In the years following their rise, delivery platforms such as Uber Eats, DoorDash, Globo, Deliveroo, and Just Eat Takeaway have transformed how we order food, groceries, and everyday essentials. However, beneath the convenience, these companies are facing mounting financial losses, labor disputes, and increasing regulatory scrutiny.
The European Union has adopted a new directive, the Directive on improving working conditions in platform work, aimed at improving working conditions for platform workers and increasing transparency in the use of algorithms. This directive builds on existing EU legal acts but introduces some new and specific measures to address challenges in the platform economy. This new directive goes beyond Spain’s Rider’s law, aiming for a harmonized set of standards across the EU.
As the platforms try to balance profitability with expansion, a significant yet often overlooked factor in this equation is the role of immigrant workers—many of whom operate in precarious conditions, sharing app accounts to survive in an increasingly competitive and costly gig economy.
Financial struggles and investor pressure
The financial landscape for delivery platforms could be better. Since going public, the largest platforms—DoorDash, Deliveroo, Delivery Hero, and Just Eat Takeaway—have collectively accumulated over $20 billion in operating losses. Once buoyed by a pandemic-fueled surge in demand, these companies face a starkly different economic reality, with their stock prices down significantly from their pandemic-era peaks.
Uber, one of the giants in the sector, achieved its first year of operating profitability in 2023, but even its path to sustainability is fraught with challenges. CEO Dara Khosrowshahi described Uber’s profitability as an “inflection point,” but the company’s growth relies heavily on expanding services and cutting costs. “Uber’s technology can allow retailers of all sizes to compete with Amazon,” Khosrowshahi said, emphasizing that the company aims to become the leader in local commerce.
However, as Jo Barnet-Lamb, an analyst at UBS, pointed out, “Investors’ willingness to fund losses has changed.” High operating costs—especially for marketing, delivery logistics, and subsidies to keep delivery fees low—have proven difficult to control. The cost of acquiring new customers in such a competitive market has also stretched these companies financially. While platforms have diversified into new areas like grocery deliveries and advertising, the thin margins of the delivery business have made sustainable growth elusive.
The role of immigrant workers and shared accounts
A crucial yet often hidden element of the delivery platform economy is the reliance on immigrant workers, many of whom use shared accounts to earn a living. New migrants, particularly those without legal work status, have found themselves drawn into the gig economy, where the barriers to entry appear lower, but the risks and challenges are high.
Take the case of Mayco Milano, a Venezuelan migrant living in New York City. Like many recent arrivals, Milano found that traditional job opportunities were out of reach without legal work authorization. After struggling to find work, he turned to food delivery, which offered a more immediate, albeit unstable, source of income. However, like many migrants, Milano does not have the required working permit to sign up for platforms like Uber Eats directly. Instead, he rents an Uber Eats login from someone else—a practice that has become common among immigrant delivery workers.
Milano pays $150 weekly to use another person’s Uber Eats account under the name “Jessica” and rents a moped for $400 weekly to make deliveries. “I work 10 hours a day, seven days a week,” Milano said, explaining how these fees devour most of his earnings. Yet, despite the high costs and limited profits, this method allows him to send money back to his family in Venezuela and slowly pay off the debts he incurred during his journey to the U.S.
This kind of account-sharing practice, though prevalent, leaves many immigrant workers vulnerable to exploitation and fraud. Some migrants have reported that the individuals whose accounts they rent disappear without paying them their share, leaving workers like Milano in precarious financial situations. As the shadow economy of moped and account rentals grows, so does the risk for those at its mercy.
In Spain, Barcelona-based Glovo and other delivery platforms have been fighting the Riders’ Law, enacted on 12 May 2021. The regulation recognizes food delivery riders working for digital platforms as employees rather than independent contractors.
Labor rights and precarious working conditions
For years, delivery platforms have touted their role in providing flexible work for millions, but the reality for many workers is far more precarious. Gig economy workers, including immigrants like Milano, often face low wages, unsafe working conditions, and a lack of basic labor protections. While platforms have been legally required to change their labor policies in some markets, the status of gig workers remains a contentious issue worldwide.
In 2021, the U.K. Supreme Court ruled that Uber drivers were workers, not independent contractors. This decision forced the company to provide benefits such as minimum wage and holiday pay in the U.K. However, Uber and other platforms classify workers as independent contractors in other countries, including the U.S., where similar debates are ongoing.
In California, a crucial ruling in 2023 upheld gig workers’ classification as independent contractors, much to the dismay of labor rights advocates who argue that these workers are employees with full benefits. While gig platforms claim that this classification gives workers the flexibility to set their hours and work when they choose, workers often feel forced to work longer hours to make ends meet.
Sergio Avedian, a delivery driver and consultant, voiced his frustration, noting that oversaturation in some markets has driven wages down. “Uber says there will be more demand with lower fees, and you’ll make more money,” Avedian said. “But in Los Angeles right now, I can’t make more than $20-$21 per hour before expenses.”
Despite these challenges, platforms argue that they provide vital income opportunities. Uber has maintained that California drivers are guaranteed to make at least 120% of the minimum wage while on trips, but the reality paints a more complex picture. “In the shelter, they support you with a place to sleep and some meals, but you also need to improve your circumstances on your own,” Milano said, highlighting the pressure many immigrants feel to work despite the low pay and high risks.
The EU Directive on platform workers
The EU Directive on Platform Workers, officially known as the Directive on Improving Working Conditions in Platform Work, aims to regulate platform work across all EU member states and establish a more balanced and fair relationship between platforms and workers. It sets a framework for addressing issues like bogus self-employment and algorithmic management, drawing inspiration from initiatives like Spain’s “Riders’ Law.”
Key objectives and provisions
- Combating bogus self-employment: The directive seeks to reduce the misclassification of platform workers as independent contractors when they exhibit characteristics of employment relationships. This is crucial for ensuring workers receive proper social security benefits and labor protections. To achieve this, member states must establish a rebuttable presumption of employment, meaning platforms must prove that a worker is genuinely self-employed based on specific criteria.
- Transparency in algorithmic management: The directive aims to increase transparency in how platforms use algorithms to manage and control workers. It requires platforms to provide workers with clear information about how algorithms impact their working conditions, including task allocation, performance evaluation, and account suspension. The directive also grants workers the right to contest automated decisions made by algorithms.
- Enhanced information and consultation rights: The directive strengthens platform workers’ rights to be informed and consulted about matters affecting their working conditions. It obliges platforms to provide workers with comprehensive information about their employment status, working hours, remuneration, and access to social protection. It also mandates platforms to consult with worker representatives on working conditions and algorithmic management matters.
Challenges and controversies
The EU directive faced a lengthy and contentious journey to its final approval, highlighting the complexities of regulating the platform economy at a supranational level.
- Balancing worker rights and platform flexibility: The directive attempts to balance protecting worker rights and maintaining the flexibility that characterizes platform work. This has led to debates about the scope of the presumption of employment and the potential impact on platform innovation.
- Resistance from Member States and platforms: Some member states, notably Germany, initially resisted the directive, arguing that it would harm their national labor markets and hinder platform competitiveness. Platform companies have also expressed concerns about the directive’s potential impact on their business models and growth prospects.
- Implementation and enforcement: The directive gives member states two years to transpose its provisions into national law. The directive’s effectiveness will depend on how member states implement and enforce its provisions, which could lead to variations in worker protections across the EU.
The EU directive on platform workers represents a significant step towards regulating the platform economy and improving working conditions for millions across the EU. Its long-term impact will depend on the effectiveness of its implementation and enforcement by member states and the ability of platforms like Glovo to adapt their business models while ensuring fair labor practices.
Regulatory scrutiny and enforcement
The situation is further complicated by the growing regulatory scrutiny delivery platforms face. For example, the General Data Protection Regulation (GDPR) in Europe has imposed stricter oversight on how companies handle worker and customer data. Uber recently faced a fine of €290 million for transferring sensitive data from its European workforce to the U.S. without adequate protection.
In New York, where the influx of immigrants has created a sizable pool of delivery workers, the city has ramped up enforcement of e-bike and moped regulations, particularly targeting undocumented workers. The New York Police Department (NYPD) has confiscated over 7,000 mopeds this year, many of which belong to immigrants like Milano who rely on these vehicles for work but do not have the necessary licenses or registration.
These enforcement measures add another layer of difficulty for immigrant delivery workers. Without legal alternatives, many need to rent mopeds without plates and use shared accounts to keep working, all while facing the constant threat of losing their vehicles or having their earnings withheld by unscrupulous account owners. “They’d take the motorcycle,” Milano said, explaining his fears. “And it’s not mine.”
The path forward for delivery platforms
As delivery platforms navigate this challenging landscape, they turn to new revenue streams and explore ways to boost profitability. Some, like Uber, are expanding into grocery delivery, ride-hailing, and even partnerships with local retailers, hoping to offset the declining margins of food delivery services. Others are pushing for membership schemes, such as Uber One, to lock in loyal customers and increase the value of each user.
However, the key question remains: Can these companies balance the need for profitability with the demands of their workforce and growing regulatory scrutiny? As Youssef Squali, an analyst at Truist Securities, noted, “The companies are all on a collision course”—not just with each other but also with regulators, workers’ rights advocates, and their own financial backers.
Once seen as a win-win for companies and workers alike, the gig economy now faces a reckoning. Its reliance on immigrant labor—often unregulated and vulnerable—underscores the fragility of the model, raising important questions about the future of work in a post-pandemic world.
While delivery platforms have revolutionized how we receive goods, they must now navigate the complex reality of delivering on their promises to investors and the workers who keep their operations running.
