The recent Zomato controversy showed that India’s gig economy debate is stuck between two poor choices. Either it requires platforms to provide full employment protections and risk their collapse, or accept ongoing worker exploitation and call it innovation. But this debate overlooks a bigger issue. What if these platforms are not truly viable businesses, and an entire sector has been built on the idea that desperation is a business advantage while society pays the hidden costs?
Here are some facts. Gig workers’ real wages fell by 11 percent from 2019 to 2022, and platforms are still losing money fast. Swiggy and Zomato have not made a profit in food delivery, even after ten years. These companies are not waiting to become profitable because they are building something new. They are waiting because their business models only work if they pay workers less than a living wage or charge customers more than people will pay.
This is where the story gets more complicated. Platform economists often talk about network effects and winner-take-all markets to explain high valuations and ongoing losses. The idea is that the first company to grow big will control the market and make huge profits. But research shows that big digital platforms are not always winner-take-all businesses. They have to compete on quality or use unfair tactics to stay ahead. The Indian food delivery market shows this clearly. Even after years of competition, neither Zomato nor Swiggy has become a monopoly that can raise prices much. Instead, they are locked in a constant subsidy battle, funded more by impatient venture capital than by real business strength.
The real change here is not about technology. It is about using legal loopholes and calling it innovation. By labeling workers as independent contractors, platforms avoid paying social security, minimum wages, and providing workplace protections that regular employers must offer. This is not a mistake in their business model; it is the core of it. Data shows that about 77.6 percent of gig workers earn less than 2.5 lakh rupees a year, and only 2.6 percent make more than 5 lakh. These are not the wages of a booming new economy. They are the wages of people who have no better choices.
Let’s look at the basic claim that gig platforms create jobs. This idea has not been proven. Research from China shows that when the job market cannot grow fast enough, platform work does not create new jobs; it replaces existing ones. A 2025 study found that the growth of the gig economy actually reduces employment among working-age people. When someone leaves a regular job for platform work at lower pay, that is not job creation. It is job loss with an app. In India, 45 percent of platform workers used to have formal full-time jobs. No one has shown that these platforms create more jobs than they replace.
Platforms do not talk about the hidden costs they pass on to Indian society. Every delivery worker speeding through traffic without insurance, every accident involving tired drivers working 14-hour days, and every injured worker at a public hospital are costs that platforms should cover but do not. In India, nine bike riders die every hour. Most are young men, many of them gig workers trying to meet strict deadlines set by algorithms. Research shows gig workers are at higher risk of crashes because they drive more, are tired, feel rushed, and use their phones while driving. A 2018 World Bank study found that cutting road deaths and injuries by half over 24 years could add income equal to 14 percent of India’s 2014 GDP. Platforms add to these tragedies, while society pays the medical bills and families suffer the loss.
There is also the problem of information asymmetry, which platforms use to their advantage. Workers do not know how their pay is set. More than 80 percent of cab drivers and 73 percent of delivery workers are unhappy with their pay rates, and 68 percent say commission deductions are random and unclear. Companies say they take 20 percent commissions, but drivers report losing 31 to 40 percent. Algorithms push and punish workers to make them work longer hours, while workers do not understand how these systems operate. This is not a fair marketplace. It is a system where the platform knows everything and the worker knows nothing.
Platforms have all the control, not the workers. This matters because courts around the world see control as the main sign of employment. In the 2021 case Uber BV v Aslam, the UK Supreme Court ruled that Uber drivers are workers who deserve minimum wage and paid holidays. The court explained that Uber sets fares, contract terms, and routes, and limits contact between drivers and passengers. Uber defines and controls the service, treating drivers as replaceable. The court said drivers have little chance to improve their earnings through skill or effort. Most importantly, the court said that contracts calling workers ‘independent contractors’ should be ignored if they do not match reality. These contracts are made to avoid basic employment rights. The court found that drivers work for Uber from the moment they log into the app, not just when they are on a trip. This logic applies to other platforms too. When courts look at who really controls the work, they see an employment relationship.
The idea that gig work gives workers flexibility is not true with real gig economy issues like extended hours and absent social security This is not just extra money; it is their main job, but without any protections. The flexibility mostly helps the platform, which can change its workforce as needed, while workers struggle to survive. When delivery workers have no health insurance, who pays if they get injured? When workers breathe polluted air for long hours and get sick, who pays for their treatment? Public hospitals, families, and society do. Platforms keep the profits and pass the risks to others.
It is not a choice between shutting down platforms with strict rules or accepting worker exploitation as innovation. The real issue is that any business that needs to underpay workers and push costs onto others to survive is not worth keeping as it is. India should use the UK Supreme Court’s approach and look beyond the contracts to see who really controls the work. If platforms set prices, assign jobs, set terms, and track performance closely, then the workers are truly working for them.
True capitalism means businesses must show they can create value. Platforms that can only survive by underpaying workers and shifting costs to society are not real success stories. They are supported by worker desperation, unrealistic investors, and public costs. The real choice is not between protection and innovation, but between honest business models and systems that move wealth from the desperate to the wealthy. The approximately 24 million gig workers expected by 2030 are not a sign of success. They show that formal jobs have failed so badly that millions will take any work, even if it puts their lives at risk on the roads.
The gig economy running on exploitative platforms isn’t the capitalist dream that it is made out to be. It may not even be better than the alternatives at hand.