05/11/2015 - 12:54

Vive la revolution

05/11/2015 - 12:54


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It’s not often that a breath of fresh air wafts out of Europe, but last night was a time for a few revolutionary comments about business, specifically that ride-sharing service Uber is ‘not a problem, just a new business model’.

UBER THAT: Senior EU officials have said rather than Uber posing a ‘problem’, it is simply just a new business model.

It’s not often that a breath of fresh air wafts out of Europe, but last night was a time for a few revolutionary comments about business, specifically that ride-sharing service Uber is ‘not a problem, just a new business model’.

Coming from two of the highest placed officials in the European Union, that remark could be the first step in Uber winning region-wide acceptance, and another step in governments being forced to accept that the internet revolution is unstoppable.

Elzbieta Bienkowska and Jyrki Katainen are European commissioners with responsibility, respectively, for industry and investment; and while they might have a tough job convincing some of their fellow lawmakers in Europe about Uber, they have certainly kicked a hornet’s nest.

Ms Bienkowska, a former deputy prime minister of Poland, was the most outspoken in defence of Uber, comparing opposition to its success as equivalent to opposing the development of printing presses in Medieval times.

Mr Katainen, a former PM of Finland, linked Uber to the wider phenomenon known as the ‘shared economy’, a development further highlighted by the millions of people who choose to rent-out assets they own to create a new business, with Airbnb one of the best known.

“The sharing economy is a growing economy,” Mr Katainen said. “It will offer a huge amount of new jobs and investment.”

And that’s the critical point. Uber, Airbnb and other businesses, which involve individual owners of cars and houses using those assets to earn income, are growing, whereas many older businesses are not.

Why the shared economy is growing is a deep topic, but the key seems to be this simple – because it is internet powered.

There are countless other examples of how everything is being changed by the internet and the way in which it connects people and business.

Social media is one example. Grocery shopping with home delivery is another, but the one I love most is the fact that even stodgy old Australian Post offers a true cutting-edge internet service to anyone who buys an international roaming sim card for their mobile phones, with the service provider being located in Estonia.

The problem Perth’s taxi drivers are having with Uber is no different to the problem their colleagues in Paris or London are having, or the problem small hotel owners are having with Airbnb.

Looked at from one direction, the protests being mounted by taxi and hotel owners is understandable. They are being hurt and do have a case to argue with government over the cost of taxi licences and the tax they have to pay on earnings, which some participants in the shared economy are currently avoiding.

But the real argument any of those losing out have with the rise of the shared economy is not with emerging competitors, it’s with government for failing to recognise that business models as we have known them for 100 years (and more) are changing.

Western Australia’s best, or is that worst (?), example of government failing to adapt to change is in potato marketing and ludicrous laws dictating how many potatoes a farmer can grow.

Arguments in support of licensing potato growers and taxi owners include claims of public health and safety, just as they do for hotel operators; though all of those issues can be covered in ways other than by government generating a piece of paper that authorises someone to do something while banning others from doing the same thing.

Whichever way you want to argue the matter, either for or against Uber, Airbnb, and other shared services, the point is that they are being driven by a combination of factors that start with the internet, which has connected suppliers and customers and then rolls on to questions of service quality and competitive pricing.

What taxi and hotel owners, along with government, are being forced to recognise is what Ms Bienkowska and Mr Katainen have identified; that is the futility of standing in the way of a business revolution that is being embraced by the vast majority of people.

As Ms Bienkowska said: “Maybe it’s a stupid comparison, but it’s like fighting with print in Medieval times”.

Someone should tell her that it’s not actually a stupid comparison; it’s totally correct. A new business model has evolved and it is revolutionising the business world – a fact government will be forced to accept, sooner or later.


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