Racism Is Built Into Sharing Economy, and Startups Are Doing Little About It

Lyft's pink car mustache

From MarketWatch:

By Caitlin Huston

Racism has infected the platforms of some of Silicon Valley’s tech darlings, and experts say the business models of the “sharing economy” could keep startups from addressing the issue.

Studies have tracked racial discrimination in car-sharing services such as Uber Technologies Inc. and Lyft Inc., as well as on home-rental sites like Airbnb, as part of a growing body of research finding bias among contractors and hosts. While the racism may be enacted on an individual basis, experts argue that the independent-contractor model of the sharing economy enables it, and that these cases could force these unicorn startups to dramatically change their business models if they try to address it.

The most recent study, which collected data from close to 1,500 app-hailed trips in Seattle and Boston, found that African-American customers using ride-hailing apps faced longer acceptance times—the time before the driver accepts a passenger’s ride request—and longer wait times after being accepted on Uber specifically. The findings mirror a study on Airbnb that found greater discrimination against guests who had names typically thought to belong to African-Americans. 

The authors of both studies suggest several changes, mostly focused on removing passenger names and pictures from the apps, to address the behavior of people working on the platform. However, that is where the difficulty lies—by making changes meant to address racism exhibited by drivers and hosts, such businesses could threaten the model on which they have based their businesses.

Uber and Lyft call themselves transportation network companies, meaning they act as just a platform to connect users with drivers, rather than a transportation company that has ownership over its drivers. Both have faced lawsuits calling for drivers to be considered employees. Airbnb says it is just a platform that connects hosts and users.

This means that as “aggregators,” Uber, Lyft and Airbnb may not be subject to Title II of the Civil Rights Act of 1964, which prohibits discrimination or segregation of any kind by a business, said Nancy Leong, an associate professor at the University of Denver Sturm College of Law.

“The laws that we have right now are not a perfect fit for what’s going on in the sharing economy,” Leong said.

If the companies attempt to enforce a system that attempts to control the decisions people using their platforms make, they may have to classify them as employees because they would take on “employer-like responsibility,” said Max Wolff, market strategist at 55 Capital Partners. That seems unlikely, as Uber and Lyft have already fought lawsuits seeking to classify drivers as employees.

“None of these companies are going to go out of their way to reclassify anyone, ever,” Wolff said.

The platforms have taken minor steps to address issues of racism. Airbnb has increased the instant book option, in which hosts do not decide who to accept, and said it would work on the diversity of its own staff following last December’s study. Uber’s app does not allow the driver to see a passenger’s name until he or she accepts the ride and has a maximum cancellation rate for drivers that varies based on the city.

“We believe Uber is helping reduce transportation inequities across the board, but studies like this one are helpful in thinking about how we can do even more,” Rachel Holt, head of North American operations at Uber, said in a statement in response to the study.

In the case of Lyft, which the study’s authors note may have a different matching algorithm than Uber, the company said it would consider the study findings.

“We intend to use this opportunity to jump-start a dialogue within the Lyft community on these issues. Inclusivity has always been a core part of who we are, and we condemn discrimination in any form,” said Adrian Durbin, a spokesman for Lyft.

While acting as independent contractors, these workers are displaying individual racist tendencies that are not necessarily indicative of the company, the ride-hailing study authors note. Still, Leong said she believes the companies can be partly to blame for not taking further steps to address racism on their platforms.

“I think there is certainly blame to go around,” Leong said. 

While trying to find a way to change the inherent issues in the system while not changing classification, or hoping the storm blows over, the companies could alienate customers who expect service without a side of bias.

“They have to professionalize up to the minimum standard that their customers demand,” Wolff said. 

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