In this week’s roundup, senior RSG contributor John Ince covers two disturbing reports in rideshare: non-compliance with the Americans with Disabilities Act (ADA) and potential discrimination in non-white neighborhoods. It’s an interesting example of the battle between independent contractor choice and company policy. That, plus more ride- and bike-share news below.
Lyft settles DOJ lawsuit alleging violation of Americans with Disabilities Act [Techcrunch]
Sum and Substance: Lyft has agreed to settle a lawsuit from the U.S. Department of Justice that alleges the ridesharing company discriminated against disabled people — specifically those who use foldable wheelchairs or walkers.
One complainant, known as J.H. in the suit, alleged Lyft drivers denied giving him a ride on several occasions because of his collapsible wheelchair. As part of the settlement, Lyft has agreed to pay $42,000 to the four complainants and $40,000 to the U.S. Treasury.
My Take: The amount of the settlement here is insignificant. What is more important are the details of the settlement: Lyft has to ensure that in the future disabled persons are cared for on the platform.
That becomes more difficult, especially when drivers are considered independent contractors – which Lyft maintains – despite AB5 in California.
Uber, Lyft algorithms charged users more for trips to non-white neighborhoods [Salon]
Sum and Substance: A recent study suggests that the algorithm used by popular ride-hailing companies Uber and Lyft may actually discriminate against customers seeking transportation in predominantly non-white neighborhoods….
“While demand and speed have the highest correlation with ride-hailing fares, analysis shows that users of ride-hailing applications in the city of Chicago may be experiencing social bias with regard to fare prices when they are picked up or dropped off in neighborhoods with a low percentage of individuals over 40 or a low percentage of individuals with a high school diploma
My Take: If true, this is a disturbing trend. The data is limited here. This study only pertained to the Chicago area, but even so it’s cause for thought.
Uber Director Robert Eckert Buys Nearly $500,000 in Shares [Market Realist]
Sum and Substance: An Uber Technologies (NYSE:UBER) insider agrees that the stock is a “buy” right now. According to SEC filings, Uber’s director, Robert Eckert, purchased 15,740 shares on June 15.
He made the purchase in the open market and paid an average of $31.60 per share. As a result, Eckert invested nearly $500,000 of his own money in Uber stock. On June 19, Uber closed at $32 per share, which placed it up 8.6% for the year. Lyft (NASDAQ:LYFT), which counts Google as one of its corporate investors, has fallen 19% for the year.
Eckert joined Uber’s board of directors in March. Uber shares have gained about 35% since Eckert joined the board. Notably, Eckert joined Uber at the height of the coronavirus outbreak. COVID-19 caused a big decline in ride-hailing demand and sparked a big sell-off in Uber stock.
My Take: The broad trends here don’t make sense. Uber is cutting costs – yes. But for the stock to have performed the way it has is baffling. I’m betting on another correction at some point.
Marin supervisors cap fees for 3rd-party food couriers [Marin Independent Journal]
Sum and Substance: Effective Monday, third-party food delivery companies, such as DoorDash and Grubhub, must limit the commissions they charge restaurants in unincorporated Marin to 15%.
Marin County supervisors unanimously approved a resolution on Tuesday putting the new cap in place. Supervisor Judy Arnold, who championed the idea, said she hopes that all 11 of Marin’s municipalities follow the county’s lead and adopt similar ordinances.
San Francisco pioneered the practice, approving a 15% commission cap in April. Since then, San Jose, Santa Cruz and seven other California municipalities have followed suit. Other cities with the caps include New York City, Washington, D.C., Seattle and Jersey City.
My Take: This is my home turf, so I paid particular attention. The delivery services were charging upwards of 40%, which came on top of the cost of the food and other miscellaneous fees.
The valuation of Doordash and Grubhub still looks pretty good – as their revenues continue to climb – through the pandemic. The core point here is that this is a low margin business that’s in the public eye.
Uber, WeWork, Airbnb – how coronavirus is bursting the tech bubble [The Conversation]
Sum and Substance: A handful of technology companies have benefited from coronavirus. Amazon has profited handsomely, as have streaming and video conferencing platforms like Netflix and Zoom. But the pandemic has laid bare the shaky foundations of a number of other platforms that bill themselves as technology companies and have enjoyed the high valuations that come with this label.
Major losers from the pandemic include the ride hailing apps: Uber, Grab (in South East Asia), Ola (India) and Didi Chuxing (China). Quite simply, people are not taking taxis. Office sharing businesses such as WeWork (which was, of course, already struggling) are also in trouble with virtually no occupancy. A similar situation is occurring in the accommodation sector with Airbnb and hotel bookings start-up Oyo.
As a result, investment in tech businesses is crumbling. But at the same time this is clearing the way for the few winners to buy bigger stakes in those that are struggling….
My Take: As the article points out, both Uber and Lyft have lots of cash to weather this storm – if it’s a short storm. But if the pandemic lasts for more than a year, there could be trouble – especially since neither company was profitable in good times.
How Uber Turned a Promising Bikeshare Company Into Literal Garbage [Vice]
Sum and Substance: One morning at the end of May, Mark Miretsky awoke in his San Francisco apartment and groggily browsed his phone. There was no rush to get up. Just a few weeks earlier, he had been laid off from his job at the bikeshare company JUMP, which was owned by Uber, along with hundreds of other people.
While still lazing in bed, he opened the Slack with more than 400 of JUMP’s laid off staff, and he saw something that hurt him even more than the layoffs. The JUMP bikes were being destroyed by the thousands and someone was posting videos of it on Twitter.
At first, Miretsky couldn’t bring himself to watch. He spent eight years of his life, often working 100-hour weeks to the point of nauseous exhaustion, to get people to ride those bikes. He did this because he believed in bicycles, and that they are worth riding….
“It kind of crushes one’s heart,” Miretsky said.
My Take: This is a long article, but it’s well worth a read. To see what Uber did to this company is enough to break your heart – if you cared at all about bikeshare.
Readers, what do you think of this week’s roundup?
-John @ RSG