In this blog, Professor Lehdonvirta takes stock of everything that he and his research team have learned through iLabour, a major research project that he launched in 2015 with funding from the European Research Council. He evaluates the impact of the findings and explains how the legacy of iLabour lives on. He also introduces his upcoming book, Cloud Empires: How Digital Platforms Are Overtaking the State and How We Can Regain Control.
Back in 2015, the idea that labour could be mediated by digital platforms was still fairly new. Uber had just been named tech company of the year in the United States. Upwork was yet to be born from the merger of two freelancing platforms. The term “gig economy” was only just starting to break into mainstream consciousness.
In the iLabour project, we undertook a deep dive into the social and economic implications of this new way of organizing work. We focused especially on online gig work: contract work delivered remotely over the Internet via online labour platforms like Upwork, Freelancer, PeoplePerHour, Fiverr, and Amazon Mechanical Turk. Together these platforms mediated all kinds of knowledge work from data labelling to software development and voice acting to bookkeeping.
Discovering a transnational labour market
One way of summarizing our findings is to say that labour platforms have created a parallel labour market on the Internet. Where conventional labour markets are bounded by national borders, the online labour market is intensely transnational, with around 90 per cent of contracts taking place between workers and employers in different countries. Most of the workers are located in low- and middle-income countries, such as India and Ukraine, but some specializations are dominated by workers in high-income countries. In 2020 there were roughly around 3.3 million online gig workers around the world who had completed at least 10 projects or earned at least $1,000 online. The market approximately doubled in size from 2016 to 2021.
This new transnational online labour market exists largely outside the reach of national institutions like employment law and labour unions. And yet it’s not quite an unregulated free-for-all. Its regulators and policy makers are the technology companies that maintain the platforms. Not only do the platforms match job seekers with employers, but also define certain labour standards and minimum wages that the contracts must abide by. They also validate workers’ skills and experiences with virtual “qualifications”. And they maintain virtual “courts” to adjudicate disputes. In these and other ways digital platform companies—largest of which are based in Silicon Valley—set the rules of the world’s online labour market.
What happens when workers are not content with the rules of this online labour market? Just like workers in national labour markets, online workers organize and engage in collective action. Sometimes their protests are aimed at national policy makers, but often they will protest directly against a platform company, in an attempt to get the company’s decision makers to change the market’s rules. However, online workers face many challenges in getting organized, such as geographic dispersion and fragmentation across many specialisms and platforms. For now, platform companies’ and their decision makers’ rule thus mostly goes unchallenged.
iLabour’s legacy: Publications, EU policies, and the Online Labour Index
We published our findings in 12 peer-reviewed journal articles and various other publications, with several more still forthcoming. We won sister grants to study how platform earnings are taxed, how online freelancers develop their skills, and how the online labour market affects rural areas. Our findings directly fed into European policy making, including through my membership in the European Commission’s Expert Group on the Online Platform Economy and the High-Level Expert Group on the Impact of the Digital Transformation on EU Labour Markets. Our work benefited the EU’s Platform to Business (P2B) Regulation, the proposed Directive on improving working conditions in platform work, and the Draft Guidelines clarifying the application of EU competition law to solo self-employed people, among other initiatives.
As part of the iLabour project, we also created the Online Labour Index, a computational system that automatically produces real-time labour market data on the online labour market. Most of the statistics that I am quoting above are only known thanks to this system. With an additional Proof-of-Concept grant from the European Research Council, we were able to turn the system from an experiment into a mature research tool. I’m happy to be able to say that even as the iLabour project winds down, the Online Labour Index lives on, as it is now maintained by the International Labour Organization. The data it produces is available online and is used by many researchers, journalists, and international organizations investigating the online labour market. Perhaps you are one of them.
Next: Virtual empires of the digital economy
The things that I learned in the iLabour project convinced me that the power of Silicon Valley companies in today’s economy will come to be considered as one of the big issues of our time. Technological visionaries promised us that the Internet would liberate us from the power of gatekeepers and large institutions. Yet the very opposite seems to have happened—why? And what can be done about it? I started working on a book project that examines this phenomenon, in the online labour market but also in markets for goods, services, and digital products more generally. The book is titled Cloud Empires: How Digital Platforms are Overtaking the State and How We Can Regain Control, and I’m pleased to say that it’s coming out from MIT Press in September.
Cloud Empires traces the evolution of the digital economy’s institutional structure from 1980s decentralized cyberbazaars to today’s platform giants and their dissidents. I show how this evolution parallels the historical development of national economies. I argue that giant platforms are thus in certain ways more like states than traditional companies, a fact that helps to explain why antitrust enforcement has never been very effective at curbing their power. Instead of trying to deal with platforms as our grandparents dealt with industrial monopolists, I argue that we should be dealing with them as our ancestors dealt with aristocrats. I’m confident that this book will provoke a fair bit of discussion when it is released and look forward to its publication.
Thank you to everyone who has supported the iLabour research team over the years. It’s been a wonderful collaboration and I’ve found it very rewarding. The iLabour project website will eventually be archived, but we will continue to publish research and blog posts related to online labour markets through our new collaboration with the International Labour Organization—a website called the Online Labour Observatory.