Incumbent Strategies against Collaborative Platforms: Lessons from the battle between taxi drivers and Uber in Spain

Abstract

The purpose of this article is to analyse the strategies that incumbent market participants are using to fight collaborative platforms. I essentially focus on the battle between taxi drivers and Uber in Spain, because it is a very complete scenario. Traditional operators feel threatened by collaborative platforms due to the greater attractiveness of their business model. Therefore, they implemented t the two classic defence measures: imitation and confrontation. Nonetheless, some references are made to other examples of sharing economy, as “short-term rental market” and other countries.

     The first strategy is imitation. Established operators try to copy technological advances to increase competitiveness. Others team up with collaborative platforms to take advantage of their power of attraction and gain market share. We believe that it is the most desirable strategy, from a systematic point of view, because it improves competition and encourages innovation. Nonetheless, there are economic, social and legal obstacles that hinder imitation and collaboration.

     Traditional operators have faced collaborative platforms through different channels. The two most important are judicial and legislative. Regarding the first one, incumbents have grounded the lawsuits on unfair competition. They argued that collaborative platforms took advantage of breaking the laws, misled, sold at a loss and, in general, did not act in good faith. The Spanish experience shows that this strategy is not efficient. Multiple uncertainties condition the result; for instance, the lack of precise knowledge of disruptive technologies. Even when the result is favourable to the plaintiff, winning does not mean necessarily success.

     The third strategy is regulatory capture. Traditional operators put pressure on Parliaments, Governments and all kinds of administrations to forbid or restrict the activities of collaborative platforms. The Spanish experience is that this strategy can work. Success is not guaranteed as it full of difficulties and uncertainties. The outcome relies heavily on the political conjuncture, that uses to be fluctuating. Besides, it is very detrimental to the economic and legal system.