In January 2022, AirAsia CEO Tan Sri Tony Fernandes announced plans to make AirAsia Asia’s largest food delivery and ride-sharing company. This decision was justified by the demand for super app services which has exploded due to the pandemic and social distancing. The rise of multi-
super-service apps, in general, have garnered huge interest: Grab has gone public with a merger valuation of US$40 billion
(RM167 billion), while GoTo, another Southeast Asian multi-service app comprising Gojek and Tokopedia, raised $1.3 billion ahead of its first initial public offering expected later this year.
Yet while the pandemic has bolstered delivery services, it has hit ride-sharing service and low-cost carriers hard as people stayed home and avoided close contact due to health concerns: AirAsia has saw its income plummet in places hit hard by the coronavirus. It also reported a quarterly loss of US$5.9 billion in the third quarter of 2021: the largest in a continuing string of losses. Yet the company is still celebrated, with its brand strong enough to raise funds to expand into ride-sharing, grocery delivery and financial services by acquiring Gojek Thailand and other similar platforms in the region.
Part of the reason the company can continue in this way is that the core of its business model involves an undervalued and precarious workforce in the form of drivers: many have no source of income. constant and, as independent contractors and non-employees, they cannot apply for any type of unemployment or government protection. Governments around the world have offered wage subsidies and cash payments during the toughest months of the pandemic to keep people employed and supported, but gig economy workers have often been overlooked as their legal status is still debated in many countries – especially ASEAN, where policy-making has not yet understood the business activity of gig-based companies. Worse, as super-app companies turn to food delivery and self-driving cars, these drivers — many of whom have made major purchases and lifestyle changes to meet the demands of the gig economy – risk becoming obsolete.
The strains of the gig economy were beginning to show even before the pandemic. As far away as China and the United States, stories abounded of the workload and tight schedules of couriers and delivery people. Platforms set strict guidelines for how their workers would operate, penalizing any slack in the system. Guidelines were also subject to change, as were algorithms that would favor particular providers over others: there are countless groups of AirAsia Ride drivers, Gojek couriers, Airbnb hosts and YouTube video producers trying to decipher the inscrutable changes in the algorithms that govern their livelihoods. . Big Tech enables the gig economy and has become for many of these people the slave driver of modern times in more ways than one. Given the unusual business models of gig-based companies, many have obtained their “license to operate” through what in other business areas would be unethical or illegal.
The promise of the gig economy comes from its ability to scale. For most companies, market expansion is a long and expensive process: staff must be hired, space must be purchased, and regulatory hurdles must be overcome. Gig economy platforms need none of that when entering a new market: even regulations can be ignored, as the burden of government attention would fall on workers and customers. who use the service, and not to the platform itself.
Almost all of the Asean tech companies that have garnered a lot of attention over the past few years are gig economy platforms: Grab, Airbnb, Food panda, Gojek, Lalamove. Even slightly older and larger tech companies have platforms as part of their business model: Lazada Seller Center connects third-party sellers to Lazada customers, while TikTok allows content creators to find loyal viewers.
That’s not to say the expansion wasn’t expensive: Platforms spent huge amounts of money marketing to workers and potential customers. Yet, for funders, these costs are just steps on the road to global dominance; giving workers in the gig economy decent protections, on the other hand, is not part of the equation. They are merely fodder for the “evaluation game” attached to the application.
This is an example of the distorted view of technology financing. A company can go years without making a profit, while attracting great interest from private investors as long as the promise of global scale exists. It’s about creating financial leverage with hundreds of millions of customers with no loyalty to workers – and therefore never really running a successful business in the truest sense of the word. Discussions of how to better protect those who use the platform – customers or suppliers – are neglected and, unfortunately, regulators have been seduced into becoming part of these systems.
This unsustainable model doesn’t even make business sense: part of the reason these super-apps spend so much money on driver acquisition is that unclear guidelines, unstable revenue, and lack of guards resulted in high driver turnover. Providers aren’t true to their platform, or even to the concept of the gig economy itself. These subsidies are also sometimes the only reason why it makes sense for suppliers to be on the platform in the first place: when both Gojek and Lalamove decided to cut their subsidies, the drivers went on a multi-day strike to force companies to sell.
Asean governments need to consider which platforms are successful and why they should try to support alternatives that don’t depend on the scale-obsessed tech funding model. Despite all their flaws, the platforms succeed in what they want to do: connect suppliers and customers. A platform that allows a service provider — whether a restaurant, handyman, driver, artist, or small business — to more easily deliver goods and services to a customer would be a real asset for small and medium businesses that don’t have the resources to create a custom solution. This has been essential throughout the pandemic.
However, this views the platform as something akin to essential economic infrastructure, rather than a business from which to extract maximum revenue. Governments could invest in public or quasi-public platforms that connect suppliers and customers for a low fee while providing adequate protection for both parties. And, by creating the platform, governments will ensure proper regulatory compliance, something ASEAN needs to take a stronger stance on, as technological developments stay ahead of policy-making.
Chandran Nair is the founder and CEO of the Global Institute for Tomorrow. This article is part of a series on key areas where ASEAN, as part of a regional and global system, must consider transforming itself if it is to learn lessons from the pandemic, identify future opportunities and realize social change for the better.