Is this the beginning of the end for the ride-hailing Goliath?


Uber is going through a scorching heat, and I can’t help but think it’s an inflection point for the racing giant. Either he must embark on a new path to fairness for his workers, or this point, right here, right now, will mark the beginning of its end.

Those who have followed Uber’s so-called ‘disruption’ of the taxi market will be all too familiar with the constant debate between drivers and the ‘app platform’ over the fairness of its algorithm and how it pays its fees. workers.

It’s a fight between David and Goliath, but David still hasn’t found his projectile.

While much of this talk focuses on what is essentially Uber’s taxi business, the company has grown and is now engaged in exciting new areas of mobility technology, which now only represent dead ends.

Last year, Uber pulled out of two crucial areas of development, air travel and autonomous driverless taxis. Uber has spoken of these two futures as being crucial in its endless pursuit of consistent profitability. Flying taxis are expected to lower operating costs and move people faster, making them a more efficient form of transportation.

Self-driving taxis have been explored for many of the same reasons. By removing the human driver from an Uber car, the company is removing its highest cost. With a fleet of millions of autonomous Uber driverless taxis around the world, former CEO Travis Kalanick boasted in 2016 that this would change everything.

The reality five years later is quite different.

It’s time to sell

Last year, Uber sold its flying taxi branch – for profit – to Joby Aviation, a California-based flying car startup. The companies have entered into a sort of partnership agreement, integrating each other’s services into their applications. If flying taxis become a thing, Uber will still be able to offer them as a service.

The ridesharing company used a strategy similar to that of its autonomous taxi division, Advanced Technologies Group (ATG). After pumping billions into the development of autonomous driving technologies, Uber sold ATG to Aurora, an autonomous vehicle start-up run by a former engineer Waymo.

On the surface, the sale appeared to remove an expensive branch of Uber’s business in an effort to speed up profitability. However, Uber is also investing $ 400 million in Aurora and taking a 26% stake. If self-driving taxis become a reality, Uber will have access to the technology it needs to make its ever-elusive driverless taxi dream come true.

[Read: How do you build a pet-friendly gadget? We asked experts and animal owners]

By selling these two divisions, Uber is no longer hemorrhaging money on efforts that are sci-fi wild bets and that have been labeled a “waste of money” by some leading investors. The ridesharing company is now a lean version of its old bloated self, with a greater focus on its core business, there is hope that it will be able to address its two still lingering challenges: her relationship. with its drivers and its profits.

The business model takes a hit

However, in the past few months, Uber has run into an obstacle after obstacle, and each threatens the very foundations of his business.

On Monday this week, the local government in Brussels banned drivers from picking up passengers using the app, disrupting the company’s operations in the Belgian capital. This ban was implemented because Uber found a workaround after another of its services in the city, UberPop, was banned.

This is minor compared to the UK Supreme Court ruling last month. After four years of legal proceedings, the Supreme Court ruled that Uber’s drivers were workers, not independent contractors. This brings them closer than ever to the status of official employees and gives them basic rights and guarantees that they should have had from the start.

This decision is the exact opposite of what Uber experienced on the other side of the pond in California. Last year the Golden State vote the public sided with the transport company, giving the green light to Prop 22, its latest attempt to keep its business model alive and avoid paying driver benefits.

Despite some benefits for drivers, Prop 22 keeps Uber largely as it always has. Uber will continue to have ultimate control over its app, how it delegates rides and how much it charges customers. In fact, these factors led the UK judges to decide that drivers are workers and not contractors. In the UK, drivers in power have found themselves in a “position of subordination and dependence on Uber”.

Even though the Prop 22 was successful, it seems drivers are now in more pain than ever before. In a recent Guardian article, drivers said wages had come down and working conditions had remained poor since the vote.

Time for a shakedown

It seems that Uber and its drivers live in two different realities, which are starting to collide. Last year, Uber surveyed its drivers and found that they generally supported the transportation company’s program. Third-party surveys have also shown that drivers would rather remain independent contractors than become workers with benefits.

Academics have criticized Uber’s approach to these surveys, suggesting the company has confused the ability to offer flexible work with employment status. But that didn’t do much to derail the Uber train.

Following the UK Supreme Court ruling, the rideshare company sent out another survey to drivers through its app. He asked the drivers about work flexibility and benefits, but didn’t mention vacation pay or the national minimum wage. The answers to the questions were also limited to a few choices, according to the Guardian.

Uber is now being criticized by driver unions for intentionally framing investigative questions in order to get the answers it needs to soften the legal blows.

Even though the Supreme Court’s ruling is final, it appears Uber is doing everything in its power to launch another attack on the UK legal system. Rather than playing by the rules, he intends to change the rules to suit his business model, regardless of the cost or degree of blame. Maybe this trait stems from the company’s hellish need to “disrupt” markets to feel like it’s doing anything. Newsflash Uber, you can deliver a cool business within the limits of the law.

A new economy of odd jobs

Why does Uber always intend to retaliate whenever it encounters legal opposition? The answer is simple. If not, he will effectively sign his own death warrant.

The company has withdrawn from less secure business opportunities, like flying and driverless taxis, to focus on its core mission. But it’s not going to be easy, so maybe it’s a good thing not to carry unnecessary luggage.

The UK decision is expected to define not only Uber’s future business model, but the entire functioning of Britain’s odd-job economy. It set a precedent that Europe also seems keen to follow.

Having to pay driver benefits and a minimum wage will dramatically increase operating costs. It’s hard to give a definitive figure on this, but an article in the San Francisco Chronicle said the company’s labor costs could rise by 30% if drivers were to be recognized as employees.

As a company that has yet to make consistent profits, only two parts of Uber’s business can absorb an increase in costs: drivers or passengers. If costs for passengers increase, conventional taxis suddenly become more attractive. As for the drivers, with reports suggesting conditions aren’t improving, it looks like they’re already at their limit.

Whatever happens next for Uber, surely a big change is underway.

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Published March 2, 2021 – 13:19 UTC


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