Aug 21, 2020

Axios Login

By Ina Fried
Ina Fried

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1 big thing: The fight over turning gig workers into gig employees

Illustration: Eniola Odetunde/Axios

The gig economy model powering a number of key tech giants threatens to break down in California, in a battle that may spill out across the country over whether gig workers should be considered employees.

Why it matters: Treating gig companies' workers as employees would guarantee them benefits and other rights they don't necessarily get as independent contractors. But the prospect presents an existential threat to the firms' business models.

What's happening: Uber and Lyft on Thursday backed off threats to suspend ride-hailing services across California after an appeals court stayed an injunction ordering them to reclassify their drivers in the state as employees. The court halted it from taking effect as long as the companies' appeal of the order remains pending.

Yes, but: It's a temporary victory for the companies. The broader court battle still looms, and California is sure to keep the pressure up. The injunction represented the state's latest attempt to enforce its new law codifying stricter requirements for classifying workers as contractors rather than employees.

The big picture: Gig economy companies view themselves as two-sided markets, connecting customers looking for, say, a ride or overnight stay with people selling that service. Labor groups and Democratic officials see them as conventional employers who have figured out a business model that lets them dodge the obligations and liabilities of employing people.

California is the battleground for those two opposing camps, as gig companies in the state look to avoid complying with the new law and increasingly end up in court. It's not just Uber and Lyft:

More significant for the companies is the very real possibility of other states — or even the federal government — following California's lead.

  • Last month, Massachusetts' attorney general filed her own lawsuit against Uber and Lyft to enforce a 2004 state law similar to California's.
  • The U.S. House of Representatives earlier this year passed a labor rights bill almost entirely on party lines that included similar provisions to California's law — a messaging exercise indicating national Democratic priorities.

The big question: What would companies like Uber and Lyft do if they exhaust all options to keep drivers as contractors?

  • Uber says classifying California drivers as employees would lead to a 25–111% increase in prices and a 23–59% decrease in trips, and that the number active drivers in a quarter would fall from 209,000 to 51,000.
  • Under the stay granted Thursday, both companies will have to certify that they do in fact have a plan to comply with reclassifying drivers, though it's unclear whether they'll make those plans public before November.
  • They've also considered alternative models like franchising their business out to standalone fleets, similar to Uber's early black car service and its operations in some countries.

What's next: Uber, Lyft and their peers are headed to the California ballot box in November, pushing Proposition 22, which would let them keep classifying workers as independent contractors while, for the first time, providing them a limited set of benefits.

2. The tech workers boosting down-ballot Dems

Illustration: Aïda Amer/Axios

Some 13,500 tech workers with day jobs at companies like Facebook, Google, Netflix and Disney are volunteering in their spare time to help down-ballot Democratic candidates in competitive state-level races with digital tools and marketing, Axios' Ashley Gold reports.

Why it matters: Democrats in recent years have fared worse than Republicans at harnessing technology to their advantage in campaigning. The stakes are higher in building a tech-savvy campaign in 2020's incredibly competitive landscape.

By the numbers: Tech for Campaigns' 13,500 volunteers have to date worked on 468 election-related projects with 366 different campaigns, flipping three state chambers Democratic. The group is working in 21 different states this cycle.

  • Jessica Alter, a tech industry vet, launched the group in 2018 with two other liberal tech industry friends, Peter Kazanjy and Ian Ferguson. They saw a desperate need for Democrats to catch up to the digital age in campaigning.

What they're saying: Ricky Junquera, a Democrat running for Florida House District 118, told Axios small campaigns already struggle to afford consulting and digital services — and then COVID-19 hit, making things even harder.

  • Volunteers from Tech for Campaigns are handling Junquera's digital ads and texting outreach, he said, decreasing his campaign's spend on each tactic by 60–70%.
  • "They're like my fairy godmother," he said. "Otherwise, I don't have a shot."

The big picture: It's no secret that many tech workers are Democrats. Some see volunteering with the program as a way to get involved in politics while stuck quarantining due to the coronavirus.

3. Scoop: OTF sues over $20M in missing funds

The Open Technology Fund (OTF) is suing the U.S. Agency for Global Media (USAGM) over roughly $20 million in congressionally appropriated funds it says the government is refusing to provide, Axios' Sara Fischer scooped yesterday.

Why it matters: There's bipartisan uproar from Congress over the funding that OTF says is being withheld. The USAGM, whose new CEO is seeking to replace OTF leaders with Trump loyalists, is required by law to provide the funding via federal grants, but it has given shifting rationales for why the money has been held up.

The big picture: The OTF is a government-supported nonprofit focused on advancing internet freedom. Without funds, it can't support work by activist journalists in places like Hong Kong and Belarus, where authorities are increasingly cracking down on internet freedom.

Details: The lawsuit alleges the USAGM breached its contracts with the OTF in three ways:

  1. It withheld about $9.4 million in funding that it owes under OTF’s 2020 grant agreement.
  2. It withheld an additional $9.8 million in prior OTF program grants held by Radio Free Asia, OTF's former parent organization.
  3. A USAGM senior adviser "engaged in transparently pretextual efforts to force OTF into breaching its grant agreement."

The lawsuit also says two chief financial officers at the USAGM flagged that it was illegal to withhold the funds, but the USAGM tried to move forward with the plan anyway.

Be smart: The issue of funding the OTF is particularly sensitive, given that the USAGM announced on Tuesday that it plans to create and fund its own Office of Internet Freedom. Sources fear the agency is withholding the OTF's funds in order to shift them to its new agency, which is illegal if done without congressional approval.

Go deeper:

4. Electric bikes see a pandemic-driven spike

Photo: Samuel de Roman/Getty Images

Electric bikes are seeing a major spike in sales that began even before the coronavirus pandemic but has sharply accelerated since March, Ashley reports.

Why it matters: E-bike manufacturers are racing to keep up with the newfound demand as people, wary of crowded public transit and facing less congestion from commuting cars, adopt new ways of getting around.

Sales of e-bikes in the U.S. increased 190% in June compared to June 2019, according to new research from The NDP Group. (E-bikes add an electric motor to traditional bicycles, making it easier for riders to pedal up steep hills and extend their rides.)

  • Yes, but: Ridership of shared e-bikes (such as those owned by Lime and city bike-share companies) has gone down during the pandemic.

The big picture: Many U.S. cities, including New York, San Francisco and Washington, D.C., have been closing certain streets to traffic, lowering speed limits and adding protected bike lanes, all key factors in helping people feel more comfortable on bikes and less threatened by cars.

  • Some cities were far along in enhancing bicycle infrastructure prior to the pandemic, while others snapped into action when COVID-19 hit.
5. Take Note

Trading Places

  • Brian Harrell, a senior official at the Homeland Security Department's cybersecurity unit, is leaving the agency for the private sector, per CyberScoop.
  • Nick Bell, an early architect of Snapchat's Discover platform, has joined Google, per The Information.
  • New Relic added to its board enterprise technology executive Anne DelSanto and Citrix president and CEO David Henshall, and named Hope Cochran, Madrona Venture Group managing director, chair of the board.


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Ina Fried