Grab-Uber deal offers test on regulating the platform economy

WHEN you tap on your ride-hailing app to get a ride, and you are charged S$20 for a ride that is 10 minutes away, do you really know how that ride and its price are determined?

A consumer probably accepts some vague understanding that the ride-hailing app is matching demand and supply of transport. But he or she would not know how the price or the ride assigned is determined by the frequency of app use, the number of ride-hailing requests at that point, the traffic conditions, or his or her display photo that may encourage a shared ride.

Dynamic pricing, as well as the evolving business model of both startups and of regulatory stance in this new economy, makes the Grab-Uber merger a test case for the ages here. The crux is in deciding how to monitor and regulate large businesses that are increasingly testing the platform model. The platform model essentially uses the Internet to match supply and demand, and build networks.