Harry here. Uber’s regulatory issues in the United States have been a cake walk compared to what they’ve faced in Europe, and it appears to only be getting worse. Europe has traditionally had stronger labor markets and taxis have done a great job unifying themselves through apps like Hailo. Whatever happens in Europe won’t have a big impact on Uber’s US operations, but after Uber’s ‘defeat’ in China, Europe and emerging markets like India and South East Asia are more important than ever in order to justify their lofty valuation.
Today, senior RSG contributor John Ince takes a look at Uber’s regulator troubles in Europe, a shady deactivation story out of New York, Uber’s new rider location tracking and more.
In Europe, Is Uber a Transportation Service or a Digital Platform? [NY Times]
Sum and Substance: Ever since Uber showed up in Europe in late 2011, the American ride-booking service has faced vocal opposition. Some of its drivers have been attacked by angry taxi drivers in Paris. Two of the company’s most senior European executives have stood trial on charges of running an illegal transportation service in France. And taxi associations from London to Frankfurt have accused Uber of flouting local rules and undermining European rivals.
The company denies the accusations. These heated battles will culminate on Tuesday in arguments before the European Court of Justice, the region’s highest court, which will most likely determine how Uber can operate across the European Union, one of the company’s largest international markets.
At stake is the ride-booking service’s often aggressive worldwide expansion. Uber has opened in more than 300 cities on six continents. That has helped the American tech company reach an eye-popping valuation of $68 billion, making it one of the most successful start-ups ever to come out of Silicon Valley. Such rapid growth has often pitted Uber against traditional taxi services and local labor unions, which have accused the company of disregarding working standards and transportation rules…. But as people increasingly turn to services like Uber and rivals like Lyft, policy makers worldwide are starting to question how such businesses in the so-called sharing economy should be governed….
For Uber and its rivals in Europe, the court case represents a watershed moment for how ride-booking companies will be able to operate in the region. The hearing relates to a standoff between Uber and a Spanish taxi association, which filed legal proceedings in 2014, claiming unfair competition. Later that year, Uber suspended its services in the country, including its low-cost UberPop offering, which had allowed almost anyone — after some basic security checks — to use the company’s platform to pick up passengers. Uber recently returned to Spain, this time in partnership with licensed taxi drivers. In July 2015, a judge in Barcelona referred the case to the European Court of Justice, asking the Luxembourg-based court to determine whether Uber should be treated as a transportation service or merely as a digital platform.
If the court decides that Uber is a transportation service, the company will have to obey Europe’s often onerous labor and safety rules, and comply with rules that apply to traditional taxi associations. Though Uber already fulfills such requirements in many European countries, the ruling could hamper its expansion plans. But if the judges rule that Uber is an “information society service,” or an online platform that merely matches independent drivers with potential passengers, then the company will have greater scope to offer low-cost products like UberPop and other services that have been banned in many parts of Europe…. A ruling is not expected before March at the earliest.
My Take: This is a major case in the evolution of the rideshare industry. The legal issues in this case echo the issues pending in several U. S. lawsuits. Is Uber a transportation company or are they a tech company? Does Uber just match riders and drivers through an app or are they a glorified taxi company? I don’t have a feel for how this is going to turn out, but I can tell you one thing – for purposes of valuing the stock of the company, Uber wants to be known as a tech company. Only a tech company could achieve a valuation of $68 billion while it hemorrhages cash at a rate of almost $2 billion a year.
Uber is deactivating New York drivers for ‘advertising’ for rival Juno [Recode]
Sum and Substance: Since October, Uber drivers in New York have received texts or emails from the ride-hail company that say plainly: Stop advertising for other companies or you’ll be deactivated.
The other company Uber is referring to? Its newest New York City competitor, Juno. The advertisement in question? Juno’s home screen. At least one Uber driver has been deactivated for “displaying advertising of other ride-sharing companies while on Uber trips,” according to a text sent to the driver from Uber, while others received renewed threats of deactivation from the company via text or email.
The Independent Drivers Guild, a pseudo-driver union in New York organized by District 15 of the Machinist Union, which Uber has agreed to work with, said it has received “hundreds” of reports of deactivation warnings over the last two months from drivers who also used Juno, and 10 reports of being deactivated or otherwise kicked off the platform.
Other drivers have complained of receiving similar threats on driver forums like Uberpeople.net. Cameron Kruger, who has been driving for Uber since September 2015 and says he is a top-rated driver, was notified of his deactivation on Monday through a text that said there were multiple “reports” that he was still displaying Juno’s screen, and that “advertising … is against [Taxi and Limo Commission] Rule 80-15G.” The TLC Rule 80-15G does in fact state that advertising to passengers while on a ride is prohibited. “A Driver must not sell, advertise or recommend any service or merchandise to any Passenger without prior written Commission approval.”
When a driver is offline, Juno devices default to an image of the logo and then a button that says “Invite (35%)” — referring to the current rider discount. Kruger said he has no other images or mentions of the company in his car. (A previous version of the Juno app featured the discount more prominently. Juno CEO Marco Talmon said the company changed it as part of a larger revamp of the app sometime in October.)
According to Uber, the company has confirmed with the TLC that advertising rider discounts is in violation of rule 80-15G in addition to its own terms of service. The company also said they believe that there is an ongoing TLC enforcement investigation into Juno’s advertising practices. TLC spokesperson Allan Fromberg said he could not confirm or deny that either is true. Marco said that Juno is not aware of any kind of TLC investigation. “We’ve discussed illegal advertising with our regulators, and will continue to educate drivers and riders when appropriate,” Uber spokesperson Alix Anfang told Recode. “We take deactivations seriously, and warn drivers to follow all TLC rules. Drivers are free to use any app at any time as long as they comply with our terms of service and TLC rules.” Kruger was not deactivated without warning, however. Just two weeks prior, the New Jersey resident said he received a call from a woman who told him she was a third-party contractor for Uber tasked with reaching out to drivers regarding this issue. Uber would not comment on the use of third-party contractors to make these calls.
My Take: Playing hardball seems to be in Uber’s DNA. They couch these moves in terms of “drivers are violating TLC Rule 80-15G,” but everybody knows what Uber’s doing. For a company that recently sought to curry favor with drivers by introducing the new “compliments” feature in it’s app, you have to wonder about the implications of these tactics in Uber’s longer term relationships with drivers. This kind of move, clearly designed to intimidate drivers, is just one more indication that Uber is taking the Juno threat very seriously. What do you think? Will this backfire on Uber?
Uber begins background collection of rider location data [TechCrunch]
Sum and Substance: Imagine you’re on your way to a therapy appointment in a downtown high-rise. You hail an Uber and enter a nearby coffee shop as your destination so you can grab a snack before the appointment. In the car, you scroll through Instagram and check your email. You get out, buy your coffee, and walk around the corner to your therapist’s office. If you installed the latest app update, Uber has been tracking your location the entire time. The app update (it’s 3.222.4, for those keeping track) changes the way Uber collects location data from its users. Previously, Uber only collected location information while a user had the app open – now, Uber asks users to always share their location with the ride-hailing company.
Uber says that, even though it can harvest your location constantly while its app is running in the background on your phone, it won’t use that capability. Instead, Uber claims it just needs a little bit more location data to improve its service, and it has to ask for constant access because of the way device-level permissions are structured.
Specifically, Uber wants access to a rider’s location from the moment she requests a ride until five minutes after the driver drops her off, even if the app is not in the foreground of her phone. Previously, Uber would not collect a rider’s background location during the trip, or her location after drop-off. The company will use this information to improve drop-offs and pick-ups, which have consistently been a pain point for Uber and other ride-hailing services. The most common reason for riders and drivers to contact each other is to communicate their location when the app does not provide an accurate pinpoint, and Uber hopes to cut down on confusion during pick-up….
The Electronic Privacy Information Center, which filed the FTC complaint against Uber, called the proposed background location collection an “unlawful and deceptive trade practice.” However, Uber says it is getting consent from users before beginning background location collection and disseminating a link that explains the changes when riders are asked to update their GPS permissions. The New York Attorney General’s Office reached a settlement with Uber in January that addressed some of the concerns raised by privacy groups.
My Take: Is this creepy or what? Uber now is collecting data about passengers – even when their Uber app isn’t running. If you want to stop Uber from collecting this kind of intrusive data, you have to find the settings in your cellphone and turn off location data. But that will present problems for other apps that need that information to function, like Waze or Google Maps. Uber says they’ve obtained user’s consent on this. Really? Do you recall giving your okay for this? Oh, that’s right, it’s buried in the back pages of the consent agreement along with the rest of legalese that nobody ever reads or understands.
Trump’s pick for transportation secretary could be a big boost to Uber and Lyft [Business Insider]
Sum and Substance: While much of Silicon Valley is reeling from the election results, companies that rely on the so-called “gig economy” like Uber and Lyft might be breathing a sigh of relief at President-elect Donald Trump’s pick for transportation secretary. Trump has reportedly chosen Elaine Chao, a former labor secretary under George W Bush, to lead the transportation department — and she’s already shown that she’s on the side of companies like Uber and Lyft when it comes to labor regulations. In a speech at the American Action Forum in November 2015, Chao said that many of the labor regulations in place today haven’t caught up with the peer-to-peer economy that’s been enabled by the internet, and she specifically used Uber as an example:
“Literally millions of people today participate in the
digitally-enabled, peer-to-peer economy. Despite its
attraction for workers, however, some suggest the sharing
economy is not a 21st century construct at all, but a new
version of the 19th century ‘piece work’ economy. This
ignores some basic realities, including who is working in the
new economy, what type of work they are performing, and why. …
As Dan Primack first pointed out, it’s a note-worthy speech because not only is Chao clearly well-versed in the labor issues facing companies like Uber and Lyft, but also because she’s willing to trust their data about workers without investigating further. Meanwhile, other news organizations like BuzzFeed have questioned whether Uber drivers can make a living wage at all. Chao’s stance on the so-called “gig economy”, which she goes on to include examples like Airbnb hosts or Etsy sellers, is that the government “must not stifle the innovation” and that there’s room to craft new solutions …
My Take: It’s unclear how much Chao’s appointment as Trump’s Transportation Secretary is really going to benefit Uber, but it probably won’t hurt. Most of Uber’s political battles are being waged on the municipal and state level. Maybe Uber will find a willing partner in the Federal government for its autonomous vehicle initiatives, but that isn’t going to solve Uber’s immediate problems – driver disaffection, driver churn, unsustainable burn rate and other issues that we’ve alluded to in our blog posts.
Readers, what do you think of this week’s round up? How do you feel about Uber’s new tracking-you-all-the-time feature?
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-John @ RSG