The politics behind the platform economy : the political-economic impact of Uber and Airbnb in Amsterdam

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The Politics Behind the

Platform Economy

The Political-Economic Impact of Uber and Airbnb in

Amsterdam

Just van den Hoek Supervisor: dr. J.G.W. Blom Second reader: dr. P. Schleifer

August 2019

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1. Introduction

It is often asserted that the digital revolution, which started some decades ago and seems to

intensify continuously, is and will be by far the most disruptive revolution mankind has experienced. This seems to be an easy and safe statement to make, because the scope of the digital revolution, if not specified, is immensely broad and therefore its potential implications are too. Breaking down the digital revolution into distinct phenomena will help to assess its disruptive potential. One of the developments which ‘the digital revolution’ encompasses is the emergence of the platform economy. More and more people start to become familiarised with the platform economy, as some of the leading platform companies have built up a stable, growing consumer base worldwide. The aggregated micro level consumption inherently translates into broader societal, political and economic effects.

The regular media has paid considerable attention to the emergence of the platform economy. The business model of platform companies is often portrayed as controversial, and the full range of implications of the platform economy is yet to be revealed. Nonetheless, some of the effects the platform economy provokes are already felt worldwide, both in the societal as well as in the economic sphere. One of these effects is closely associated with the globalisation of tourism, as the hospitality industry is one of the areas in which the platform economy leaves its mark. Sometimes it is stated that the platform economy facilitates the globalisation of tourism, which consequently results in serious resistance by affected citizens. The societal response to the platform economy in Amsterdam seems to be no exception to this trend. While public debate can be heated on the emergence of the platform economy, there is currently a lack of scientific knowledge about its potentially significant effects. Therefore, this research poses the following question, in order to address the rise of the platform economy from a political-economic perspective: ‘In what ways does

the emergence of the platform economy impact on the political economy of markets?’

This question aims to address two distinct types of effects. The first of these are the effects of the emergence of the platform economy on the regular framework of policymaking, in which platform companies may have different interests than other, more established companies in specific industries. The second, and perhaps more striking set of effects refers to the fact that platform companies may catalyse a structural change in the policymaking process, due to their innovative business models. As will become clear, commodification plays a central role in the operations of platform companies, which results in the introduction of new types of actors whose interests

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policymakers have to take into account when formulating policy. Essentially, the platform economy has the potential to effectively change what the market is, which subsequently impacts upon the political sphere.

The research question breaks down into three sub-research questions. The first is: ‘Who are the key

actors in the political economy of the transportation and hospitality industry and what are their interests?’ In the chapter on research design, the reasons for scrutinizing the transportation and

hospitality industry will be given. This question aims to provide an overview of the key actors within the respective industries and their interests. Actors are considered as ‘key actors’ if it can reasonably be expected that they have substantially influenced the policymaking process. The logic here is as follows. Actors representing a broad base of interests will, hypothetically, be more successful in engaging with policymakers. The analysis will therefore revolve around the views of actors who are expected to be directly involved in the policymaking process, such as platform companies,

established companies, workers, consumers and groups representing individuals who are active on the platforms. This sub-research question also addresses the connections of the interests of the actors with specific policy issues.

The second sub-research question is: ‘What have been the most politically salient issues regarding

the emergence of the platform economy in the transportation and hospitality industry?’ Previous

research on the political dynamics surrounding the platform economy has emphasized that different actor constituencies mobilize around different policy issues, which subsequently has an impact on the policymaking process (Thelen 2018: 941). In other words, the rise of the platform economy might make new issues salient, which is related to the changes in the market the platform economy

provokes. This draws attention to the fact that it is not only crucial to provide an overview of the relevant actors involved and their interests, but also on the way in which public discussion has played a role in the policymaking process. Therefore, this section revolves around the question which issues regarding the platform economy have been the most politically salient.

The first two sub-research questions serve as a stepping stone for the third sub-research question, which is as follows: ‘How is the policymaking process on the platform economy shaped in the

transportation and hospitality industry and who benefits and loses from the resulting governance pattern? ’ This question firstly addresses the way in which different interests of different actors

within the transportation and hospitality industry impacted upon the regulatory process and outcome. It is clear that there will always be certain actor groups who benefit from a governance pattern and actor groups who lose. In this sense, the policymaking process can be conceived of as a

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zero-sum game. In addition, an assessment is made about the role varying levels of political salience of different policy issues have played in the process of policymaking. Further, the way in which the emergence of the platform economy structurally impacts upon the policymaking process is

discussed. Subsequently, the market dynamics in the respective industries under scrutiny are reflected upon.

The three sub-research questions altogether generate sufficient information to answer the main research question. It will be argued that the emergence of the platform economy introduces a new layer of market activity to the existing market realm. Consequently, distinctive policy issues become salient, around which new types of actors emerge that are introduced to the political sphere, which impacts upon both the process and the outcome of policymaking. Moreover, the extension of the market realm is exploited by the citizens who are active on the platforms, whose interests need to be taken into account in the policymaking process by political authorities.

This research may provide a more nuanced understanding of the implications of the operations of platform-based companies, as they are regularly subject to a range of allegations by the media (de Vries 2019a). One of the most commonly voiced criticisms is that platform-based companies operate outside legal frameworks. For engaged citizens who have only become familiar with the platform economy through the media, the research could therefore shed light on how the platform economy operates, both inside and outside of legal parameters. In a broader sense, the research could provide a better understanding of the plausibility of the arguments posed at either side of the societal debate concerning the effects of increasing tourism in Amsterdam. For some, increasing tourism, which some aspects of the platform economy inevitably attract, is something to embrace. Others are eager to point out that Amsterdam is set to become the next Venice, where locals are crushed by the amounts of tourists coming in each day. The research may help to judge whether the platform economy is a curse or a blessing in light of these debates regarding tourism in Amsterdam. The paper proceeds as follows. In the next chapter, the platform economy will be conceptually clarified and an overview of its most important implications will be provided. Moreover, the ways in which political salience and public opinion impact on policymaking processes are reviewed.

Subsequently, the methodological choices underlying the empirical research will be justified. In this chapter, a reflection on case selection and data collection is given. Afterwards, the empirical work of this research is carried out. First, the relevant actors and their interests will be discussed, after which the most salient policy issues will be described. Finally, the process and the outcome of policymaking on the platform economy in the transportation and hospitality industry are discussed. The paper

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concludes by formulating an answer to the overall research question.

2. Theoretical framework

In order to be able to understand how the platform economy impacts on the political economy of markets, it is crucial to know how the platform economy can be conceptualized. The first section in this chapter therefore aims to conceptualize the platform economy and reviews the literature on its economic and societal implications. Moreover, a framework for understanding the policy issues arising from the emergence of the platform economy is devised. The link between political salience, public opinion and policymaking processes in the context of the platform economy is subsequently provided.

2.1 The platform economy: conceptual clarification, implications and policy

issues

Capitalism, as the fundamental organizing model for the economy and society as a whole, has evolved over time throughout modern history. This evolutionary character of capitalism has been masterfully described by Schumpeter, who points out that capitalism as a system can only be maintained by means of continuous innovation. Innovation has the potential to ‘revolutionize the economic structure from within, incessantly destroying the old one, incessantly creating a new one’ (Schumpeter 1943: 82-83). This process is referred to as creative destruction, and the most common way to analyse this concept is by highlighting emerging forms of competition. Transformative, competitive pressures may be catalysed by different sources, of which innovative individual

companies are one example. They may carry the potential to alter existing economic structures and create new ones.

One of the emerging forms of competition with the greatest potential to alter and create economic structures is the variety of developments commonly categorized as belonging to the ‘platform economy’ (Kenney and Zysman 2016: 62). Most empirical examples that are associated with the platform somehow provide services or goods through a technology-infused platform. Anwar (2018: 59) adds that both firms and private individuals interact through platform-based exchange, while Tham (2016: 394) emphasizes the informal character of the activities carried out. This latter aspect makes it rather difficult for tax authorities to keep track of the activities of platform companies, which negatively impacts on the amount of taxes that can be collected.

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The truly Schumpeterian potential of the platform economy, spearheaded by a limited number of small companies, is underlined by the fact that its global market size has grown from $4.3 trillion in 2016 to a staggering $7.18 trillion by the end of 2018 (Consultancy.org 2018). Even though this is a rough estimate, complicated by measurement issues which arise from debates about exact definitions of the platform economy, it shows that the size and growth of the platform economy is wholly compatible with the Schumpeterian notion of innovation, which creates new markets and profoundly changes existing economic structures . There is already tentative evidence that stakeholders in some sectors become marginalized due to the disruptive behaviour of emerging market players active in the platform economy (Tham 2016: 403). For example, in the transportation industry in Amsterdam, the established companies have lost 12 percentage points of market share to recent market entrants between 2013 and 2017. It is difficult to empirically verify exactly how large the proportion of platform-based companies is among the market entrants, but it seems that the emergence of the platform economy is largely responsible for this trend (Frenken et al. 2017: 20). Consequently, this process of creative destruction has profound implications for the political economy of markets.

The entrance of disruptive platform companies will inevitably have an impact on the policymaking process, as they change what the market constitutes. For example, the platform-based companies in the hospitality industry change the business of being a hotel. New businesses may alter the

distributional equilibrium of rents between different actors in the market, as a result of changed consumer demand or reductions in production costs due to technological progress. Regulation could then be a way to restore the distributional equilibrium, or to provide compensation to actors whose rents have diminished as a result of new entrants. This view of the regulator providing a ‘buffer’ to established companies in markets to absorb shocks brought about by new entrants assumes that self-interested, rational policymakers seek to maintain a politically optimal distribution of rents between different actors within the market (Peltzman 1989: 10; 16). In this process, policymakers use regulation to build as much political support as possible.

There is, however, a more fundamental, distinctive way in which the emergence of the platform economy impacts on the policymaking process, which arises from the business model employed by the associated companies. They are engaged in making commercial profits out of what are essentially private assets, just like any other business. The difference with more regular business models is that the private assets being exploited in the platform economy are not capital goods but consumption goods. Therefore, the emergence of the platform economy demonstrates a new feature of the business model employed by platform-based companies: the issue of commodification. Financial

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opportunities may arise from everyday practices and objects, which might not be immediately identifiable as representing economic value (Van der Zwan 2014: 102). In the platform economy, human activities become marketable through platform-based exchange (Kenney and Zysman 2016: 62). Since such exchange provides ordinary citizens with the opportunity to monetize their private assets and activities, this process of commodification requires a redefinition of the roles of

consumers, workers and owners compared to a more traditional political economic model of markets (Cheng 2016: 66).

Since individual owners can monetize their private assets by participating in the platform economy, they can build up revenue streams. In this situation, there is no direct involvement of companies needed for exchange anymore, since consumers can directly approach owners for services. The only way in which platform companies are involved is through the facilitation of exchange. In a more traditional political economic model, consumers approach companies for the provision of services, who then employ their workers to provide such services. In the platform economy, however, consumers directly approach (private) owners. Another crucial, simultaneous development that the platform economy introduces is the fact that private owners not only somehow take up the role of producer without any direct interference of companies, but also that these owners are usually consumers of the utilized good as well. Of course, this redefinition of the political economic model is, at best, a general description of the changing nature of producing and consuming which the platform economy introduces. In fact, there are important differences between the business models

employed by different platform-based companies. Still, this redefinition of the political-economic model points to the fact that regulation needs to address and respond to the changes in actor constituencies involved in the market.

The outcome of the commodifying aspect of the platform economy business model is currently that existing law is more often than not inadequately capable of addressing the activities of platform-based companies. In other words, the activities of the companies largely occur outside of existing regulatory frameworks, which is commonly pursued as a consciously formulated business strategy. In this way, platform-based companies can build up a solid consumer base, which can subsequently be used as political leverage if policymakers introduce compatible regulation (Thelen 2018: 938-940). It follows that traditional competitors, who are forced to operate within the existing legal frameworks, express grievances resulting from their perception that the emerging platform-based companies do not operate on a level playing field (de Vries 2009). The restraints experienced by policymakers to regulate the platform economy are further intensified by the relative advantage platform-based companies enjoy vis-á-vis regulators in the realm of technology. The fact that the platform economy

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business model is heavily reliant on fast-paced technological developments hampers the formulation and implementation of adequate laws. The current legal problems that are related to the rise of the platform economy have not only resulted in law avoidance in a general sense, but also in tax

avoidance (Murillo et al. 2017: 70). This is because platform-based companies are reluctant to share their data with tax authorities.

The nature of the platform economy business model, as well as its economic and societal

implications, give rise to a number of practical policy issues around which debates have emerged. Even though there is a general lack of knowledge in policy circles about such issues, academic attempts have been made to identify the set of relevant policy issues connected to the platform economy. Thelen (2018: 941-942) comes up with a number of policy issues around which debates have developed. The first of these relate to competition issues. As stated earlier, the question here is whether platform-based companies comply with existing rules and consequently whether they operate on a level playing field. Established companies in a range of sectors where the platform economy has emerged continuously cast doubts on the fairness of market activities carried out by their platform-based competitors. The second and third policy issue identified by Thelen involve employment and labour issues, as well as social policy. As has been hinted upon before, the emergence of the platform economy obscures the understanding of what an employment

relationship exactly constitutes. Since any such definition has implications for the legal and financial rights of workers, platform-based companies on the one hand and workers on the other hand do not share the same incentives for agreeing on a definition. This also explains why the social policy of platform-based companies, indicated by their (absence of) payments of social security contributions, is a heated policy debate connected to the emergence of the platform economy. Since these issues identified by Thelen are so closely connected, it may be appropriate to treat them as one single category, which deals with labour and employment issues.

The third policy issue concerns taxation policy. Since platform-based companies are reluctant to share their data with tax authorities, regulators are forced to search for ways to increase the tax contributions of platform-based companies. Thelen identified issues relating to consumer safety as a fourth policy issue around which debates emerged. Because the operations within the platform economy often involve peer-to-peer transactions without formal supervision, safety cannot always be guaranteed (Thelen 2018: 942). In other articles (Cheng 2016: 67; Kenney and Zysman 2016: 69) another policy issue that the emergence of the platform economy introduces is identified: the impact on local communities. Central to this debate is the question how private economic activity brought about by the platform economy, especially in popular tourist destinations, can be reconciled with the

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maintenance of local community identities. Especially the alleged nuisances in terms of noise and inappropriate tourist behaviour that the platform economy directly or indirectly brings to

communities is a core theme within this policy issue. This policy issue can be rather broadly

conceptualized, as the impact on local communities also includes the effects on the housing market. It is sometimes asserted that housing prices are on the rise in areas where the platform economy has attracted increasing numbers of tourists (Cheng 2016: 61). In sum, there are five major policy issues that have arisen from the emergence of the platform economy, which revolve around issues relating to: competition, labour and employment, taxation, consumer safety and what may most

appropriately be described as ‘social impact’.

2.2 Policy communities, interest groups and network

Apart from understanding the content of the policy issues most relevant to the platform economy, some theoretical insights about policymaking processes are necessary in order to grasp the impact of the emergence of the platform economy on policymaking. The concept of policy communities helps to shed light on the interaction between interest groups, politicians and civil servants. Interest groups are non-political actors, representing certain interests, which have the aim of influencing policy choices. Interest groups show, by definition, at least some level of internal organization (Dür and Mateo 2014: 1202). Policy community theory maintains that certain exchange relationships, primarily based on material interests, exist between interest groups, politicians and civil servants, which altogether account for the formulation of policies (Thatcher and Braunstein 2015: 769). Especially the exchanges flowing from interest groups to politicians are useful to consider, as interest groups provide policymakers with information on (segments of) public opinion. Meanwhile, they also keep their constituencies informed about the activities of politicians (Dür and Mateo 2014: 1205). In this way, interest groups are the linkage between the public and political authorities.

Networks also play a role in the exchange relationships that are the basis of policymaking within policy communities. Policy networks horizontally link all the different types of actors involved in policymaking. Therefore, the notion of policy networks stresses the relations and interactions between actors, which ultimately lead up to the formulation of policy. Mapping the actors involved in a policy process may in this way provide clarification of the relations between different actors (Thatcher and Braunstein 2015: 770). The relationships that exist are by no means only of a horizontal nature, as policymakers ultimately possess the authority to decide on the content of policy. To reveal the processes by which policymakers decide, which account for policy outcomes, it follows that studying the interactions between the interest groups and policymakers is crucial.

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The concept of policy networks also draws attention to the specific way in which networks of different actors may persuade policymakers to adopt certain policies through the mechanism of ‘priming’. This branch of theory assumes that policymakers are most often in a situation of uncertainty, where knowledge exchange and interest expression by interest groups helps policymakers to become familiar with policy issues. Within this context, priming refers to the mechanism by which interest groups convince policymakers of the set of relevant issues and positions through a number of communicative channels, such as press releases, articles and interviews (Thatcher and Braunstein 2015: 771). Ultimately, such priming activities are designed to encourage policymakers to adopt the preferred policy positions of interest groups. The platform economy is especially a policy field where priming may be a useful mechanism for interest groups to deploy, as the set of relevant policy issues related to the platform economy is largely unknown yet for policymakers.

It has been recognized that so-called ‘strategic frames’ can be used by actors to ‘make intentional decisions and choose between the available competing frames to pursue their goals’, which is most often exerting influence on policymaking processes (Dombos et al. 2012: 5). The deliberate usage of framing and priming as a political strategy deployed by interest groups serves to build public support for a certain outcome. Consequently, the increase in public support enjoyed by interest groups may be reflected by an increase in political support by policymakers for a specific outcome (Terkildsen et al. 1998: 47). Through scrutinizing the frames used by actors in their mutual interactions, it becomes possible to trace political decisions back to these inputs of interest groups.

Interest groups can increase their political leverage, through building up more and more public support, when they generate so-called ‘collective frames’. Such frames are much more likely to have an impact on the policymaking process than frames constructed by individual actors. This is because collective frames become better connected to policy issues as they are more frequently pronounced. Additionally, a high degree of internal consistency within collective frames has substantial potential to push policymakers to make what the interest groups perceive as the most appropriate and preferred decision (Junk and Rasmussen 2019: 485-486).

Since the connection of interest groups within policy networks is central to policymaking, network analysis can be coupled with collective action frameworks. Not only can this help to illuminate the connections between different actors, it also scrutinizes how group nature and size may influence the relations within policy networks. Collective action theory asserts that large groups, composed of

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rational individuals, are by definition ill-equipped to achieve collective goods, as rational individuals are inclined to free-ride on the expected efforts of others. This results in the theoretical situation that ultimately no effort is made to bring about the collective good. As long as no incentives are put into place that ensure participation by group members, this situation will persist. Moreover, large groups suffer from a heterogeneity of interests, which constrains the ability to express common interests (Olson 1982: 17-23).

By contrast, if groups are relatively small, it becomes more plausible that they will be able to organize themselves coherently. This is because reaching consensus between competing interests is less problematic in this situation. Moreover, enforcing participation by group members is easier (Olson 1982: 21-24). Olson makes clear that there exists a negative relationship between group size and the ability to influence policymakers. More specifically, interest groups representing a narrow set of interests are expected to be better able to influence policymakers than heterogeneous, diffuse groups, according to the theory of collective action.

These theoretical considerations would lead us to expect that established companies have a clear advantage over citizens who are active on the platforms in exerting influence on the policymaking process. This is because the compact interests of the established companies allow them to mobilize their constituents coherently, while the diffuse interests of a large group of individuals place substantial constraints on their organizational capacity. However, the emergence of the platform economy ensures that platform-based companies automatically represent all citizens who are active on the platforms. Moreover, the seemingly unfortunate characteristics of these citizens with regard to organizational capacity can be overcome when compact interest groups are formed.

2.3 Issue salience and public opinion

In order to understand the interaction between political influence and interest groups better, the concept of issue salience is useful. Issue salience can be conceptualized as the importance of an issue in relation to other issues (Spendzharova and Versluis 2013: 1499-1500). Since policymakers are generally equipped with limited time and resources, they tend to devote attention to the most salient issues under their authority. Higher issue salience therefore directly impacts upon the prioritization of activities of policymakers. There are certain issues which have inherently more potential to become salient than other issues; these are topics that form part of a comprehensive, understandable narrative, which are consequently easier to grasp for the wider public (Dür and Mateo 2014: 1203). In addition, conflictual issues, and issues which affect larger proportions of the

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population also have a relatively high potential to become salient (Mahoney 2007: 371-372). Interest groups are more likely to stress their interests on these potentially salient types of issues, as this will make it more likely that policymakers will be informed about their policy preferences. The

assumption here is that policymakers are rational self-interested actors who want to secure their office positions by acting as much as possible in favour of the largest subset of voters that is involved in an issue (Spendzharova and Versluis 2013: 1503). This strategy is most effectively carried out through formulating policy on highly salient issues, which affect relatively large sections of the electorate. This is connected with Peltzman’s view of policymakers who aim to maintain a politically optimal distribution of rents between different actors within the market through implementing appropriate regulation (Peltzman 1989). The same line of reasoning regarding the relation between political decision-making and the size of voter constituencies explains the relation between public opinion and lobbying success by interest groups. Interest groups are more likely to win regulatory battles when their demands are generally compatible with the demands expressed by the general public (Dür and Mateo 2013: 1206).

As has been implied before, high issue salience by definition generates increased intensity of public opinion. Media attention can simultaneously be an indicator of issue salience and the intensity of public opinion, which are inextricably linked. Media attention can emerge in response to certain ‘focusing events’, which indicate heated public opinion on a certain issue. Subsequently, the salience of the issue involved in the focusing event increases (Spendzharova and Versluis 2013: 1499-1503). In this way, increasing media attention and higher intensity of public opinion can mutually reinforce each other. Interest groups may intentionally try to increase the political salience of an issue and thereby influence public opinion, which will subsequently help to get the issue on the agenda of policymakers. Such interest group strategies can be pursued in many different ways, for example by releasing articles and advertisements. When issue salience increases as a result of the mobilization efforts of a variety of interest groups, and therefore the attention of policymakers heightens, it is common to speak of ‘attention cascades’ (Dür and Mateo 2013: 1203-1204).

The aforementioned theoretical insights about the various relations between issue salience, public opinion and political influence help to shed light on the decision-making process regarding the platform economy in the empirical research. Especially the respective issue salience of the five policy issues identified within the academic literature (competition, labour and employment, taxation, consumer safety and social impact) is crucial for understanding this process. In addition, the interactions between the key actors involved in their respective policy communities and networks, guided by their specific interests, show in what way the interest groups under scrutiny have deployed

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priming and framing strategies. In the next chapter, the methodological choices underlying the empirical work are explained. The chapter starts with a discussion of case selection, after which an overview follows on the deployed research methods and the data sources consulted.

3. Research design

The research question will be answered through a qualitative in-depth case study design. In fact, two cases, the transportation and the hospitality industry in Amsterdam, will be researched. The case study approach involves a detailed examination of specific processes in a specified setting. Given the relative infancy of academic literature on the emergence of the platform economy from a political-economic perspective, the case study design is suitable, as it allows for theory development and hypothesis generation (Gerring 2007: 66; 79).

3.1 Discussion of case selection

The transportation industry and the hospitality industry in Amsterdam will be the cases for this research, since it is expected that the emergence of the platform economy has impacted significantly on the political economy of markets in these industries, as a result of the emergence of Uber and Airbnb, respectively. Both companies are among the most prominent companies within the platform economy (Anwar 2018). In this way, they might be ‘extreme cases’, as they are expected to be ‘paradigmatic of some phenomena of interest’ (Gerring 2007: 101). A further reason to pursue research on these platforms, market leaders within the transportation and hospitality industry, is because these platforms and the policy issues with which they are associated are the biggest challenges regarding the platform economy for the municipality of Amsterdam. This explains why Uber and Airbnb receive by far the biggest amount of attention of the municipality out of all platforms (Blokhuis and Schippers 2019).

An inquiry into the political-economic effects Uber and Airbnb have provoked within their respective industries may shed light on the wider realm of cases Uber and Airbnb represent; that is, the

companies associated with the platform economy as a whole, which may be active in industries other than the transportation and hospitality industry. Further research could verify whether such

companies indeed show some similarity with the ‘Uber or Airbnb trajectory’. Since Uber and Airbnb are expected to be extreme cases due to their prominence and success, it is not likely they are fully representative of other cases. Rather, researching these two companies has value in illuminating the

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ways in which the emergence of the platform economy could change the political economy of markets. For other companies associated with the platform economy, the effects are expected to be less severe, since other companies will most likely be less prominent and less successful than Uber and Airbnb. However, if they exhibit the same development as Uber and Airbnb, the research could well be useful for these type of cases. The aforementioned considerations point to the research goal: contributing to theory development about the platform economy. The limited number of cases under scrutiny, and their seemingly similar nature, may provide a fruitful way through which this may happen, since it has been argued that observing relatively similar cases may reveal certain causal pathways leading to a certain outcome (George and Bennett 2005: 23; 32-33). This means that the similarity within observed cases may point to underlying mechanisms leading to the same outcomes. These insights could then be of value for the wider realm of cases.

The reason for taking two sectors as cases is to gain a greater insight into the impact of the emergence of the platform economy on the political economy of markets. Notwithstanding the causal pathways argument mentioned before, it is expected that scrutinizing two sectors provides a more comprehensive and nuanced argument than would be the case if only one sector would be studied. Even though both Uber and Airbnb share important common characteristics, as they are both representatives of the platform economy, it will be crucial to differentiate between the two sectors in which they operate and the inherent logics thereof. The two cases are discussed

separately, so as to provide a more comprehensive account of the impact of the emergence of the platform economy on the political economy of markets.

In terms of the geographical delineation of the cases mentioned, the case selection is based on the observation that Amsterdam is an average case, struggling with the excesses of the platform economy. Other cities, for example in Germany, have taken a more aggressive stance towards the platform economy, which has sometimes resulted in the prohibition of activities by platform-based companies. Still other cities, for example in the United States, leave the platform economy largely unregulated at all (Thelen 2018). Therefore, research into the city of Amsterdam may lead to valuable insights about the ways in which the emergence of the platform economy changes the political economy of markets in cities that simultaneously recognize the potentially positive effects of the platform economy and its potential downsides. In fact, it is exactly this attitude that characterizes the position of most major cities in the EU (Young 2019). In order to exchange knowledge about regulating the platform economy, the municipality of Amsterdam has coordinated cooperative activities among 14 European municipalities and regions since January 2018 (Nota van

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The municipal level is an appropriate level of analysis because the bulk of the activities associated with the platform economy takes place in cities. According to a statement about the platform economy by the European Commission, it is up to member states themselves to regulate the activities associated with the platform economy (Dagnino 2016). The Netherlands, being a member state of the EU, regulates the transportation industry, and more particularly the taxi industry under which Uber’s activities can best be categorized, through the Nationale Wet personenvervoer1_from

2000. This regulation, which has been amended several times subsequently, stipulates that the national level regulates the taxi industry. However, and this makes the municipal level the most appropriate to analyse, it also stipulates that a number of bigger municipalities, including Amsterdam, have the legal abilities to regulate the taxi industry according to specific local

requirements (Van Veldhoven 2018). As for the hospitality industry, the municipality of Amsterdam is able to formulate and implement policy autonomously from the national government as well

(Huisvestingsverordening Amsterdam 2016). In the next section, an overview of the deployed research methods and data sources will be given.

3.2 Methods and data

The different elements of the research question each require different data. The first sub-research question calls for a mapping of the relevant actors involved in the policymaking process on the platform economy, their relations to each other, and their interests. Various strategies will be pursued to reveal this information. Firstly, a news article analysis will be conducted, in order to highlight which actors have appeared most frequently in the media (following Thelen 2018). Such a mapping of the actors involved may then generate expectations about which actors were best able to influence the policymaking process, as it represents the outcome of competition between the various actors in the media, since they all want to reach large audiences to get their message across. Therefore, the relative strength of these groups in relation to each other can be assessed. While reading the news articles, the following actor groups have emerged as key players in the

policymaking process regarding the platform economy in the transportation industry: Uber, the established companies in the transportation industry, consumers, the workers of the established companies and the workers affiliated with Uber. The actor groups found to be key players in the policymaking process regarding the platform economy in the hospitality industry are: Airbnb, the established companies in the hospitality industry, consumers, workers of the established companies, affected citizens representing the neighbourhoods in which tourists associated with Airbnb stay, and

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the individuals active on Airbnb who rent out their houses: the hosts. The logic behind identifying which actor groups have appeared in the articles is simple: actor groups have appeared when they are directly mentioned. Needless to say, multiple actor groups can appear at once in one news article.

The search engine Nexis Uni has been used to conduct the news article analysis. All news articles on Uber and Airbnb, which inherently touch upon policy issues relevant to the platform economy within the transportation and hospitality industry, from newspaper Het Parool have been analysed. This newspaper is chosen since it has a specific focus on the (policy debates within the) city of

Amsterdam. It reaches at least 218.000 households every day (De Persgroep 2019). The choice to only use one single newspaper for the analysis is justified by the fact that the empirical research focuses exclusively on the city of Amsterdam. News articles in Het Parool are therefore most suitable to use. The selection of articles within Nexis Uni has been carried out as follows.

For the articles on the emergence of the platform economy in the transportation sector, the search word ‘Uber’ has been used. As the most important representative of the platform economy in this industry, it is expected that articles on Uber inherently touch upon discussions regarding the emergence of the platform economy in the transportation industry. Using search words such as ‘transportation’ or ‘transportation and policy’ results in relatively more irrelevant results than using the word ‘Uber’, as the research is concerned with discussions regarding the platform economy within the sector in which Uber operates. Not all discussions in the respective sector are the focus of this research. Following the same logic, the search word ‘Airbnb’ has been used to select the news articles on the emergence of the platform economy in the hospitality sector.

Initially, searching articles by using the word ‘Uber’ resulted in 549 articles. Conveniently, Nexis Uni allows for the filtering on several categories. The results have been filtered on sectors, subjects and geographical delineation. In order to strengthen the validity of the research, all articles within

categories that might somehow be relevant are chosen. This is because the news article analysis aims to represent the debates regarding the emergence of the platform economy within the

transportation sector as broadly as possible. A detailed step-by-step guide on the deployed search strategies is included in annex I. After having filtered, 33 news articles on the emergence of the platform economy in the transportation sector remained to be scrutinized. The search word ‘Airbnb’ initially resulted in 798 articles. Filtering reduced the amount of news articles to be included in the analysis to 96. Taken together with the articles on the emergence of the platform economy in the transportation industry, the total dataset of news articles consists of 129 articles.

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Further data for the first sub-research question comes from the information the relevant actors provide themselves, such as the information stated on their websites and the relevant documents they produce. The positions of policymakers will not be taken into account in this section, since the third sub-research question scrutinizes their views. In addition, secondary literature is consulted which provides further information. It has been tried to conduct interviews with a range of relevant actors, such as Uber, Airbnb and the established companies in both the transportation and the hospitality industry. Unfortunately, none of the approached actors was eager to participate. However, the lack of data in which this results is as far as possible covered up by the other data sources used.

The second sub-research question scrutinizes what the most politically salient issues have been regarding the emergence of Uber and Airbnb in their respective industries. The policy issues on which this analysis focuses are the issues that were identified in the theoretical framework as most important within the political debates on the platform economy: competition, labour and

employment, taxation, consumer safety and social impact. In order to assess the political salience of these different policy issues, a news article analysis of the same set of articles in Het Parool described previously has been conducted. This time a quantitative mapping of the issues, instead of the actor groups, will be provided. Again, multiple policy issues can be present in one news article. Charting the number of times policy issues have appeared in the media gives an indication of the extent to which those issues have been salient. The logic behind the classification of the policy issues is as follows. When an issue is explicitly touched upon in the article, it is included in the quantitative mapping. This does not mean, however, that the word ‘competition’2_{must necessarily be in the}

article for it to touch upon policy debates regarding competition. This is because the debate on competition may also come to the surface in a slightly more indirect way. A set of examples of fragments of the analysed articles is provided in annex II, which helps to clarify how the policy issues have been identified.

Apart from understanding which issues as such have been most salient in the policy debates

surrounding the emergence of the platform economy, it is also insightful to know whether there has been a certain development in the extent to which regulatory issues have been salient. This

information then provides crucial clues about why the policymaking process is shaped in a certain way at certain moments, with which the third sub-question deals. Therefore, the periods in which the articles appeared are distinguished, which is done following a year-to-year categorization. In

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addition, the tone of the articles provides information about public opinion on the emergence of the platform economy. Articles have been classified as either positive, neutral or negative towards the platform economy. Important to note here is that the tone of the article has been measured by looking specifically at explicit opinions stated by the newspaper, Het Parool.

The first two sub-research questions serve as a stepping stone for the third sub-research question, which traces how the policymaking process in both the transportation and the hospitality industry is shaped and subsequently provides an overview of which actors lose and benefit from the resulting governance patterns. An analysis of the market dynamics in both industries has also been conducted. Thatcher and Braunstein (2015: 772) describe how policy content can be assessed through

investigating the relations between external events, interest group behaviour and policy outcomes. Therefore, primary data such as policy documents provided by the city council will be analyzed. Such data can be used to measure the prioritization of certain issues by policymakers, which gives a clue of which actors have won regulatory battles in which contexts (Spendzharova and Versluis 2013: 1507).

Examples of consulted policy content are the Taxiverordening Amsterdam 20123_{and the}

Huisvestingsverordening Amsterdam 20164_{, which touch upon the municipal regulation on the}

transportation industry and the hospitality industry. Further, an interview with policymakers Femke Blokkers and Nanette Schippers, both programme managers platform economy at the Economic Affairs department of the municipality of Amsterdam, has been conducted. The semi-structured interview guide is included in annex III. The methodological approach taken for this sub-research question is that of process-tracing, which ‘focuses on sequential processes within a particular historical case’ by tracing ‘the links between possible causes and observed outcomes’ (George and Bennett 2005: 13; 6). In this way, the sequence, value and weight of the different types of data used for the research can be assessed.

According to Beach and Pedersen (2013: 11), three types of process-tracing exist: theory-testing process tracing, theory-building process tracing, and explaining-outcome process tracing. In a sense, all three methods will be manifest in the research. The research makes use of existing political-economic theory, but also builds theory as there is currently a lack of academic scrutiny on the political-economic effects of the platform economy. Simultaneously, the regulatory outcomes of the policymaking process are explained.

3_{English translation: Taxi Ordinance Amsterdam 2012.} 4_{English translation: Housing Ordinance Amsterdam 2016.}

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3.3 Validity and reliability threats

The usage of triangulation, which entails scrutinizing different data sources (which are, in this research: different kinds of documents, news articles and the interview), ensure that the validity challenges are as limited as possible. Similarly, triangulation minimizes the risk of drawing conclusions from inadequate sources.

Generally, the case study research design inherently provides difficulties regarding the external validity of findings. Since the research design involves a great deal of analysis about context-specific aspects, the generalization of findings to a broader set of cases may only be possible in a cautious way. However, according to Gerring (2007: 85), ‘no case study research should be allowed to

conclude without at least a nod to how one’s case might be situated in a broader universe of cases.’

4. Who are the key actors in the political economy of the transportation and

hospitality industry and what are their interests?

The key actors in the transportation and hospitality industry will be separately discussed. Each section in this chapter starts with an overview of how frequently the different actors have appeared in the news articles that have been analysed. In this way, their relative strength vis-à-vis each other can be assessed. The reasons behind the extent to which actors have been able to attract media attention will be discussed. The specific interests of every actor within the respective industries are revealed, after which a discussion follows on the connections with the policy issues identified as most politically relevant to the emergence of the platform economy: competition, labour and employment, taxation, consumer safety and social impact.

4.1 The political economy of the transportation industry

As stated earlier, the news article analysis scrutinises a carefully selected set of 33 articles. The quantitative results on the appearance of actors within the transportation industry in the articles is depicted in graph 1 on the next page. Not surprisingly, Uber was mentioned 33 times in the articles, since the search word ‘Uber’ had been used to select the articles. Among the other actors, the established companies and their workers recurred most frequently in the articles, as they were both mentioned 15 times. The fact that both of these actors were mentioned the exact same amount of times suggests the established companies and their workers have succeeded in constructing

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collective frames on the policy issues that are relevant to them. The workers of Uber were mentioned 12 times. Even though they do not substantially fall behind the media attention the established companies and their workers were able to generate, it is noteworthy that Uber and its workers do not seem to have constructed as much collective frames as the established companies and their workers have. As will become clear later on, a plausible explanation for this is that the interests of Uber and its workers are by no means as well-aligned as the interests of the established companies and their workers. Further scrutiny of graph 1 makes clear that consumers did not appear a lot in the media, as they were only present three times in the articles. Collective action theory (Olson 1982) provides an explanation for this low amount. The organisational capacity of consumers is significantly weaker than that of the other groups. Given their large group size and varying

preferences among group members, consumers inherently possess more difficulties to organize themselves coherently, which hampers their ability to attract media attention.

The relatively large distance between the number of times Uber is mentioned and the amount of times the other actors have appeared in the media can be explained by the fact that, despite careful selection of the articles, not all articles directly touched upon the actors involved in the policymaking process on the platform economy in the transportation sector in Amsterdam. Some of the articles talked about Uber’s activities abroad or were illustrations of the ceo of Uber, for example.

Graph 1: Media appearance of actors within the transportation industry

0 5 10 15 20 25 30 35 Uber Established companies Consumers Workers established companies Workers Uber

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The distribution of actor appearances in the media provides information on the extent to which actors have been able to attract media attention. Media attention facilitates actors with a platform through which they are able to deploy their priming strategies by constructing frames. Crucial for understanding the frames and priming strategies of the actors is the content of their interests.

On its website, Uber emphasizes the possibilities they open up in terms of connectivity which are created through its technology-reliant business model. They also highlight their engagement with other actors: ‘We’re building a culture within Uber that emphasizes doing the right thing, period, for riders, drivers, and employees’ (Uber 2019a). This quote reveals that Uber is committed to building up and maintaining friendly relations with consumers (Uber calls them ‘riders’), their drivers and their employees. Especially the relation Uber maintains with its drivers deserves further attention. Uber portrays its drivers as ‘independent providers’ who make use of Uber’s services, which becomes clear in the following passage on Uber’s website: ‘The [Uber] App connects independent providers of transportation services with requests from riders requesting transportation services’ (Uber 2019a). This statement ensures that Uber’s drivers have self-employed labour arrangements with Uber. Therefore, they are not recognized as formal employees. This is because it exempts Uber from paying burdensome social security contributions. While self-employed arrangements are in fact quite common in the transportation industry, the extent to which Uber exerts control over its drivers is not. Uber’s platform decides which drivers get which rides at which time at which price. This degree of dependency of drivers on their ‘employer’ is rather unique in the sector (Blokhuis and Schippers 2019).

On its engagement with cities worldwide, including Amsterdam, a spokesperson for Uber states that ‘technology has changed the way people move around cities and use mobility services, which is changing the way cities need to organize themselves. We are always looking to engage with cities and governments to make the future of cities better, and provide meaningful insights to help them solve local mobility challenges’ (Uber 2019b). While this statement indicates a certain willingness on the side of Uber to cooperate with cities ‘to help them solve local mobility challenges’, the business model Uber has become known for worldwide puts this statement in another perspective. Since Uber self-reportedly has ‘changed the way cities need to organize themselves’ through its technology, it expects policymakers to adapt the regulatory environment in order to provide leeway for the operations of Uber. In other words, Uber wants to bring about the modernization of the legal framework, ‘to make the future of cities better’. The ceo of Uber in the Netherlands puts it this way: ‘Our goal is to create a legal framework for the provision of ride-sharing services. We aim to

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modernize the law’ (Frenken et al. 2017: 53).

The second actor group in the policy community on the platform economy in the transportation industry are the established companies. More specifically, these are the Toegelaten Taxi

Organisaties5_{(TTO’s) in the municipality of Amsterdam. They are allowed to pick up passengers from}

a designated taxi spot or on the streets (Gemeente Amsterdam 2019a). One of the biggest TTO’s in Amsterdam is the Taxi Centrale Amsterdam (Taxi Centre Amsterdam: TCA). They highlight

characteristic aspects of the established taxi business they represent: the stringent quality requirements they apply for drivers, such as psychological tests, and the fact that they have fixed prices (Taxi Centrale Amsterdam 2019). The TCA, as well as other established companies in the sector, perceive the competition they participate in with Uber to be unequal. They highlight the differences in the regulatory regimes to which the established companies on the one hand and Uber on the other hand must comply with, for example in the realm of safety requirements. Hubert Andela, representative of Koninklijk Nederlands Vervoer6_{, an organization in which the established}

companies are unified, gives an example of how the different rules manifest itself: ‘When a driver from a TTO commits certain traffic violations, his license will be withdrawn. Drivers outside of the TTO system are not subject to these rules’ (Taxi Pro 2019a). These differences in regulatory

treatment stem from the distinction between the ‘pick-up market’ and the ‘order market’ in the law. The details regarding this distinction are scrutinized in the third-subquestion, but for now it is crucial to understand that the established companies want the same regulatory treatment as Uber.

The third group of actors relevant for the policymaking process are consumers. Since consumers are the largest subset of voters among the actor groups associated with the platform economy,

policymakers are expected to take especially their views into account. Research has shown that consumers have the following demands when it comes to the transportation industry. The first of these relate to quality provision, which involves the quality of the car, comfort, and the assurance that drivers use the fastest way possible to the destination of the consumer. In addition, freedom of choice among a number of options is preferred, as well as availability: it must be possible to get a taxi whenever consumers want it. Safety and affordability are the other important priorities consumers have (SEO Economisch Onderzoek 2008: 8). Consumers are, given their large group size and diverging interests among group members, not a unified group. Different consumers have different order rankings when it comes to the priorities discussed. Business people generally prioritize quality provision and availability over price, whereas students prioritize affordability, for

5_{English translation: Allowed Taxi Organisations.} 6_{English translation: Royal Dutch Transport.}

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example (SEO Economisch Onderzoek 2008: 4). Since the prices Uber charges are substantially lower than those of its competitors from the established companies (de Vries 2019b), consumers who mainly prioritize affordability support the market entry of Uber. Uber also enhances freedom of choice and availability, which is supported by consumers, as the research on consumer preferences shows. Therefore, the interest of consumers it to use Uber unrestrictedly, also because the

consumers who prefer transportation services from the established companies are not hindered to do so by the market entry of Uber.

The interests of workers from established companies are closely related to the interests of the established companies themselves. This is because they allege Uber of practices of unfair competition. According to drivers of TTO’s, the taxi market in Amsterdam is already saturated (Mooring 2019). Therefore, they perceive the market entry of Uber to undermine overall profitability in the transportation industry. Another frustration is that, according to workers of established companies, the emergence of Uber has coincided with the introduction of opaque and illegal work arrangements, with which drivers from TTO’s are more and more confronted as well. In such arrangements, drivers work under a license from other drivers, which is forbidden under Dutch law (Wet personenvervoer 2000 art. 76e). Subsequently, the driver leases a vehicle to work with, but the financial obligations related to the lease and those pertaining to the license holder are such that the drivers are forced to work disproportionate amounts of hours in order to make ends meet. Workers from TTO’s also note that this development commonly results in tax evasion. Apart from their wishes to improve labour conditions, the workers from TTO’s also demand that tougher quality

requirements are implemented so that consumer safety is not put at risk (Mooring 2019). The similarities in the interests of established companies and their workers explain how both actors have been able to construct collective frames, as became clear from the news article analysis.

Such a similarity of interests does not exist between Uber and its drivers. The latter group is frustrated about the perceived inability of Uber to respond to their problems. The roots of their grievances relate to unsatisfying agreements with Uber about revenues. Uber deducts a fee of twenty five percent on all fares its drivers make (Uber 2019c). Uber’s drivers demand that Uber takes a smaller share of the revenue, which may result in less financial pressure to work disproportionate amounts of hours. In addition, agreements about pensions should be improved, and the rating system (through which consumers express their opinions about the drivers) must be enhanced, according to Uber drivers (Taxi Pro 2019b).

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Having outlined the main actors within the transportation industry and their interests, it becomes possible to discuss the positions of the respective actors in terms of the policy issues theoretically identified as most relevant to the emergence of the platform economy: competition, labour and employment, taxation, consumer safety and social impact. Uber’s main interest, modernization of the legal framework in order to let its operations function more smoothly, is connected with the issue of competition. While Uber wants to preserve the market power they currently enjoy, the established companies point to the practices of unfair competition with which Uber is associated. The drivers of TTO’s share the main interest of the established companies: equal regulatory

treatment between them and Uber and its drivers. Consumers are not as concerned about regulatory treatment as they are about consumer benefits, which is also connected with the issue of

competition. The market entry of Uber increases consumer benefits such as freedom of choice, availability and decreased prices, which is why they are supportive of Uber’s operations.

The interests of drivers of TTO’s are not only connected with competition issues, but also with the issue of labour and employment . They demand improved labour conditions, which have dropped significantly due to the emergence of Uber. Drivers from Uber are discontent with their current labour conditions too. It follows that, on the basis of the interests of the key actors, issues related to competition and labour and employment are the most salient policy issues within the debate on the emergence of the platform economy in the transportation sector. Taxation, consumer safety and social impact are not salient issues in this debate. This observation is confirmed by the news article analysis carried out under sub-question two, as becomes clear later on.

4.2 The political economy of the hospitality industry

96 articles on the emergence of the platform economy within the hospitality industry have been analysed. The quantitative results on the appearance of actors in the media is depicted in graph 2 on the next page. Apart from Airbnb being obviously mentioned 96 times, the actor group of affected citizens was very visible in the media, as they appeared in more than one out of three articles with 35 mentions. This indicates that this actor group has been able to organize themselves coherently, which allowed them to express their positions in the media. The same can be said for the actor group of hosts, which have been mentioned almost as much as the affected citizens with 34 mentions. Clearly, the media evenly distributed attention to both groups, which have juxtaposed interests as will be clarified later. The established companies in the hospitality industry have not

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received substantial media attention, as they were mentioned 17 times. This suggests that, even though their group characteristics for organisational capacity are beneficial, they have not been able to mobilise their constituents sufficiently. The workers of established companies have barely played a role at all in the media with only 1 mention. It seems plausible that their priming strategies have therefore occurred under the umbrella of their employers, the established companies. This is because the interests of the workers are closely connected with the interests of their employers, as will be demonstrated. The weak appearance of consumers in the media was to be expected, since their disparate group composition usually imposes difficulties on organisational capacity. Another explanation for the fact that the media has not devoted much attention to them is that the media assumed their interests were widely known to the public.

The reason for the large gap between the number of appearances of Airbnb in the media and the amount of appearances of the other actors lies in the fact that some of the analysed articles did not touch upon policy debates on the platform economy within the hospitality industry in Amsterdam. Therefore, the relevant actors for this research were not always mentioned in the articles, despite careful selection of the articles (see annex I).

Graph 2: Media appearance of actors within the hospitality industry

Now that the reasons behind actor appearances in the media have been discussed, it is time to turn to the interests of the actors. On its website, Airbnb describes its mission as follows: ‘Airbnb exists to create a world where anyone can belong anywhere, providing healthy travel that is local, authentic,

0 20 40 60 80 100 120 Airbnb Established companies Consumers Workers established companies Affected citizens Hosts

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diverse, inclusive and sustainable. Airbnb uniquely leverages technology to economically empower millions of people around the world to unlock and monetize their spaces, passions and talents to become hospitality entrepreneurs’ (Airbnb 2019). As becomes clear, Airbnb stresses the variety of enriching opportunities it facilitates to travellers. They are also keen to point out that individual home-owners can create revenues by becoming ‘hospitality entrepreneurs’ (more commonly referred to as hosts) when they rent out their ‘spaces’. Here, the commodification aspect central to Airbnb’s business model is obvious.

Airbnb uses its narrative of authentic and empowering tourism to convince the actors with whom it interacts, including policymakers, that their business model brings many benefits to economies and communities worldwide. This is their core interest. However, it is highly contested that Airbnb brings exclusively benefits to the polities in which it operates. In order to counter such criticism, Airbnb states that its platform ‘benefits all its stakeholders, including hosts, guests, employees and the communities in which it operates’ (Airbnb 2019).

The established companies occupy an important position in the policy community on the emergence of the platform economy in the hospitality industry. Apart from smaller bed & breakfasts and the like, this group mainly consists of hotels. They are represented by the umbrella organisation

Koninklijke Horeca Nederland7_{(KHN). The KHN acknowledges that the rise of the platform economy}

forces the traditional hotels to reconsider their current operational practices. Even though they do not see the increase in the usage of platforms, of which Airbnb is the most prominent, as a problem in itself, it is also stated by the KHN that new entrants must commit themselves to stick to the same rules that apply to the established companies. Especially regulation in the areas of (fire) safety, taxes, consumer protection and the environment are mentioned as key priorities for Airbnb to comply with (KHN 2019). Without Airbnb’s compliance with regulations, the claim that Airbnb does not operate on a level playing field becomes easier to justify for the established companies. Some hotels explicitly do not acknowledge Airbnb as an equal competitor for this reason (Blokhuis and Schippers 2019). Other points about which the KHN is concerned are the number of guests that private hosts may accommodate and the number of days that may be used for commercial profit. The KHN asserts that ‘a house is not a hotel and a private kitchen is not a restaurant’ in order to justify their concerns (KHN 2019). On the basis of these empirical observations, the interest of established companies is to have existing regulations much more tightly enforced and to have the activities of Airbnb hosts

constrained.

The politics behind the platform economy : the political-economic impact of Uber and Airbnb in Amsterdam