Economy

Why 'Uberization' Of Our Economy Is Here To Stay

Uber still has plenty of critics in Argentina, but its clearing key legal hurdles is a sign that there's no turning back the clock on a digitally-driven marketplace.

The gig economy is taking over how we do business
The gig economy is taking over how we do business
Raúl Martinez Fazzalari

-OpEd-

BUENOS AIRES — In a recent ruling, Argentina"s Supreme Court finally decided, for procedural purposes, to recognize contracts that individual parties make through the intermediary firm Uber as legally valid.

The decision comes amid growing public debate over these kinds of digital platforms and the services they provide. Uber and its ilk seek to match service providers with users through a third party that removes the administrative barriers, local regulations, tax and labor rules we've otherwise been accustomed to.

If we add to this the non-territorial nature of these firms, one can see how difficult it is to judge or penalize these firms, or even apply the rules as we know them. The phenomenon is not, however, new. Indeed, we can see this same disruptive blueprint in other big tech firms.



uber_gigeconomy

Uber-style services are beginning to dominate multiple markets — Photo: Serge Kutuzov

Facebook, the world's most important communication platform, owns no telecommunication infrastructures. The online retailer Alibaba owns no shops. Netflix, the online distributor of films and television series, holds no licenses. And the world's main search engine, Google, charges nothing for the information it finds. Something is changing in the world, and the costs and logistics of marketing are today dropping to practically nothing.

The consumer, in the meantime, can now access directly — and from anywhere — whatever he or she wants, and, so far, this has proved highly popular. The internet has permitted this access to information, entertainment or services, converting and simplifying atoms into bytes.

Just as with passenger transportation, new protagonists are also creating complex systems for product deliveries. They include, at the bottom end, the cyclists and motorcyclists we now see as part of the city landscape, remolding the reality of consumption and work. All of this means new jobs, use of communication technologies, more tax contributions and reduced costs.

The consumer, in the meantime, can now access directly — and from anywhere — whatever he or she wants.

One should recall that the debate on the legality of these services is comparable to the Supreme Court ruling of 2015, which exempted search engines of responsibility in their intermediary role in the search for content. Laws always follow facts on the ground, which makes sense. After all, we cannot anticipate norms for things that have yet to happen.

As for the transportation and taxi services, the realities we can all already see — the proliferation, namely, of two-wheeled delivery people — will inevitably lead to legal redefinitions for the emerging economic sector. It's just a matter of time.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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