all, once a driver is full-time, they'll have invested in a dedicated vehicle and other expenses that make leaving more costly than staying.

The upshot of all this is that if the platforms are sincere in their claims that they should not be forced to obey labor law because their workers are contractors, then the platforms are in flagrant violation of *antitrust* law.

This isn't a hypothetical interpretation of the law. Steinbaum cites many on-point precedents for treating the platforms' tactics as violations of antitrust's ban on vertical restraint.

The platforms have been incredibly imaginative in the ways that app-based labor controls let them control the workers they swear are independent contractors. For example, Uber allows some drivers an advance look at where a passenger wants to go and how much the driver will earn for the run - but they also impose a minimum acceptance quota on those drivers, which "defeats the entire purpose of seeing it in the first place."

The platforms are fiercely committed to hiding workers wages from them. Doordash, for example, hides the amount of the "tip" offered by the customer (the only way for most Doordash runs to be profitable for drivers is if there's a sufficiently large tip attached). Para offered drivers an app that analyzed job offers to reveal the full compensation. Doordash responded with a bad-faith smear campaign that falsely claimed that drivers could have their identities stolen if they used Para:


Platforms understand that they'll lose customers if drivers aren't willing to accept unprofitable jobs, which is why companies like Instacart tacitly collude with customers to facilitate "tip baiting," which is when a customer dangles a high tip in advance of a delivery, then cancels the tip after the delivery is made:


The irony, of course, is that all the gig companies are losing money - they're all still burning investor capital while destroying workers lives, forcing beloved local restaurants into bankruptcy, and destroying public transit.

No wonder that these parasites are scrambling for ways to squeeze their workforce harder - and thus definitively crossing the line into illegal vertical restraint. As Steinbaum writes, gig workers get to decide which hours they work, "but once they do so, virtually every economically-significant aspect of the job is controlled and decided for them, and frequently against their interest."

Steinbaum argues that we should open a second front in the war on these companies: antitrust complaints. Antitrust is actually a great vehicle for tackling these companies' labor abuses, because when a company loses an antitrust case, it usually has to pay damages and suffer injunctions limiting its future activities.

In other words antitrust victories over gig companies wouldn't just entitle workers to compensation for the wages the companies have stolen from them - it would also pave the way for requirements for the gig companies to facilitate interoperability, so workers and their customers could bargain to shift any transaction to the app that took the lowest commission and/or charged the lowest price. Given the scorching commissions that Uber and the other big guys charge (35-50%!) there's plenty of room for bargains that would result in lower prices *and* higher pay.

This is actually the vision of Para, who want to create meta-apps for gig workers that allow them see, from moment to moment, which tasks will pay them the most money, turning the tables so that workers can play the platforms off against each other.


It's an American version of tuyul, the Indonesian gig-economy's ubiquitous after-market apps that give workers more power over their jobs, providing higher wages and safer working conditions:


Like Para, tuyul apps aren't officially supported - rather, they are example of adversarial interoperability or comom, where toolsmiths reverse-engineer a service in order to modify and improve it.


Although Steinbaum doesn't say so, one antitrust remedy that a regulator could seek in a vertical restraint case against a gig work platform is a binding promise not to attack adversarial interoperators using copyright, patent, cybersecurity or other laws. The combination of adversarial and mandatory interop makes for a strong and flexible guarantee of corporate good behavior:


Interop is the key to safeguarding worker rights in technologically mediated workplaces. With interop, workers can seize the means of computation, and change the apps so they work *for* them, not *against* them:


Of course, Steinbaum adds, if the platforms don't want to do any of this, they have an easy way out: they can just admit that their workers are employees and extend all the labor rights they're entitled to.



🐣 Cops prove how stupid the SMART Act is

Remember back in Feb '21, when cops in Beverly Hills were caught blaring Taylor Swift songs to prevent videos of their misconduct from being posted to social media by triggering copyright filters?


At the time, the Beverly Hills PD was publicly shocked and appalled by the conduct and promised to root it out. Other police departments didn't get the memo. One county over, in Santa Ana, cops spent Monday night blaring Disney tunes out of their cruiser in an (unsuccessful) bid to keep themselves off Youtube:


The officer - an SAPD corporal, badge 3134 - woke the sleeping residents of W Civic Center Dr and N Western Ave at 11 p.m., and kept the Disney tunes going for hours until a resident - who was also a Santa Ana city councilor - confronted him.


Councilmember Jonathan Hernandez asked the officer why he was playing Disney music. The officer answered "Because they get copyright infringement," meaning Youtubers who post videos in which cops play copyrighted music.

Local residents - who wouldn't go on record because they feared retaliation - told Jessica De Nova for ABC7 that this was a recurring nuisance on their street, with cops routinely playing music to forestall videos of their conduct.

These dirty cops are relying on Youtube's automated filters, which robotically remove content that matches materials that have been identified as copyrighted works. These has made it effectively impossible for classical musicians to post their own piano recitals of public domain works. Companies have claimed white noise, bird-song, and silence as copyrighted works, with no consequences for overreach.

Incredibly, the US Copyright Office floated a proposal late last year to make these filters mandatory for all platforms:


After getting an earful about the idiocy of this measure, they backed off. But Congress stepped in to fill the idiocy gap, with Senators Leahy and Tillis introducing the SMART Act, which revives the idea of making these filters mandatory for all online speech:


As my EFF colleague Katharine Trendacosta writes, this won't just make all our online speech more brittle and easily censored, but it also has grave implications for the ability of independent online creators to pay their bills:


She's hosting a live roundtable this Friday, 8 Apr, at 11:30hPT, with a Q&A:



🐣 Hey look at this

* How the internet really works... with jugglers! https://www.youtube.com/watch?v=TWViGcBlnm0&t=909s (h/t Dave Taht)

* Better, broader, safer: using health data for research and analysis https://www.gov.uk/government/publications/better-broader-safer-using-health-data-for-research-and-analysis/better-broader-safer-using-health-data-for-research-and-analysis


🐣 This day in history

#20yrsago Annotated Jack Valenti https://web.archive.org/web/20020603153356/https://research.yale.edu/lawmeme/modules.php?name=News&file=article&sid=168

#15yrsago Microsoft dropping DRM from Zune Music Store https://web.archive.org/web/20070408151231/http://www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=mobile_devices&articleId=9015898&taxonomyId=75

#10yrsago Understanding TPP, ACTA’s nastier, more secret little brother https://www.techdirt.com/2012/04/06/where-tpp-goes-beyond-acta-how-it-shows-us-future-ip-enforcement/

#10yrsago Original pitch-reel for the Muppet Show is delightfully bonkers https://muppet.fandom.com/wiki/The_Muppet_Show_Pitch_Reel

#5yrsago Scuttlebutt: an “off-grid” P2P social network that runs without servers and can fall back to sneakernethttps://scuttlebutt.nz/

#5yrsago The linguistic backflips used by Deliveroo to pretend its employees are independent contractors https://qz.com/952034/startups-in-the-gig-economy-like-uber-and-deliveroo-will-go-to-great-lengths-to-avoid-calling-their-employees-employees/

#5yrsago For sale, one of the CIA’s extraordinary rendition torture-jets https://www.motherjones.com/politics/2017/04/cia-rendition-plane-for-sale/

#5yrsago “Global Britain”: the plan to turn post-Brexit Britain into the world’s money-laundering arms-dealer https://www.theguardian.com/commentisfree/2017/apr/05/global-britain-brexit-financier-arms-merchant-brutal-dictators

#5yrsago A club for people whose relatives had them​ declared dead in order to steal their land https://openthemagazine.com/features/india/the-living-dead/

#5yrsago The truth behind Pepsi’s tone-deaf #blacklivesmatter-commodifying TV spot https://www.youtube.com/watch?v=1BZifBEOp5Y

#1yrago Door Dashers organize app-defeating solidarity https://pluralistic.net/2021/04/07/cruelty-by-design/#declinenow

#1yrago Leaked NYPD "goon squad" manual https://pluralistic.net/2021/04/07/cruelty-by-design/#blam-blam-blam


🐣 Colophon

Today's top sources: Kevin Lively (https://twitter.com/Livelyland), Liz Schiller (https://twitter.com/LMegaparsec).

Currently writing:

* Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. Yesterday's progress: 520 words (80711 words total).

* A Little Brother short story about DIY insulin PLANNING

* Vigilant, Little Brother short story about remote invigilation. FIRST DRAFT COMPLETE, WAITING FOR EXPERT REVIEW

* Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION

* Spill, a Little Brother short story about pipeline protests. FINAL DRAFT COMPLETE

* A post-GND utopian novel, "The Lost Cause."  FINISHED

* A cyberpunk noir thriller novel, "Red Team Blues."  FINISHED

Currently reading: Analogia by George Dyson.

Latest podcast: The Byzantine Premium

Upcoming appearances:

* Surveillance Capitalism, Borders, and the Police (Tech Workers Coalition San Diego), Apr 14

* Seize the Means of Computation, Emerging Technologies For the Enterprise, Apr 19-20

* UK Competition and Markets Authority Data Technology and Analytics conference, Jun 15-16

Recent appearances:

* The Long, Slow Death of the Internet (Factually with Adam Conover):

* Creative Commons Open Minds Podcast:

* Initiative for Public Digital Infrastructure Podcast

Latest book:

* "Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The *Washington Post* called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html

* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59 (print edition: https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)

* "Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html

* "Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p1562/_Poesy_the_Monster_Slayer.html.

Upcoming books:

* Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin, nonfiction/business/politics, Beacon Press, September 2022

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