DIGITAL LABOUR

In the World Development Report 2019, the World Bank addresses the quality of work offered by corporate digital platforms and other technological firms. Low to mid skill jobs can be platformized further and automated in the future, they project.

What about all the informal sector jobs in Africa and Asia – driving, delivery – that employ millions of people? What does it mean for platforms to spread to newer sectors that offer work to many who are currently in the informal economy? What does it mean to have dependency to big companies that do not offer full time employment in the context of informality?

What does it mean for platforms to spread to newer sectors that offer work to many who are currently in the informal economy?

Does the informal economy affect how platform firms behave?

What does it mean for a platform operator or those who run a digital platform to work in the midst of the informal economy? Businesses have been grappling with the “vibrant” informal economy sometimes as a good thing since it requires less legislation to manipulate, offers cheap resources at ‘competitive rates’. On the other hand, the informal economy is sullied as a “black economy” operating illegally, squandering precious resources in many inefficiencies.

What do technology companies do with this scenario? Platform firms adapt their strategies of finding drivers, delivery people, plumbers etc. to this political economy. For example, firms approach panchayats (village local governments) in the periphery of metropolitan centers to recruit people rather than strategies used in American cities.

Firms approach panchayats (village local governments) at the periphery of metropolitan centers to recruit people rather than strategies used in American cities.

What does it mean for a platform service professional to agree to the in-app terms and conditions which is the platform’s version of a contract? Most drivers, plumbers, beauticians on apps haven’t had work or employment based on a legal contract. What does this kind of history and experience do the way in which platforms explain their working conditions? Platform firms use this fact to their advantage because they often face less legal and regulatory pressure to offer ‘full employment’ given the ‘evaluative precursor’ of the informal economy. Informality in economic activity alters built form, market dynamics, political economy of labour, labour organization, the potential of collective bargaining.

When you look at the database try to imagine how to compare a platform’s functioning in the midst of a large, vibrant informal economy in the service sector with that of economically advanced countries? Does it matter that this economic context varies for platform business?

Does it matter that this economic context varies for platform business?

The role of digital platforms in building a future of work is widely acknowledged. Institutions as far and wide as the International Labour Organisation, the Big Four, World Bank, civil society organizations, workers unions and governments worldwide have clued in on the ways in which companies like Mechanical Turk, and Uber are shifting the way people earn a living.

The platform is at once an economic model, imbued with technological processes, interface and structure.

The platform is one of the most utilized business models to distribute new technologies like algorithmic management, artificial intelligence. The platform is at once an economic model, imbued with technological processes, interface and structure – setting up what the challenges of the new digital age are. Platforms defy how policy has defined industrial structures, forms, and actors. They represent a new industrial form deploying digital capitalism through layers of software, applications and data.

Platforms can re-shape business

Platforms re-organize ideas of economic value, infusing a new logic into the architecture of value chains.

An overarching value of the platform is that it can be equated to principles of economic re-organization in the digital economy which infuse technology into the architecture of value chains for industries spanning media, communications, retail, mobility, logistics, labour.  Platforms can realign the way innovation and transactions are distributed economically and socially because: digital platforms are equal parts technology and business. They fuse the economics of multi-sided markets with digital tools and infrastructures that alter the ways in which business value chains have been cut.

The ‘Fourth Industrial Revolution’, spurred by the former ICT revolution has allowed businesses with little physical infrastructure and hard asset investment (like machines used in a factory assembly line, or office space to house numerous workers) to grow in number and size. Technology has been used by companies to digitize the platform’s way of relating producers, consumers, and providers. Platformization is increasingly driving ‘value creation’ in the economy.

Technology has been used by companies to digitize the platform’s way of relating producers, consumers, and providers.

Platforms reorder access to goods and services so that finding taxis, ordering food, handymen, or groceries feel like almost the same thing. Whether its taxi drivers, food delivery people, handymen or people who will deliver groceries to your doorstep, platform architecture is structured in a way that lets economic actors interact with each other based on a set of defined terms.

This is expressed as a two, or multi-sided platform – the language you will read in the economics and management literature. It is interaction and exchange between these ‘sides’ of a platform that creates the core of economic value on the platform. Both of these ‘sides’ (buyers, sellers) have to be present on a platform for any economic and social “value” to be generated. You can read Rochet and Tirole’s Nobel prize winning (in economics) article on these markets here.

A Diagram to Understand what goes on behind an App

The diagram above is a very generic  representation of the platform model where two-sides of the economic marketplace are represented by consumers/users, service providers/producers. Ecosystems here refers to a host of things including digital infrastructure (servers), local law and order or regulatory enforcement.

Much of a platform’s digital infrastructure is based in ecosystems. Cloud computing is a key tool that has allowed the immateriality of this technology to exist. Computing processes – virtualized and abstracted – radically reduces the costs of running a firm and can reduce barriers to accessing infrastructure. Users like firms can rent resources like scalable virtual servers rather than investing owning them making them “operating expenses not capital expenses”.

In other words, platforms claim to connect external producers, providers, and consumers to enable value-creation amongst them. In the diagram above this is why the platform is the middle of ‘external’ agents of consumers and suppliers. A platform provides a participative infrastructure for these interactions and sets governance conditions for them. Ecosystems can constitute any actor that the platform firm doesn’t render immediately valuable to its ability to create the infrastructure that allows participation.

Swiggy brings on restaurants who want to increase their reach to customers through delivery. In turn the larger the volume of restaurants on offer, the more customers will flock to the Swiggy app for a larger range of food delivery options. Ola brings on drivers to their platform to serve riders. Ola wins if they are in more cities than other competitors, have larger numbers of drivers, and better-quality drivers. This makes the user more likely to come back to the Ola platform. More drivers means reduced taxi wait times.

Large geographical footprint means that the same user can travel the country and keep coming back to the app for mobility needs wherever they go. Even though as a rider I may not care about everyone else’s decisions to use Uber or Ola their choice influences the value of the platform to drivers and vice versa. Drivers care about density of riders, and in turn riders care about the density of drivers on the platforms. In economics literature this is seen as demand-side economies of scale or network externalities, or network effects. Drivers care about density of riders, and in turn riders care about the density of drivers on the platforms.

How does a platform get big and ‘win’ a market?

Coupled with this power is that the two-sided network relies on ‘demand side economies of scale’ necessitating drivers, delivery agents, carpenters, runners, to flood the platform in a bid to attract mercurial customers that are spoilt for choice. This is especially true for the Indian urban consumer market where delivery has been a free add-on service for groceries, and home needs. Whether through a vibrant network of vendors, or kirana stores groceries, and household items have always reached households at many class levels.

The platform is a highly agile model whose shape and nature changes over time, and according to the sector it is applied to.

 

The platform is a highly agile model whose shape and nature changes over time, and according to the sector it is applied to.  Many scholars identify platforms that share innovation, and those that allow transactions. Many taxonomies of platforms come from business, management, economics and information studies literature that are analytical while others are built out of empirical observation. Given how agile, and popular this model is, defining platforms is difficult.

Given how agile, and popular this model is, defining platforms is difficult.

 

In a 2019 report, the United Nations Conference on Trade and Development (UNCTAD) distilled the many ways in which to classify a platform – this excellent review of taxonomies is useful for anyone learning about platforms. This report finds that scholars and multilateral development agencies classify platforms by:

• Different platform strategies (advertising, cloud, industrial, product, lean)
• Kind of commercial activities that transactions are made for (labour, capital)
• How far platform firms take their role in being “passive conduits” or a stronger “editorial role”
• On the main function of the platform – matchmaker, enabling external exchanged, makers

Digital labour platforms “connect workers with consumers of work”. Platforms also provide the infrastructure and the governance conditions for the exchange of work and facilitate the corresponding compensation. It is here that the ‘gig economy’ or the precarious forms of work of ‘independent contractors’ is studied.It is vital to distill the ways in which platforms make choices about ‘governance conditions’ i.e. business strategy around their workforce. Reading reports by Fredrich-Ebert-Schubert (FES) and Sangeet Paul Choudary can help. You can find these resources in this section.

It is vital to distill the ways in which platforms make choices about ‘governance conditions’ i.e. business strategy around their workforce.

 

There are a variety of platform firms. FES has created a categorization of platform-based work bifurcating most firms into those that offer web-based work and those that offer location-specific work. This diagram is useful for understanding the spread of platform work offerings. This primer focuses on location-specific work amongst platforms ranging from driving cars, bikes, delivering goods on trucks, production of food in cloud kitchens owned by larger platform delivery firms, grocery delivery.

For the on-demand or hyperlocal firms that this primer focuses on this implies workforce management strategies – how does Ola cabs manage its hundred of thousands of drivers? How does Swiggy assure delivery people are available when it is mealtime? How does Urban Company (previously Urban Clap) ensure that there are enough housecleaning servers on their platform during peak festival times like Diwali?

An example of digital labour platform classification

Source: FES Report (2017)

Companies that set up digital platforms vary by how they strategize – what kinds of services they offer, the actors that provide and require them, whether these actors have any ownership of the platform or not, the ways in which the actors relate to each other. Companies control so much of how social, economic and political transactions are conducted between different actors because a platform sets up a digital space where they take place.

Does Ola hold both passengers and drivers equally accountable for bad behavior during a taxi ride or not?

 

The platform company which provides the digital technology, interfaces (apps for example), infrastructure and the rules of the game. The service of Uber is dependent on the kind of company Uber is – does it believe in common ownership of resources or does it seek to maximize profit for itself? Does Coursera want students to pay high fees for accessing education or does it believe in free education? Does Ola hold both passengers and drivers equally accountable for bad behavior during a taxi ride or not?

What constitutes Working Conditions on a platform

Most platforms limit the ability of a service provider to ‘cancel’ or ‘reject’ tasks – this means that if there are 100 tasks coming your way, as a service provider if you do not do those tasks you are likely to be penalized. Some firms choose to penalize service providers for not following the rules of work by  docking pay, in some others it means you could be bumped down on the algorithmic task board implying that in the future you will receive less ‘orders’ or ‘tasks’ because the platform assumes you want less work.Firms often have a single-handed role in determining what these rules of work or service provision are. In some firms,  service providers are put at a grave disadvantage for exercising any agency of choice vis-a-vis platform operators, almost as if having a David battling a Goliath over one bad day.

Many platforms use automated systems to receive communication from service providers. Not all use call centers! Some literally use automated grievance redressal where service providers are asked to leave a comment through a form, or make a call to a third-party call center that routes calls to platform operators. This leaves the individual worker under a system of rules and regulations that are done through technological calculations (in a language they do not know) by a set of operators to whom they have no reach. These restrictions on agency and freedom compound with a lack of security offered from full-time employment can leave service providers wholly at the risk of company culture. Note in our database how companies explain their version of ‘task rejection’.

Platform Economics

Investors – whether friends and family, private equity, or venture – also dictate the terms by which companies scale, and have to return their investments. This can squeeze platform operators to create large incentives to get service providers to join their platforms and then once they are hooked (drivers often buy cars on EMI to drive for Ola cabs and are dependent on the rides that Ola cabs can get them to pay off their loans) companies drop incentives forcing drivers into ugly dependencies that force them to work over 16 hours a day barely making enough to cover daily living expenses.

Over the course of the platform economy maturing, investors have played a big role in dictating changes in company structure, management, mergers and so on.

 

Automation

In addition, platform companies strategize how much of their businesses are determined and conducted by automated processes. “Algorithmic management” is a key ‘labour innovation’ that on-demands rest their value on. Uber is only “efficient” because of its matching algorithm. When a platform system matches a driver to a customer it acts as a ‘manager’ managing a driver’s time and tasks. This matching could have been done by a human manager at a taxi stand, or a centralized booking agency for Livery Cars. What different kinds of outcomes for work can come from having an algorithmic system or having a human manager? What does this presence of  human intervention do to questions of discrimination, fairness, exploitation and so on?

This balance – of algorithmic management and human management – is key to platform strategy for affecting service providers’ working conditions.

 

This balance – of algorithmic management and human management – is key to platform strategy. It costs platform companies lots of money, changes the way they set up their firms, who they hire, rules that make platforms play favorites to some users and not others. Platform firms have found a way to take some parts of delivering a service or product out of the hands of humans rather to automate parts of this. The technology used in enabling machines to take certain decisions is at the core of the business offering that platforms bring. A key, easy to read note has been put together by scholars at Data and Society, read it here.

This can impact whether a platform service provider is able to call up a human in a platform firm, a professional that manages the day to day operations of the digital economic space, to resolve an issue, or whether a platform firm only notices an issue exists if over 1000 service providers complain about. In the latter scenario, the firm has ‘too many’ service providers working remotely to monitor individual complaints so waits till an issue reaches a ‘critical mass’ before addressing it.

These relationships formed on economic transactions are enacted through automated processes – precisely what the ‘innovation’ of labour platforms are said to be. This ability to automate parts of the labour process have inspired new ways of managing a workforce, structuring firms, and figuring out what the expensive and cheap parts of running a business are.

Use the company database to discern the factors that could impact this across individual firms.

 

Number of Active Users and Historically Listed Users

Platforms strategize to have the largest market share. This is key for platforms to be successful - to have the most customers and most service providers – so often, reporting on these numbers (in media, academia) is severely curtailed since platforms guard these numbers. It is proof of their success or failure. The data most platforms put out there indicates the most users they can say have used their platform historically, that is, over time. So when Ola cabs says they have 300,000 drivers on their platform that doesn’t mean you’ll open the app to a world of 300,000 active drivers around the country.

The data most platforms put out there indicates the most users they can say have used their platform historically, that is, over time.

 

These strategies are proprietary to platforms since success and failure are determined by these. The database of Platform Strategies for platform companies operating in India gives first-cut empirical insights into these strategies. Typically, reporting on platform strategy comes from management studies, business reporting, and information studies spanning the economics and the technology side of platforms. You can find some of those resources in this section.

This database of Platform Strategies for platform companies operating in India gives first-cut empirical insights into these strategies.

‘Platform work’ or ‘platform labour’ are undertheorized concepts that refer to the work that people do on digital platforms, or the people that labour on digital platforms. Most service people on platforms are offered ‘work’ without jobs, or working within the framework of ‘full employment’. This means that platform companies divorce themselves of many payouts, benefits, and responsibilities that come with full time employment – like being able to take your employer to court if they don’t hold up thereby bypassing another avenue to fairness, and decent working conditions. Courts worldwide have tried to pass new laws, subsume platforms under existing employment law to find a way to deliver better working conditions to service providers.

The terms that reflect the platform-service provider relationship fall prey to corporate marketing strategies.

If a platform does not want to ‘employ’ a service provider then they cannot call them employees or workers. They call them a whole host of things, the most popular example being the Uber ‘driver partner’. The terms that reflect the platform-service provider relationship fall prey to corporate marketing strategies.These terms hide the nature of relationships created between the people who make rules on the marketplace and those who have to follow those rules.

The terms vary across platforms. Take a look at the different ways in which platform firms operating in Bengaluru classify their service providers.