The gig economy, once touted as an inventive success, is already exhibiting basic problems that cast question on its long-term viability, equity and accountability.
WHEN they initially appeared, e-hailing services were revolutionary and this was not long ago. With a few taps on their cellphones, urban commuters may gain unprecedented levels of control and convenience.
They may hail a ride, bypass the unstable taxi system and other options. Even though the tale was simple, it was intriguing.
Many more people can now afford to travel because of technological improvements. Competition would push prices down. Ultimately, customers would win.
However, as we approach 2027, that initial hope is fading. The gig economy, once touted as an inventive success, is already exhibiting basic problems that cast question on its long-term viability, equity and accountability.
Economists and behavioural scientists have long been concerned about a paradox that is key to this transformation. According to the paradox of choice, more options do not promote freedom beyond a certain point, but rather cause confusion, inefficiency and discontent.
This is more visible than anywhere else in today’s e-hailing landscape. Customers are no longer limited to one solid platform.
On the contrary, they must navigate a competitive app market in which every ridesharing provider claims to offer the best pricing, fastest pickups and nicest service.
Fatigue, not empowerment, is the result. Instead of having a smooth experience, consumers engage in hidden labour, such as navigating between apps, checking costs and second-guessing decisions.
This dispersion occurs everywhere, not just among customers. The drivers who keep the industry moving are in an increasingly perilous situation. Demand is minimal in a market with multiple platforms.
As a countermeasure, drivers begin to use numerous platforms at the same time, attempting to increase the number of ride requests by logging into multiple apps.
Even when this behaviour makes logical sense on an individual level, it results in systemic inefficiency. Several platforms may show that a driver is available at the same time, creating the illusion that there is more demand than there is. Cancelling requests causes delays, irritation, and a loss of trust when one platform accepts a reservation.
The actual issue is not technical; it is regulatory. For the most part, policymakers have taken a hands-off approach, allowing market forces to determine outcomes with minimal intervention. In theory, this technique encourages innovation while also lowering entry barriers.
What it has developed is a type of toxic competition that undermines the efficiency it encourages. Without well-defined legislative limits, platforms compete primarily on price, aggressively cutting rates to acquire market domination. Even though customers may benefit in the near term, this race to the bottom threatens the industry’s long-term financial viability.
There is no minimum fare structure, which is one of the most significant regulation gaps. Price floors are often used in traditional transportation economics to ensure that service providers can cover operational costs while maintaining acceptable levels of safety and quality.
Drivers, on the other hand, bear an unfair share of the burden in the e-hailing market because such safeguards do not exist. Many people are driven to work unsustainable numbers of hours since their incomes are unpredictable and frequently insufficient.
It is increasingly usual to hear of drivers working sixteen hours a day. Because tiredness increases the likelihood of traffic accidents, it raises serious issues regarding both public safety and labour exploitation.
Drivers are considered independent contractors, which complicates the situation even further. Platforms gain from the model’s agility and cheaper operational costs, while workers carry most of the risk.
People still do not have equal access to social security systems such as insurance, retirement contributions, and occupational incentives. There are also gaps in execution, including legislation such as the Gig Workers Act of 2025, which disadvantages many drivers in an already competitive business.
Along with employment issues, the rise of e-hailing services has raised substantial worries about data privacy and security. In today’s information economy, data may be both helpful and harmful. Location data, travel history and financial information are just a few examples of personal data that all platforms collect in plenty.
The number of organisations with access to users’ personal information increases in proportion to the number of platforms. As a result, data becomes disconnected and subject to varying levels of security, inconsistencies and silos.
Some platforms, particularly those that are younger or smaller, lack the resources to invest in a robust cybersecurity system. This makes them easy targets for cybercriminals and data breaches. The consequences of these breaches extend beyond simply making people’s life more difficult.
They put consumers at risk of surveillance, financial fraud and identity theft, while also eroding public trust in digital services. Platforms experiencing financial difficulties may be able to profit from user data through collaborations with other parties, although this is typically done without explicit channels for user consent.
Consumers are discovering that service quality and safety concerns increasingly outweigh the promise of expediency. Despite the relatively high standards maintained by major platforms, the introduction of unpredictability generated by the entrance of several smaller competitors may degrade the user experience.
There may be less stringent background checks for drivers, less helpful customer service, and more ambiguous accountability mechanisms. The burden of risk assessment consequently falls on the user, who, armed with limited information, must navigate a complicated web of service providers.
The increased adoption of ride-hailing applications has not resulted in a more accessible and efficient transportation network. Instead of increasing demand for public transportation, competition among these platforms for rides pulls customers away from both traditional taxis and other conventional modes of transportation such as buses and trains.
Instead of boosting demand, this mechanism results in redistribution. Sustainable urban development is dependent on a strong public transportation system, which will suffer in the long run as a result.
Given these challenges, the e-hailing industry cannot continue its current trajectory without some form of strategic intervention. Restructuring could start with establishing a minimum price barrier and a consistent ticket system.
A move like this would eliminate exploitative pricing techniques, level the playing field for drivers, and encourage improvements in service quality and innovation. Furthermore, it would demonstrate that you are concerned with achieving a balance between consumer interests and worker well-being.
Data stewardship is an issue that urgently need more strict regulatory oversight. An effective digital governance structure should be based on mandatory cybersecurity audits, transparent data protection policies, and enforceable penalties for noncompliance.
To rebuild users’ trust, priorities data usage transparency and improve permission processes.
In addition, only trustworthy and qualified operators should be allowed to enter the market, hence the entry conditions should be updated.
Financial security, technical prowess and a track record of prioritising driver well-being are all aspects to consider. Policymakers can decrease and improve market clutter and service quality by raising the entrance barrier.
The most serious issue facing the e-hailing sector is a failure to collaborate, not a lack of ideas. Unchecked expansion is no longer regarded as a positive indicator of sector development. Rather, it risks creating a disconnected, ineffective, and unfair system that will be unable to meet the demands of all parties involved.
Finally, the paradox of choice in the e-hailing sector serves as a warning tale regarding market liberalisation’s limitations.
Having more alternatives does not guarantee better results. However, if not adequately regulated and strategically coordinated, they have the potential to destabilise the market, diminish worker livelihoods, and lower consumer value.
Now is the time for policymakers to stop watching urban mobility and start making decisions about it. When that happens, the e-hailing revolution will have fulfilled its promise in a fair and sustainable manner.
Associate Professor Dr Mohd Azmir Mohd Nizah
Universiti Sains Islam Malaysia
