Digital platform cooperatives: A step closer to equality and inclusion?

• by Jenifer Shapiro and Mohit Dave
• Dec 14, 2023
• 6 min

The emergence of gig platforms, such as Uber and Lyft, initially promised improved livelihoods for unskilled workers globally. However, issues such as exploitation, inadequate protection, gender disparities, and uncertain wages persist. In response, the Platform Cooperativism Consortium advocates for cooperative principles and emphasizes shared ownership, democratic governance, and human-centric design. Despite scalability, regulations, and capital-raising challenges, digital platform cooperatives offer a potential solution and promote fair working conditions to empower workers

Authored by Jenifer Shapiro and Mohit Dave, Head of Partnerships and Resource Mobilization for the International Cooperative Alliance, in affiliation with the regional office in Asia and Pacific. Mohit is also a fellow at the Platform Cooperative Consortium housed at The New School in New York City. Mohit has shared his personal views and comments, which may not necessarily represent the views of the organizations with which he is affiliated.

The Emergence of Gig Platforms

When ride-hailing giants Uber and Lyft emerged in the United States in the 2010s, they were viewed as a panacea for transportation. Around the same time, other gig platforms, which include those that specialized in food and grocery delivery, caregiving, accommodations, and freelance work, came to market. This disrupted traditional business models and put power in the hands of consumers as they offered competitive prices and on-demand services. Workers also benefitted from flexible schedules and the ability to make a side income. These digital platforms were not unique to just the US and Europe, as the same platforms or others with similar business models, rolled out services in the Global South.

Yet, the initial hopes that platform work would improve the overall livelihoods of unskilled workers in the Global South, and worldwide for that matter, remain unfulfilled. Researchers have witnessed increased worker exploitation, a lack of social protection mechanisms and governing regulations, an increased gender divide, and inconsistent and uncertain wages for those who engage in platform work. What was once deemed an avenue for unskilled workers to climb out of poverty is increasingly viewed as work that exacerbates inequality and exclusion. Many of these outcomes are attributable to the for-profit business models adopted by digital platforms. This model has a winner-takes-all attitude, driven by deep-pocket investors, shareholder growth, and profit optimization, often at the workers’ expense.

A focus on the Worker – Digital Cooperative Platforms

Several efforts have emerged to rectify the negative consequences of platform work on workers’ lives. These include the creation of worker-centric platforms, the emergence of spaces to rate gig platforms against principles of decent work, such as Fairwork, advocacy for better working conditions, and knowledge dissemination on best practices in the area led by organizations, such as the JobTech Alliance.

Such efforts have been helpful. Yet, a burgeoning movement has emerged that addresses the lack of democratic and transparent values inherent in venture-backed commercial digital platforms.

The Platform Cooperative Consortium (PCC) is a leader of this movement. The PCC strongly advocates for the adoption of cooperative principles that include shared ownership and democratic governance, human-centric platform design, transparent and open-source development, and open data. It believes that platforms that adhere to these cooperative principles will give rise to higher quality jobs, lower worker turnover, privacy and transparency, and fair pay, among other positive benefits for those who work for the platforms.

The PCC and its associated digital cooperative movement have gained momentum, partly through its annual conventions. However, the transition from private digital platforms to cooperatives or the launch of cooperative digital platforms has had its challenges. Some pressing challenges are outlined in detail below.

Scalability: The hyperlocal nature of cooperatives often runs counter to the concept of scaling. Many cooperatives are borne out of identities closely tied to local values and their environments. This makes growth, expansion, the accommodation of a wider range of member identities, and applicability in other markets more challenging.

MSC, through its work in India’s Bihar state with the Bihar Rural Livelihoods Promotion Society (BRLPS), also known as JEEViKA, supports farmer producer companies (FPCs)—a form of a cooperative. MSC’s support enhances the FPCs’ governance models, helps them realize better prices, and digitizes their value chains. Through this work, we have recognized the inherent difficulties FPCs face when they attempt to grow, scale, and digitize. Federated platforms have emerged as an alternative to overcome such scaling hurdles. They allow the cooperative to remain small, local, and sustainable. At the same time, it benefits from the strength of joined forces with several platforms.

SEWA Cooperative Federation in India adopted the federated model, which proved useful. Another example of such adoptions is AMUL, the marketing apex organization of the Dairy Cooperatives of Gujarat. Some cooperatives have not adopted a federated model yet scaled successfully, at least on a pan-India level. Such cooperatives include ULCCS, India’s oldest worker cooperative, with roots in Kerala.

Digital platform cooperatives, however, allow a relaxation of the hyper-localness to which their non-digital brethren are tied. Their digital nature naturally lends them to larger markets. This holds if the cooperative members are not limited in terms of access to digital platforms and the skills to use them. Limited access to platforms and a lack of digital literacy have challenged rural women’s cooperative members in Indonesia, who lack information, resources, and digital tools. Typically, they are small-scale and semiformal and often fall behind amid the charge toward digitalization. Therefore, such cooperatives require mentors or ambassadors from the cooperative community to shepherd other members through digitization.

Regulations: The lack of policies and regulations that govern digital platforms in the Global South often leads to the types of worker exploitation highlighted above. However, there appears to be a lot of promise at the municipality or city government level to create an enabling ecosystem for cooperatives in the digital economy. Currently, the International Cooperative Alliance conducts research in Chennai to determine the levers policymakers can use to facilitate environments that help digital platform cooperatives sustain and grow.

Beyond the municipal level, states, such as Kerala in India, have a fertile backdrop for digital cooperatives to thrive. The state’s policies promoting technology adoption, its higher-than-average national literacy rates, and its worker-centric government make it conducive to digital cooperatives. The Auto Savari app, registered under the Ernakulam Jilla Auto Drivers Cooperative Society in Kerala, is a digital cooperative platform that has recently emerged as an alternative to ride-hailing apps, such as Uber. State or national-level laws that allow transnational digital cooperatives to expand beyond their borders are beneficial. Examples of such cooperatives that have benefitted from cross-border expansion include Smart, based in Belgium, which addresses the administrative nuances that freelance workers face, and MyCoolClass, an online teachers’ cooperative domiciled in the UK.

Capital raising: Investors chase returns, so in the case of platform cooperatives whose business models are the antithesis of pure play capitalism, the scope for significant returns over a short time frame does not exist. Additionally, other modes of capital raising, which include business loans and crowdfunding, are difficult for digital platform cooperatives as they struggle to compete with private tech companies that offer big payouts. The shortage of capital hinders digital cooperative platforms from attracting the best talent and technical expertise. This limits further investment into the platform for growth, which makes it hard for cooperative platforms to compete with their privately owned counterpart.

That being said, fundraising is not impossible, as was recently proven in New York City, where a driver-owned Uber alternative crowdfunded approximately USD 1 million. The cooperatives’ member-owners must recognize that attracting capital will take longer. They may have to rely on various capital sources while they target investors who do not fit the mold of traditional venture capitalists such as a combimation of impact investors and crowdfunding.

Digital platform cooperatives present an opportunity for workers to control the direction their businesses take alongside a host of other advantages, many of which spill over to actors in the platform cooperative ecosystem. However, the transition to a digital platform cooperative model has not yet been extensively tested and thus far has presented the hurdles outlined above. With ingenuity, patience, and innovation, such challenges are worth tackling, as they can provide fair working conditions to the millions of workers who rely on digital platforms for their livelihoods.