Pluralistic: 02 Jun 2021

Originally published at: https://pluralistic.net/2021/06/02/arbitrary-arbitration/


Today's links



NYC's driver-owned Uber alternative (permalink)

New Yorkers have a new ridehailing alternative to Uber: The Drivers Cooperative is a driver-owned, app-based ride-hailing service that pays drivers more, charges riders less, and pays out any profits to driver-owners as periodic dividends.

https://www.nytimes.com/2021/05/28/technology/nyc-uber-lyft-the-drivers-cooperative.html

Platform cooperativism is a powerful antidote to app-based gig work: a way to provide customers with the convenience that made app-based services so popular while putting workers in control of their days, schedules and working conditions.

It's particularly buoying to see a platform co-op challenge Uber, a company that started as a way to funnel Saudi royals' billions into a bid to dismantle public transit and worker protections in a single fell swoop.

Uber is especially vulnerable. It's losing billions of dollars, and it had to pay a group of suckers $400m to relieve it of its failed, $25b self-driving car unit whose product couldn't manage a single mile on its own.

https://pluralistic.net/2021/02/16/ring-ring-lapd-calling/#uber-unter

Uber's main project has always been regulatory, not technological: that's why it funneled hundreds of millions of dollars into passing California's Proposition 22, a law that legalized worker misclassification and banned unionization.

After years of losing billions, Uber's original investors exited through an IPO that brought in suckers who bought in on the premise that a pile of shit as big as Uber must have a pony underneath it somewhere.

Now those investors have to figure out how to recoup the billions that Uber squandered on subsidizing rides, suborning regulators, and staging elaborate long cons like its self-driving car unit.

It must pay drivers less and charge riders more than a new market entrant that has none of this baggage. That's why a drivers' co-op is such a big move.

But I fear that Uber has one enduring advantage that the drivers will struggle to overcome: the network effect.

Drivers and riders are already overwhelmingly on Uber. If you're a rider, trying to hail a Drivers Coop car is likely to result in a longer wait because fewer drivers have the app installed. So fewer riders will try, and drivers won't have an incentive to sign up.

Both critics of tech monopoly and apologists for it zero in on this network effect as the key driver of market concentration – but this analysis misses a far more important factor: switching costs.

https://onezero.medium.com/tech-monopolies-and-the-insufficient-necessity-of-interoperability-aafba94f1eb3

It's easy for a driver to drive for Uber and the Drivers Coop (just as many drivers already keep both Lyft and Uber running simultaneously), but it's extremely hard for a rider to send out ride-hail requests to multiple companies at once.

That's not because of any technological barrier – it's trivial to build a service that hails your driver as an Uber, then automatically checks whether they have Drivers Coop running as well, and, if so, cancels the ride and rebooks it as a Coop ride.

https://locusmag.com/2019/01/cory-doctorow-disruption-for-thee-but-not-for-me/

That would be fully in keeping with Uber's fiction that drivers are "independent contractors" and not employees, but Uber's got a powerful tool to prevent drivers and customers from evading high switching costs.

Uber and other tech giants use "IP" – a cluster of laws best understood as "any policy that allows me to control the conduct of my customers, competitors and critics" to criminalize the "disruption" they laud – if it's directed at them.

https://locusmag.com/2020/09/cory-doctorow-ip/

Thus a meta-ride-hailing app would face claims under Sec 1201 of the DMCA (for bypassing the DRM on the Uber app); CFAA (for violating terms of service) and maybe even tortious interference (for allowing drivers to get a better deal).

I will definitely use the Drivers Coop the next time I'm in NYC and I hope you will too. But if platform coopertavism is to take hold, we need ways to lower the switching costs of using a co-op over a monopolist. We need interop.

https://www.drivers.coop/



Amazon running scared from arbitration at scale (permalink)

"Binding arbitration waivers" started out as a way for giant companies going into business with one another to avoid costly litigation by agreeing in advance to have a private arbitrator hear their disputes.

But Federalist Society judges, led by Antonin Scalia, spent a decade dismantling protections that ensured that binding arbitration was only used between equals, and not forced upon workers and consumers.

https://web.archive.org/web/20160322142114/https://www.acslaw.org/sites/default/files/Arbitration_as_Wealth_Transfer_1.pdf

The result was a massive wealth-transfer to corporations, who could defraud and maim with impunity, safe in the knowledge that their victims had signed away their right to sue, especially through class action.

These victims would be limited to filing individual cases, each one confidential and non-precedential (meaning that a loss to one victim didn't pave the way to losses to the rest), heard by a private "judge" who depended on the company for their salary.

The plan worked…until it didn't. In 2018, 12,500 California Uber drivers filed arbitration claims against the company, putting the company on the hook to find 12,500 arbitrators and pay them $1500 retainers.

https://www.reuters.com/article/legal-us-otc-uber/forced-into-arbitration-12500-drivers-claim-uber-wont-pay-fees-to-launch-cases-idUSKBN1O52C6

Uber scrambled to fight the mass arbitration claims, even getting Keller Lenkner, the firm behind the claims, disqualified. It became clear that the point of arbitration wasn't to create an alternative justice system – but to have no justice system.

https://www.reuters.com/article/otc-uber-frankel-idUKKCN1P42OH

The California Uber drivers mass-filings didn't cool the corporate world's love-affair with arbitration. By 2020, 81% of Fortune 100 companies were routinely forcing arbitration waivers on workers and customer.

https://pluralistic.net/2020/02/24/pluralist-your-daily-link-dose-24-feb-2020/#iamthelaw

All those waivers were an irresistible target, and an alliance of Silicon Valley law firms and tech firms found new ways to automate mass-filings against companies who used arbitration waivers.

https://pluralistic.net/2020/04/11/socialized-losses/#justice-restored

It's a kind of denial-of-service attack aimed at the flimsy pretense that companies use arbitration to help everyone resolve their disputes fairly and amicably – revealing the true intent: to deny justice altogether.

https://www.nytimes.com/2020/04/06/business/arbitration-overload.html

Now, arbitration is in retreat, thanks to the automation of arbitration claims. This week, Amazon quietly amended its Alexa terms of service to REMOVE the forced arbitration clause.

https://www.bloomberg.com/news/articles/2021-06-01/amazon-to-let-customers-sue-after-thousands-of-alexa-complaints

Why would Amazon do this? Because its creepy Alexa surveillance devices have generated thousands of claims from people who were horrified to learn their Alexas had been sneakily recording them and Amazon had shared those recordings with third parties.

https://www.bloomberg.com/news/articles/2019-04-10/is-anyone-listening-to-you-on-alexa-a-global-team-reviews-audio

(Not just Amazon – every smart speaker does this. Don't buy smart speakers. Throw your smart speaker away. Seriously.)

https://www.bloomberg.com/news/features/2019-12-11/silicon-valley-got-millions-to-let-siri-and-alexa-listen-in

Now, Amazon is being drowned in arbitration claims, and it is begging for mercy – please, it's saying, please SUE US. Stop trying to arbitrate!

It's delicious.

(Image: Tim Evanson, CC-BY-SA)



How the Dutch helped CBS cheat on its taxes (permalink)

When you think about tax-havens, you probably think about Caribbean "treasure islands," the ex-colonies whose erstwhile conquerors set them up as dependent financial secrecy jurisdictions whose economies were doomed to be stunted forever.

But in truth, the most harmful tax-havens are "onshore-offshore," notorious jurisdictions like Delaware, Nevada and Wyoming, or, in the EU, Malta, Luxembourg, Cyprus and the Netherlands.

The Dutch are among the most enthusiastic hosts to financial crimes. That's how Uber cheats on its taxes: it has 50 Dutch shell companies that it launders its money through.

https://pluralistic.net/2021/05/13/uber-cheats/#50-companies

They document the tissue-thin pretenses that Dutch regulators tolerate, like "selling" its IP to a Dutch subsidiary financed with a $16b "loan" from a Singaporean subsidiary, garnering 20 years' worth of $1b annual tax credits.

Uber may be an aggressive user of the Dutch system, but they're not the only one. Viacom-CBS evaded a $4b US tax-liability by pretending to license its IP to shell companies in "Barbados, the Bahamas, Luxembourg, the Netherlands, and Britain."

https://gizmodo.com/viacomcbs-avoided-nearly-4-billion-in-tax-on-franchise-1847011793

While this was a global affair, the Netherlands were central to the con, because of its 0.8% tax rate on foreign distribution revenues.

https://www.somo.nl/keep-watching/

CBS jealously defended the pretense that a series of numbered companies with few (or zero!) employees were actually conducting its licensing and distribution business, firing at least one exec who tried to blow the whistle on the scheme.

https://www.nytimes.com/2021/06/01/business/media/viacom-cbs-tax-scheme.html

The billionaire Redstone family – who controlled the company through most of this activity and whose scion, Shari Redstone, is its current CEO – dispute the careful, well-documented claims in the report, though they offer no evidence to contradict them.

(Image: Adrien Coquet/Noun Project, CC BY, modified)



This day in history (permalink)

#15yrsago JPEG patent invalidated http://www.pubpat.org/Chen672Rejected.htm

#15yrsago Canadian copyright agency launches kids’ propaganda campaign https://web.archive.org/web/20060602044638/http://www.captaincopyright.ca/Default.aspx

#10yrsago The Red Market: book on the criminal trade in orphans, organs, bones, skin, eggs, hair, and other human flesh https://memex.craphound.com/2011/05/31/the-red-market-book-on-the-criminal-trade-in-orphans-organs-bones-skin-eggs-hair-and-other-human-flesh/

#5yrsago Ronald Reagan was Donald Trump, until he was president https://nymag.com/intelligencer/2016/05/ronald-reagan-was-once-donald-trump.html

#5yrsago Every Heart a Doorway: Seanan McGuire’s subversive, gorgeous tale of rejects from the realms of faerie https://memex.craphound.com/2016/06/02/every-heart-a-doorway-seanan-mcguires-subversive-gorgeous-tale-of-rejects-from-the-realms-of-faerie/

#5yrsago Class action: publishers paid writers “sale” royalties on ebooks whose fine-print says they’re “licensed” https://www.copylaw.org/2016/05/simon-schuster-hit-with-ebook-royalties.html

#1yrago Big Tech distorts our discourse https://pluralistic.net/2020/05/29/mind-control-skepticism/#tech-unexceptionalism

#1yrago Teardown of an "anti-5g" USB stick https://pluralistic.net/2020/05/28/holographic-nano-layer-catalyser/#conspiragrifters



Colophon (permalink)

Today's top sources: Slashdot (https://slashdot.org/).

Currently writing:

  • Spill, a Little Brother short story about pipeline protests. Yesterday's progress: 265 words (3382 words total).
  • A Little Brother short story about remote invigilation. PLANNING

  • A nonfiction book about excessive buyer-power in the arts, co-written with Rebecca Giblin, "The Shakedown." FINAL EDITS

  • A post-GND utopian novel, "The Lost Cause." FINISHED

  • A cyberpunk noir thriller novel, "Red Team Blues." FINISHED

Currently reading: Analogia by George Dyson.

Latest podcast: How To Destroy Surveillance Capitalism (Part 06) https://craphound.com/nonficbooks/destroy/2021/05/10/how-to-destroy-surveillance-capitalism-part-06/
Upcoming appearances:

Recent appearances:

Latest book:

Upcoming books:

  • The Shakedown, with Rebecca Giblin, nonfiction/business/politics, Beacon Press 2022

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