Huffman & Schmidt-Kessen on Gig Platforms as Hub-and-Spoke Arrangements and Algorithmic Pricing: A Comparative EU-US Antitrust Analysis

Max Huffman (Indiana University Robert H. McKinney School of Law) and Maria José Schmidt-Kessen
(Central European University (CEU) – Department of Legal Studies) have posted “Gig Platforms as Hub-and-Spoke Arrangements and Algorithmic Pricing: A Comparative EU-US Antitrust Analysis” on SSRN. Here is the abstract:

Gig platforms are a modern economy enterprise structure characterized by a firm matching service providers with consumers – prominent examples include ride-sharing platforms, like Uber; delivery platforms, like Wolt; and lodging rental platforms, like Airbnb. As all online platforms, gig platforms are data-driven business models that employ and develop algorithms and AI tools that learn from user behavior and adapt to make interactions increasingly efficient. In contrast to other online platforms, such as advertising exchanges or online market places for goods, gig platforms enable users to sell their labor or services to other users via the platform.

Scholarship has shown enterprises that contracts with their service providers, who are then by necessity operating as independent enterprises, are best analyzed as agreements implicating Art. 101 TFEU and Section 1 of the Sherman Act. Currently, the dominant legal treatment of service providers on platforms including Uber (ride-sharing) and Wolt (food delivery) is as contractors rather than employees. We employ here the lens of a hub-and-spoke arrangement, with the platform as the hub and the service providers as the spokes, and the algorithmically-established price terms representing a collection of parallel vertical agreements. We then engage in a comparative study of the legal implications under antitrust law in the US and the EU of hub-and-spoke arrangements.

The chapter proceeds to outline the hub-and-spoke structure of the service provider-platform agreements in a gig economy enterprise, including the universal agreement to abide by prices set by algorithm in contracting for services. It covers various design options for pricing algorithms that can be used by platforms to coordinate the transaction between its users. Next, the chapter considers the EU caselaw on hub-and-spoke arrangements, analyzing authorities from across the EU, and identifies the probable treatment of the gig economy agreements in the light of these authorities. The chapter then conducts a similar analysis of leading recent authorities in the US and likewise concludes the most probable treatment under US law. In the conclusion, the chapter compares and explains the likely legal treatment of an algorithmically defined hub-and-spoke agreement and suggests areas for change.