The Antitrust Case for Gig Worker Rights

Hello, friends, 

Well, it’s been an eventful week. While waiting for the votes to be counted in the presidential race, we at The Markup spent the week stress snacking and tracking how tech policy fared at the ballot box.

In almost every race we were following, voters chose to force more accountable uses of technology. Changes that we saw included:

But there was one notable exception to the trend: the passage of Prop 22 in California, which gives companies like Uber and Lyft the right to treat their drivers as “independent contractors” rather than complying with AB5, a state law passed in 2019 that categorized them as employees. 

The tech companies poured an estimated $200 million into lobbying for the ballot measure, using every possible technique at their disposal. As David Bradley Isenberg reported for The Markup last week, tactics included using their apps to spam customers with pro–Prop 22 messages and, according to a lawsuit, allegedly coercing their gig workers into publicly endorsing the ballot measure. 

“We were outspent 20:1. We were outgunned,” tweeted Nicole Moore, an organizer with Rideshare Drivers United, which opposed the law. “But we haven’t gotten this far because it was easy. We are fighters. And we punch above our weight. We stand strong when we stand together. We will fight - in the courts, in Sacramento, and in the streets.”

To find out where the legal battle might go next, I spoke to Sanjukta Paul, assistant professor and Romano Stancroff Research Scholar at Wayne State University Law School (currently serving as a visiting professor at University of Minnesota Law School), who studies labor and antitrust law, among other things. Her forthcoming book, “Solidarity in the Shadow of Antitrust: Labor and the Legal Idea of Competition,” will be published by Cambridge University Press.

Paul has a distinct point of view that does not represent the views of The Markup. The interview is below, edited for brevity. 

Angwin: You study both antitrust and labor law. How do those two disciplines affect the gig economy?

Paul: We tend to think of the primary legal question raised by gig work as a question of whether labor law extends to these workers or not. But there is also a question about what antitrust law is doing here.

 What antitrust law has been doing is, it has been allocating coordination rights to these platform firms, to Uber, Lyft, DoorDash, etc., while denying parallel coordination rights to the workers in the orbits of those platforms.

 The starkest example of this is Uber, which says it is an app company. Their fundamental claim is they are just a platform that mediates between drivers and their customers, namely riders: essentially a vendor providing a service that both riders and drivers pay to use. 

 Well, just imagine any other vendor who has the power to set the prices that their customer is charging to their customers. A mechanic is not getting involved in the pricing policies of the taxi driver whose car they are servicing. Or even a credit card company that sets merchants’ consumer prices. This sounds crazy to us, as it should. Yet we have largely accepted this exertion of power by the gig platforms.  

 Angwin: You’ve written about antitrust as the “allocator of economic coordination rights.” What does that mean?

 Paul: Economic coordination is the stuff that is happening all the time to make markets run. Firms engage in economic coordination internally: organizing production and distribution, setting prices and output levels, directing investments, planning for future production. Economic coordination also takes place within markets: All markets are coordinated to some extent … whether it is expressly or tacitly, by a large dominant firm or by a trade association of smaller firms, through public market management, through a producers’ or buyers’ cooperative, or sometimes through a labor union. When a labor union is engaging in collective bargaining, that is economic coordination. But so is it when Uber is setting prices for all drivers through their app.

 The idea of “economic coordination rights” is something I started invoking in order to capture the idea that the law is giving some actors the right to engage in economic coordination and not others. In other words, the law is always deciding which forms of economic coordination to permit or promote, and which forms to discourage or prohibit.

 Here’s an example: Let’s say you have a market where there are 100 different truck drivers and five firms of 20 truck drivers each. Each firm sets the prices for the loads that their truck drivers are carrying. And it just seems very obvious that of course the firms set the prices. 

 But 20 of those truck drivers decide to be independent and agree on prices together, that is going to be prohibited by antitrust law as a price-fixing cartel. It will be prosecuted—potentially criminally. The Supreme Court has called that the “supreme evil of antitrust”!

 So what you have is diametrically different legal treatment for actions that are economically identical. 

And if those truck drivers try to get together and unionize, that is effectively also treated as price fixing, because the labor exemption from antitrust laws has largely been assumed to exclude independent contractors.

 Angwin: So how does this work in the gig economy?

 Paul: In one sense, the platform companies are claiming expanded firm boundaries for antitrust purposes while asserting far narrower firm boundaries for the purposes of labor law. Each serves to expand the coordination rights the law allocates to them, while narrowing or eliminating the coordination rights allocated to other parties (here, workers). 

Under antitrust law, they are claiming the privilege of price-setting and the contractual restraints they put on the drivers, as if they were a firm that included drivers. But under labor law, they are saying these people aren’t part of our firm, so we don’t have to pay a minimum wage and we don’t have to guarantee a safe workplace … and under both antitrust and labor law, they are saying we don’t have to recognize workers’ collective bargaining rights. 

 In essence, they are having their cake and eating it too. 

 Angwin: So is there an antitrust case to be made about these companies’ employment practices?

 Paul: Antitrust law was originally passed to help the little guy—and that would be the Uber driver, not Uber. So it is extremely perverse that it’s been deployed against the littlest guys in the economy and has thus far protected the coordination of pretty powerful firms. 

 It hasn’t always been this way, and it doesn’t have to be this way.

 Now that Prop 22 has succeeded, I think it’s time to truly pursue an antitrust strategy. AB5 was trying to address one side of that equation. But if we are now all supposed to accept that workers are independent, then the antitrust law ought to require platform companies to truly treat them as independent. Moreover, this is the perfect place for the FTC to exercise its latent authority to define rules of fair competition. That dominant platforms should be able to engage in price-fixing but drivers should not be able to cooperate [with each other] is neither fair nor rational.  

Angwin: What would it look like if the companies couldn’t set prices?

Paul: There’s a tendency to assume that if we take that away, everything else has to stay the same, so we’ve still got the same firms, and price-setting may become like an auction system where drivers put their bids on jobs in. But there’s no rule that everything else must stay the same. If antitrust law were to reallocate coordination rights toward the smaller players and away from the dominant ones, many other options open up. Perhaps there could be a drivers cooperative that builds an app; then the people actually doing the work and risking the capital (their cars) are the ones managing pricing. Or, a municipality could run the app and publicly coordinate the market, taking into account public interest. 

 If we do all agree that it’s better to set prices in some coherent way, then really the fundamental question is, Who gets to coordinate that? Who gets to benefit from that coordination? And do we actually need this particular model, where there is a small group of people with a great deal of power who hold all the reins to manage the market?

As always, thanks for reading,

Best,

Julia Angwin

Editor-in-Chief

The Markup

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