Do fair-weather tech companies need regulating?

COVID-19 is creating a great deal of disruption in the market. Technology itself, which was seen as the great saviour for most companies, is having a reverse effect on some, which were founded on a tech base. 

These app-based organisations must go through various adjustments to stay in business post pandemic. With their employees and customers in full or semi-lockdown and social distancing becoming the norm for everyone, the app companies are furiously upgrading their existing programmes to fit new social needs and fill the gaps in their operations. 

Technology companies are also moving fast on the ground, looking to recover the losses and find fresh opportunities that did not exist in the pre-lockdown times. 

Some tech-based companies spread across the world are re-evaluating their businesses and making changes that will hugely impact the people who are already dealing with the fallout from the global pandemic. One company making such cutbacks is Uber, which has faced challenges due to some parts of the world going into full lockdown and curfew conditions, resulting in no movement and the closure of food outlets and restaurants.

Uber has announced that it would be concentrating on its core ride-hailing business and delivery platforms, which means it is considering layoffs around the world. It has also announced that it would move its Asia Pacific hub, which was set up to support its markets in countries like India, Bangladesh, Sri Lanka, Japan, South Korea, Taiwan, Hong Kong, Australia and New Zealand.

Its explanation is the company is resizing to match the realities of its business, given the unpredictable nature of any eventual recovery from the pandemic’s impact. 

Multinational companies like Uber have the luxury of withdrawing their services from any country in the blink of an eye, when they feel it is no longer profitable to run. Such is the nature of their business and cutbacks are made with impunity as technology companies by their very nature and makeup have only fibrous roots in any country they operate. 

While this may seem like a smart and obvious move to make for the companies, some of these cutbacks would have drastic repercussions for the employees, who depended on them for their livelihoods, especially in our part of the world. 

A recent report in the Dhaka Tribune said that UberEats had decided to close operations in Bangladesh. A spokesman for the company was quoted as saying, “We have made the decision to discontinue UberEats in Bangladesh from June 2, 2020. This continues our strategy of focusing our energy and resources on our top Eats markets around the world.” 

This brings us to a whole new equation when considering the pros and cons of technology companies that became important players during our own local lockdown. Delivery services became a lifeline for consumers in the last two months with strict curfews imposed, particularly in the urban areas of Sri Lanka. 

Although the suppliers themselves worked out methods to deliver their goods to the consumer by obtaining curfew passes, the taxi-hailing services played a big role in distributing dry rations and later prepared food. Whilst the lockdown consumer was kept satisfied, these technology-driven taxi services played another vital role in that they helped to restart the food and beverage entrepreneurs giving a small but direct push to our very crippled economy. 

In the last couple of years, restaurants and takeaway outlets have come to depend a great deal on these app-based tech companies to deliver food orders to consumers and have by default, failed to promote their services to a great extent outside these platforms. One couldn’t blame them as the reach of the app-based delivery platforms are far greater than the organic reach of the restaurants.  

But what happens if the app-based delivery service suddenly drops you like a hot potato, like what happened in the case of Bangladesh and UberEats? The well-developed supply chain would vanish overnight and this fragile industry would face calamity. To realign their clientele to a new service would take valuable time, which can in reality be the make or break of that enterprise because regular customers find alternatives.

Given this circumstance, it would be reasonable to say that these outlets might put themselves at risk by depending on multinational companies with no national loyalties but purely operate on what profit they make and where they can make it. 

The question then is how to safeguard our restaurants and food outlets from facing a similar situation like Bangladesh? It is a matter for our policymakers to work out during this time. Should there be more stringent operating rules for these techy multinationals, which operate in our country but don’t seem to have any deep roots?
The recent surge of employee dismissals by Uber worldwide is another major cause for uncertainty as to how one can create stability when dealing with gig market operators. While this model has its advantages in creating a level-playing field for those seeking jobs in the related industry, the very frivolous approach taken by these operators bodes ill for anyone who deals with them.   

For example, if their commitment to operate in countries like ours is only in fair weather and can withdraw the moment they hit a rough patch – it would no doubt create jitters amongst national planners looking at economic self-stability and the provision of stable employment. 

The Business Times (Singapore) on May 19 reported Uber’s decision to move its Asia-Pacific headquarters out of Singapore in the next 12 months as the COVID-19 outbreak continues to rattle its business. The move is expected to affect around 120 roles.  The Asia-Pacific hub was launched in Fraser Tower, Singapore in April last year to support its operational markets in the region. 

On May 6, Uber had announced that it will cut its customer support and recruiting teams by about 3,700 full-time employee roles but with CNBC’s announcement on May 18, that Uber is cutting 3,000 more jobs less than two weeks after the initial round of layoffs, would have the company’s global headcount slashed by about a quarter. 
It has allegedly laid off people here in Sri Lanka. This is something that has to be looked at carefully by merchants and consumers. 

While the cost-cutting reflex is understandable, business leaders have an obligation to make responsible decisions to keep their companies afloat. Those who manage the economic effects of this crisis in a clear and compassionate manner will create more value for their companies and will come out of this pandemic stronger than ever before.  

In the Fourth Industrial Revolution, one thing is ever so clear – that it is not just technology that will drive our lives but how technology interacts with humans. If a technology-driven company needs to operate in a country, especially one where the economy is fragile, it absolutely needs to have a human face and a heart. These international technology companies have become ghost operators, even those like Airbnb and similar operators.

They have hardly any human interface and this is not a sustainable solution for economic and social viability.
(Neluka Jayasinghe, a keen follower of socio-economic and political developments both locally and internationally, can be reached at [email protected])