The Sharing Economy Doesn't Need to Be Full of Monopolies

  • 2015-12-14
  • The Alantic

The so-called sharing company has made it possible to hail a private taxi via a smartphone and book a room in someone’s private home, and these are the early days: So much more is ready to be turned into a product and sold, via the power of an app.

For partisans of the sharing economy, the result of this privatization will be a dynamic mix of corporate sovereigns, all jostling to better serve the producers and consumers on each side of their platforms. But is competition really all that likely for the major platforms? Things don’t look so good for Lyft, the Uber also-ran, despite what a series of highly visible attacks staged by Uber managers might imply. When a monopolizing firm starts conquering city after city, it looks a bit more like a colonizer than a company competing with other companies.

That would matter less if market share were truly meritocratic. But it’s often the luckiest or most cutthroat firms that triumph. As the sage in Ecclesiastes puts it, “The race is not to the swift or the battle to the strong.” The first platform to gain critical mass can leverage that advantage into massive financing, which in turn can scare away competitors. Matters are particularly dire in two-sided markets such as search or ridesharing, where consumers are often in a rush and don’t care to learn multiple user interfaces so they can find the best deal among multiple providers.

Image Credit: leeroy