April 27, 2017

Private: Platforms, Gigs, and Market Power

2017 ACS National Convention, Orly Lobel

*This piece is part of the ACSblog Symposium: 2017 ACS National Convention. The symposium will consider topics featured at the three day convention, scheduled for June 8-10, 2017. Learn more about the Convention here

by Orly Lobel, Professor of Law, University of San Diego School of Law

I am pleased to be a speaker at the ACS 2017 National Convention, which takes place in June 8-10 in Washington D.C. My talk, which will be part of a panel discussion entitled A Second Gilded Age? The Consolidation of Wealth and Fracturing of Employment, will bring together several lines in my research: the gig economy, platform regulation and governance, human capital, intellectual property and antitrust law. In April 2016, I had the honor to deliver the 12th Annual Pemberton Lecture at the 9th Circuit Court of Appeals. I delivered a paper called The Gig Economy and the Future of Employment and Labor Law, which was later published in the USF Law Review and can be read here. I ask: What is the future of employment and labor law protections when reality is rapidly transforming the ways we work? What is the status of gig work and what are the rights as well as duties of gig workers? I propose four paths for systematic reform, where each path is complementary rather than mutually exclusive to the others.The first path is to clarify and simplify the notoriously malleable classification doctrine; the second is to expand certain employment protections to all workers, regardless of classification, or in other words to altogether reject classification; the third is to create special rules for intermediate categories; and the fourth is to disassociate certain social protections from the work. As the economy becomes more automated and work becomes increasingly contingent and fractured, I urge us to think about the distribution of wealth and the organization of human activities outside of the traditional lens of corporate employment. In particular, we need to understand the new challenges workers face with regards to job mobility, ownership over their human capital, and their ability to compete with former employers. In my book, Talent Wants to be Free: Why We Should Learn to Love Leaks, Raids, and Free-Riding (Yale University Press), I argue that under the radar, through contractual arrangements between employers and employees, we have subverted the balance struck in intellectual property – a problematic contemporary ecology that fences employee knowledge and chills competition.

One of the important ways to begin thinking of these issues, complementing the call to update our employment and labor laws, is to examine competition law and market power in the ever expanding platform economy. In my recently published article, The Law of the Platform, Minn Law Review 2016, I offer metrics for policy makers to consider this foundational inquiry: Do the regulations we have carry over to the platform economy? By unpacking the economic and social drives for the rise of the platform economy, the article develops a new framework for asking whether digital disruptions comprise loopholes akin to regulatory arbitrage, most prominently studied in the tax field, circumvention akin to controversial copyright protection reforms, or innovation-ripe negative spaces akin to design-around competition in patent law. Millions of people are becoming part-time entrepreneurs, disrupting established business models and entrenched market interests, challenging regulated industries and turning ideas about consumption, work, risk and ownership on their head. Paradoxically, as the digital platform economy becomes more established, we are also at an all-time high in regulatory permitting, licensing and protection. The battle over law in the platform is therefore both conceptual and highly practical. New business models such as Uber, Airbnb and Aereo have received massive amounts of support from venture capitalists but have also received immense pushback from incumbent stakeholders, regulators and courts. This article argues that the platform economy is presenting not only a paradigm shift for business but also for legal theory. The platform economy does not only disrupt regulated industries but also demands that we inquire into the logic of their correlated regulations. It requires that we go back to first principles about public intervention and market innovation. Bringing together these different bodies of law, the article offers a contemporary account of the relevance of regulation for new business models. The article concludes that, as a default, legal disruption by the platform economy should be viewed as a feature rather than a bug of regulatory limits. Kenneth Bamberger (University of California, Berkeley) and I are currently co-authoring a follow up paper entitled Platform Market Power where we look specifically at antitrust law and competitiveness in relation to the digital platform. I look forward to an engaging conversation as we delve into these important and highly dynamic issues of 21st century fairness, distributive justice and economic policy.