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The problem is when one technology company that uses this model reaches critical mass stage, they create a chicken-and-egg problem for anyone that wants to attempt to disrupt their market. You can't get contractors without clients and if you don't have contractors, clients won't want to wait. The problem has been getting worse with the rise of the internet and global connectivity as these companies can more easily expand into an entire industry and quickly dominate the technology side.

This domination of the tech side of old industries makes it especially hard for tech companies that want to disrupt the "old" companies because the market often assumes there is only room for one technological provider/disruptor per market service. This is similar to the first to market principle. If you get your service out there and generating new users before your competitor, you have an innate advantage over all the competition AND a great advantage over future companies using a similar model to yours. In the process of shutting out new, small tech companies, the competition is narrowed down to the "old" companies/interests in which the tech company has a clear new, tech-inspired advantage over, else why would they be called a disrupting tech startup?

So you have situations where 1 tech company, slowly morphing into a giant, effectively shuts out both the entrenched interests who cannot adapt fast enough to stem the hemorrhage of customers and the new interests who can't compete on either price or availability without a long ramp up and generally necessary venture capital. This creates a situation in which the contractors are taken advantage of, due to the lack of competition and complete monopoly that is slowly being acquired by the tech company.




Several über drivers are also lyft drivers. Über is trying to prevent this by requiring drivers to accept a minimum percent of rides, but a company could get critical mass in a large city using 5% time from a large number of drivers. Growing from there would easily enable full time drivers.

Which means über can only maintain a monopoly with thin margins which is generally considered ok.




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