Harry here. Today, senior RSG contributor John Ince shares a story of a quick thinking driver, a lawsuit against Uber brought forth by its own employees and a new study from MIT.
Uber Driver Helps Rescue Runaway Teen From Suspected Pimps In Elk Grove [CBS Local]
Sum and Substance: ELK GROVE (CBS13) — A teenage girl is safe after an observant Uber driver helped rescue her from a suspected sex trafficking ring. While he didn’t know it at the time, he was taking a young girl, her pimp and another person to a job. But when they started openly discussing their plans in the car, the driver knew he had to do something.
It started out as a regular call for Kevin Avila, but when he picked up three female passengers at around 6:30 p.m. on Monday, he immediately knew something was wrong. The 16-year-old was dressed provocatively and sitting in the front seat. “I saw her legs are really long and she was a really young girl,” he said.
….The conversation turned to the how-tos of solicitation. “She was saying, ‘When we get there you want to hug them do you want to say do you have any weapons that’s the first thing you ask.’” he said. Avila says the directions were specific about collecting money. “‘Then you want to pat them down make sure they don’t have any weapons and ask them do you have my donation do you have my donation you want to do that first before you start touching up on them or anything,’” he said.
That’s where the ride came to an end. Avila dropped off his passengers, then called police. … “We’re actually passing on this information to other law-enforcement agencies to see if there are similar activities going on in their jurisdiction,” Trim said.
My Take: When you signed up to be a driver, how many of you expected you might end up aiding law enforcement? Here this guy finds himself in the middle of a huge media circus, because he saw something terribly wrong going on from his view behind the wheel. How many of you would have had the presence of mind, courage and sense of civic responsibility to do what this guy did?
Uber Taking ‘Millions’ In Tax Deductions By Lying To Employees, Lawsuit Alleges [Jalopnik]
Sum and Substance: Uber is recruiting software engineers and employees by promising stock options worth “hundreds of millions of dollars,” only to later grant far less valuable options, a lawsuit filed Monday alleges. The move, the complaint says, permitted the ride-sharing company to take “millions of dollars of tax deductions which it otherwise would not be entitled to take.”
The 22-page complaint filed in U.S. District Court alleges that Uber fueled its “meteoric rise” by recruiting software engineers and other employees by promising in their employment agreements an “incentive stock option,” or ISO, which constitutes the “majority” of Uber employees’ compensation. The ISOs are worth “hundreds of million dollars, maybe more,” according to the complaint. The lawsuit says that Uber initially offers employees an ISO — an advantageous incentive for employers, according to the plaintiff’s attorney, as the stock options aren’t taxed until they’re sold.
But when the plaintiff, Uber software engineer Lenza McElrath, started work, the complaint says Uber breached his employment agreement by switching the terms of when his stock options can be purchased. As a result, most of McElrath’s stock options would be re-classified from an ISO to a non-qualified stock option (NSO). With an NSO, employees have to pay the tax on the stock options immediately, McElrath’s attorney said, and at a significantly higher rate than an ISO.
“It’s a bait and switch,” McElrath’s attorney, Randy Erlewine, told Jalopnik. While a lot of it gets bogged down in excessively mundane terms about stock options, what the complaint alleges is significant, and, as one business law professor put it, can have an adverse impact on employees. Cindy Schipani, business law professor at the University of Michigan, said employees may not be able to afford to exercise their non-qualified stock options because of the up-front tax. The tax can total “hundreds of thousands of dollars,” according to the complaint.
“Thus, there are significant actual monetary costs to the employee by swapping NSOs for ISOs,” Schipani told Jalopnik. Uber can also take a tax deduction for the amount the employee has to report as ordinary income for an NSO, Schipani said. “There is no similar tax deduction for ISOs,” she added. The higher cost to exercise an NSO forces employees to forfeit their stock options, as well, according to the complaint, due to the “significantly higher” up-front tax. Employees who leave the company only have 30 days to exercise their stock options, the complaint says, or they’re forfeited. “[T]his reclassification of the options as NSOs has permitted Uber to take millions of dollars of tax deductions which it otherwise would not be entitled to take,” according to the complaint.
Uber didn’t respond to a request for comment.
My Take: This issue has been on my radar ever since I gave a ride to a finance guy who helps structure the stock options for Uber. Later I gave another ride to a developer who’s good friends with several Uber developers. Both confirmed what this lawsuit alleges – that Uber is playing games with employees by leading them to believe their stock options are more valuable than they actually are. I wasn’t aware of the intricacies of the allegations until I read the lawsuit. Sure sounds like a very sophisticated “bait and switch”, potentially leaving many developers very disappointed when they realize what has happened.
MIT study says 3,000 ride-sharing cars could replace every cab in New York City [The Verge]
Sum and Substance: All 13,000 taxis in New York City could be replaced by a fleet of 3,000 ride-sharing cars if used exclusively for carpooling, according to research published today by MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL). Instead of hailing taxis, passengers that use ride-sharing services for carpooling may lead to reduced traffic congestion, pollution, and fuel use.
The CSAIL researchers used public data from NYC taxi rides published by the University of Illinois to develop the algorithm. They calculated that 3,000 four-person vehicles traveling to similar destinations could meet 98 percent of taxi demand in the city with an average wait time of 2.7 minutes. Perhaps the most important part of the system is a dynamic repositioning of vehicles based on real-time demand, which makes the system 20 percent faster.
As both Uber and Lyft work to expand their carpooling businesses, the CSAIL team also looked at the potential for extreme carpooling. By examining other vehicle sizes, the team found that 2,000 10-person vehicles could meet 95 percent of demand, or the system could use a variety of vehicle types and reassign them based on incoming requests — perhaps by sending multi-passenger vans to a big sports event or concert rather than a larger fleet of smaller cars.
The system looks at all incoming requests and available vehicles and then determines the best routes and assignments for each car. After cars are assigned, the algorithm can then rebalance the remaining idle vehicles by sending them to higher-demand areas.
“A key challenge was to develop a real-time solution that considers the thousands of vehicles and requests at once,” says Professor Daniela Rus who led the research. “We can do this in our method because that first step enables us to understand and abstract the road network at a fine level of detail.”
My Take: Very interesting study that gives both Uber and Lyft a powerful weapon in their PR arsenal to use in battles with local regulators. The fact that the study comes from an independent source with the credibility of MIT gives it even more impact.
NYC says it needs Uber’s data to make passengers safer. So why is Uber fighting back? [News.vice.com]
Sum and Substance: The New York City government wants ride-hailing giant Uber to provide information about where its drivers drop passengers off in order to better measure and combat the problem of “driver fatigue.” Uber, citing concerns about consumer privacy, doesn’t want to comply.
Over the last few years, the New York City government and sharing economy titans have squared off over everything from the allotment of Uber driver taxi licenses to the regulation of so-called “illegal hotels” on Airbnb. In those fights, Uber has largely succeeded in getting what it wants.
In the latest chapter of the ongoing drama, Uber this week urged customers over email to “send a clear message” to the city government in response to a proposed rule change from the city’s Taxi and Limousine Commission concerning passenger dropoff information. A public hearing on the issue is scheduled for Jan. 5.
The city wants this data — not just from Uber, but from all Taxi and Limousine Commission licensees — to help with implementing Mayor Bill DeBlasio’s “Vision Zero” initiative to minimize traffic fatalities.
The TLC, which is one of the lead agencies tasked with implementing Vision Zero, wants to take on the problem of driver fatigue. This past summer, the agency ruled that Uber and taxi drivers can drive for only 12 hour shifts with a mandated 8-hour break. The city says it needs passenger dropoff data in order to make sure drivers obey those rules.
Uber, in turn, says that it doesn’t want to hand over what it calls “sensitive personal passenger data” on the grounds that it would violate the privacy of its users. The city already collects rough passenger pickup information, and Uber has agreed to provide data about trip duration, but providing specific drop-off information like taxis are obligated to would amount to surveilling individual passengers, Uber argues.
“We have an obligation to protect our riders’ data, especially in an age when information collected by government agencies like the TLC can be hacked, shared, misused or otherwise made public,” the company said in a statement.
My Take: Very interesting question behind this: who ultimately controls the data Uber is amassing and what are they permitted to do with it? I’m not prone to conspiracy theories, but it doesn’t take much of a stretch to see how various government agencies might want access to Uber’s data on passengers (and drivers). Remember Uber is now collecting data even when your Uber app is not on.
Side-plot: Donald Trump just appointed Uber CEO to one of his high powered advisory boards. At the outset a relationship has been established between two potential partners. Uber has something people in government want. Surely the government can provide something that Uber wants. We’re talking about the guy who wrote, “The Art of the Deal.” Is there a deal to be made? Likely we’ll never find out – even if there is.
Readers, what do you think of this week’s round up? Have you ever noticed something potentially illegal happening in your car (even if it wasn’t an extreme as the story above)? Let us know in the comments!
-John @ RSG
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Latest posts by John Ince (see all)
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