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An IKEA Acquisition Shows Limits Of The Sharing Economy

Elaine Ou*

SAN FRANCISCO — I can't help but feel disappointed that TaskRabbit, the San Francisco-based startup and "sharing economy" pioneer, has agreed to become a unit of Ikea. Although the company has tried to cast the deal as an expansion opportunity, this outcome is a far cry from the lofty expectations of its early days.

TaskRabbit's fate illustrates Silicon Valley's unbounded idealism when it comes to optimizing everything. The company was a catalyst for "collaborative consumption," a movement in which everyone would share their homes, their vehicles and their time. In a seminal TED talk, Rachel Botsman declared that the currency of the new economy was trust, not money. PwC predicted that TaskRabbit and its sharing economy peers would comprise a $335 billion market by 2025.

Unlike traditional commerce, which was cold and profit-driven, collaborative consumption revolved around relationships and reputation. Lyft was "Your Friend With a Car," not a money-grubbing corporation. TaskRabbit offered "service networking" — like social networking, but with labor. Other ventures formed around sharing home-cooked meals, storage space, power tools and camera equipment. Airbnb founder Joe Gebbia predicted that society would eventually abandon private ownership in favor of community-based sharing.

All the activity fell into a regulatory gray area. Early on, Lyft and other ride-sharing services didn't explicitly sell anything: They just took a percentage of the fares "donated" by customers. The companies involved organized an advocacy group called Peers, which campaigned to keep the sharing economy free of regulation — which, of course, was meant to rein in greedy capitalists seeking to exploit information asymmetries, not people who chose to share their resources with trusted peers. (Disclosure: I was the community organizer for the Silicon Valley chapter of Peers.)

When the subsidies went away, the platforms began to struggle.

I had a car and some spare time, so I signed up as a TaskRabbit. Heck, I became a Lyft driver and an Airbnb host as well. Any underutilization of resources was wasteful, I reasoned. Yet somehow my career as a service provider never felt as empowering as advertised. Prospective customers were more price-sensitive than one might expect from a community of peers. They treated my car and apartment worse than I would expect from a trusted friend.

For all the sharing economy's alleged virtues, participants primarily came for the cheap services. The companies had a cost advantage because they faced little or no regulatory burden, and because their investors were willing to subsidize low prices in an effort to build new markets. As soon as the subsidies went away, the platforms began to struggle.

Silicon Valley is obsessed with the idea that technology can iron out the inefficiencies of any system. The underutilization of our time and resources presents a tempting opportunity, but utopians often overlook the transaction costs associated with real-world commerce. As it turns out, burdens such as licensing, insurance and regulation go a long way toward facilitating transactions between strangers. If you take this into account, the outsourcing of one-off errands looks far less efficient.

The gig economy could even be considered dystopian, in the way it takes advantage of differences in the value of people's time. To some extent, it can provide cover for failing to pay a living wage. TaskRabbit likes to advertise its platform as a source of furniture assemblers, but another popular task is hiring people to stand in line at the Department of Motor Vehicles. Nothing underscores wealth inequality like paying someone to hold your place in line.

In Silicon Valley, bad business models never die — they temporarily disappear and later resurface with new buzzwords. Just as the sharing economy is fading, collaborative consumption has begun to reemerge on the blockchain. This time, underutilized resources like energy, disk space, and apartments will be tokenized and traded. If that doesn't work, maybe quantum artificial intelligence will be next.

*Ou is a blockchain engineer at Global Financial Access, a financial technology company in San Francisco. Previously she was a lecturer in the electrical and information engineering department at the University of Sydney.

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FOCUS: Israel-Palestine War

Palestinian Olive Trees Are Also Under Israeli Occupation — And That's Not A Joke

In the West Bank, a quieter form of oppression has been plaguing Palestinians for a long time. Their olive groves are surrounded by soldiers, and it's forbidden to harvest the olives – this economic and social violence has gotten far worse since Oct. 7.

A Palestinian woman holds olives in her hands

In a file photo, Um Ahmed, 74, collects olives in the village of Sarra on the southwest of the West Bank city of Nablus.

Mohammed Turabi/ZUMA
Francesca Mannocchi

HEBRON – It was after Friday prayers on October 13th of last year, and Zakaria al-Arda was walking along the road that crosses his property's hillside to return home – but he never made it.

A settler from Havat Ma'on — an outpost bordering Al-Tuwani that the United Nations International Law and Israeli law considers illegal — descended from the hill with his rifle in hand.

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After kicking al-Arda, who tried to defend himself, the settler shot him in the abdomen. The bullet pierced through his stomach, a few centimeters below the lungs. Since then, al-Arda has been in the hospital in intensive care. A video of those moments clearly shows that neither al-Arda nor the other worshippers leaving the mosque were carrying any weapons.

The victim's cousin, Hafez Hureini, still lives in the town of Al-Tuwani. He is a farmer, and their house on the slope of the town is surrounded by olive trees — and Israeli soldiers. On the pine tree at the edge of his property, settlers have planted an Israeli flag. Today, Hafez lives, like everyone else, as an occupied individual.

He cannot work in his greenhouse, cannot sow his fields, and cannot harvest the olives from his precious olive trees.

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