As we approach 2019 and IPOs for both Lyft and Uber, questions (legal and otherwise) are beginning to challenge the assumed dominant position of Uber. Could Google be the winner in the end, or will Uber continue to dictate in the rideshare space? Senior RSG contributor John Ince addresses those questions and more in this week’s round up.
How Google Will Destroy Uber [Forbes]
Sum and Substance: Google’s Waymo has officially launched the world’s first self-driving, ride-sharing service! Residents in four Phoenix suburbs can now ride around in its robo-taxis for a small fee. In RiskHedge, I recently explained why self-driving cars are going to gut the auto industry like a fish. And Phoenix is only the first step in Waymo’s domination of American roads.
Waymo Is at Least Three Years Ahead of Its Peers…
Gaining Public Trust Is Key…
Waymo Will Make Uber Obsolete…
My Take: This article offers a fascinating perspective. I’ve long believed that Waymo was going to be a big player in the autonomous vehicle space, and this writer, who is far more knowledgeable than I, seems to agree.
I do take issue with some of the writer’s rosy predictions about the ultimate potential of driverless cars. In particular, I challenge the contention that drivers are taking 80% of the overall fare. From our research at RSG, we estimate it to be considerably lower, somewhere between 50 and 75% depending on the nature of the ride and the particular formula Uber/Lyft uses to calculate the split.
But the author’s main points stand – especially the power of the Google / Waymo brand to inspire trust and all the extras Google brings to the table in the form of AI technologies and potential tie ins with Google/Alphabet owned properties like Google Maps/Waze… not to mention the mountains of data that Google already has about almost everyone who would be a passenger.
HAS UBER’S CUTTHROAT CULTURE ACTUALLY CHANGED? [Vanity Fair]
Sum and Substance: A new scandal over Uber’s self-driving cars suggests that while Dara Khosrowshahi may have cleaned up the sexism, a reckless competitive streak still defines the company’s DNA.
To all outward appearances, Dara Khosrowshahi has done an admirable job of scrubbing Uber’s public image. Gone is the frat-house culture of co-founder Travis Kalanick, the hot-tub loving former executive who presided over a series of sexual harassment scandals. In its place, is a kinder, gentler Uber, featuring advertising slogans like “Moving Forward” and “Doors Are Always Opening.” Onstage at Vanity Fair’s annual New Establishment Summit in Los Angeles earlier this year, Khosrowshahi spoke candidly about the consumer-facing side of the makeover. “We believe we can be a force for good,” he explained. “We demonstrated that externally with how we approached regulators and cities. We’ve taken some big steps on the safety front. We’ve changed our actions but the cultural change continues.”
Behind the scenes, however, the depth of Uber’s transformation is less clear. Earlier this week, The Information reported an incredible story about how Uber executives essentially ignored an employee who warned in March that the company’s self-driving car technology was too unreliable for large-scale testing.
…Uber is under immense pressure as it races to prepare for an impending I.P.O. (Lyft, its biggest domestic competitor, is set to go public first) and struggles to fend off Waymo, whose autonomous driving technology is reportedly far more advanced. Last quarter, Uber posed a massive $1.1 billion loss. Employees recently told The New York Times they worry Uber is taking shortcuts to hit its aggressive metrics for success….
My Take: While I count myself as one of Uber CEO Dara Khosrowshahi’s admirers, I’ve been skeptical of the media reports that suggest Uber’s culture has undergone a complete transformation. When you’re as big as Uber has become, changing the core of the culture is an enormous challenge. And let us not forget that Uber operates in a cutthroat competitive environment, with increasing pressure to show a credible path to profitability in the runup to its 2019 IPO.
That kind of pressure often translates into cost cutting measures that jeopardize safety and public trust, as mentioned in this article. Economic pressures also can force the company to further disadvantage drivers by taking an ever larger share of passenger fares. This, of course, is what we have seen recently with the adjustments to how fares are calculated, decreasing per mile rates and increasing time charges.
Uber loses latest legal bid over driver rights [BBC]
Sum and Substance: Uber has lost an appeal against a ruling that its drivers should be treated as workers rather than self-employed. In 2016 a tribunal ruled drivers James Farrar and Yaseen Aslam were Uber staff and entitled to holiday pay, paid rest breaks and the minimum wage.
That ruling has now been upheld by the Court of Appeal. But Uber pointed out that one of the three judges backed its case and said it would appeal to the Supreme Court.
My Take: Against the face of reality, Uber continues to pursue appeals like this one seeking to protect the illusion it has so carefully cultivated in the media that drivers are “independent contractors.” Pardon my bluntness, but the whole thing is a charade and I applaud the actions of Mr. Farrar and others who rightfully challenge the illusion.
Slowly but surely the courts are lifting the veil on the gig economy, as Uber now seeks to buy time, trying to perpetuate enough legal uncertainty over this issue, that their IPO might still sail through, keeping this thing going a little longer.
Uber hit with antitrust suit 3 years after former competitor Sidecar went bust [San Francisco Chronicle]
Sum and Substance: Sunil Paul, a co-founder of Sidecar, a ride-hailing company that went bust in late 2015, is behind a new federal antitrust lawsuit filed against Uber. Uber, which is preparing to make its Wall Street debut, issued a statement Tuesday denying the claims in the antitrust suit. Uber used illegal practices to stifle competition and obtain a monopoly that drove a smaller rival out of business, a company affiliated with now-defunct ride-hailing pioneer Sidecar alleges in a federal antitrust lawsuit filed Tuesday.
“It was never a fair fight,” Sunil Paul wrote in a blog post about the legal action taken by SC Innovations, which Paul, who co-founded Sidecar Technologies and was its CEO, calls a successor company. Sidecar went bust in late 2015. “That’s why Sidecar failed. And it’s also why both drivers and passengers are left with higher prices and fewer choices today.”
Uber strongly disputed his premise. “Ridesharing is a highly competitive industry, with many players coming and going over the years — like Sidecar, not all have survived,” Uber said in a statement. “Sidecar’s lawsuit has it backwards: new competitors, along with low prices, benefit consumers and reflect the exact type of competition that the antitrust laws are meant to protect.”
My Take: I’m no expert in antitrust law, but this lawsuit strikes me as an attempt to cash in on Uber’s upcoming IPO. No company wants to have lawsuits clouding up their future while they’re trying to convince investors that this is a safe bet.
Paul contends that Sidecar’s demise made ridesharing less competitive. But if that’s the case, why have passenger fares continued their decline over the last three years? Even so, the natural tendency for a company in Uber’s position is to settle in advance of an IPO, just to get the lawsuit out of the way and provide comfort to potential investors.
My bet is that exactly what Sunil Paul is betting will happen. And if it does, he will have walked away with a nice chunk of change to add to what he salvaged from the company when he sold its remaining assets to GM for something less than the $39 million that investors had put into the company.
Chicago drops ban on advertising in Uber, Lyft cars; Video ad app maker drops constitutional legal challenge [Cook County Record]
Sum and Substance: A decision by Chicago City Hall to amend a city ordinance to now allow interactive video advertising in vehicles operated by drivers for ride-hailing services like Uber and Lyft has brought to a conclusion one company’s legal quest to win a court order declaring such a ban unconstitutional.
Earlier this month, the city of Chicago and Minneapolis-based Vugo Inc. agreed to end the lawsuit, prompting U.S. District Elaine Bucklo to dismiss the case with prejudice, cutting short her deliberations over whether the city rules against the advertising in so-called “ridesharing” vehicles were ever even legal.
“The city of Chicago’s reversal on the rideshare advertising issue is a victory for rideshare drivers, the rideshare advertising industry and entrepreneurs and startups throughout the United States,” said Vugo founder James Bellefeuille in a prepared statement.
Editor’s Note: Prior to this, in Chicago, the city had a ridesharing ordinance banning advertising in ridesharing vehicles. Specifically, the rules prohibited ridesharing vehicles from displaying any commercial advertising on the outside or inside of their vehicles, and violators were subject to fines.
As we have covered before, Vugo’s service allows Uber and Lyft drivers to earn additional money each month, around $100, by giving passengers the option of engaging with interactive advertising during their trip. Vugo is paid by advertisers, then pays a percentage of that revenue to drivers. Vugo’s argument was that since the city allowed taxicabs to display advertising and did not prohibit other passenger vehicles from displaying ads, that Vugo should be allowed to do so as well. With this ban dropped, now drivers in Chicago can sign up with Vugo to make extra money while driving.
The Dark Realities Women Face Driving for Uber and Lyft [Bloomberg]
Sum and Substance: Uber and Lyft have been hailed as economic saviors, offering flexible work for mothers juggling childcare responsibilities. While the quick pay and autonomous work have drawn people in, many women like Pagliocco who drive for Uber and Lyft say they frequently encounter harassment or assault.
In a private Facebook group for female drivers that’s grown to more than 10,000 members since it was started in 2016, women frequently ask questions, give advice, and share driving stories. Many of the posts include experiences of sexual harassment. In one post, a woman wrote that a passenger grabbed the steering wheel and sexually assaulted her. She called 911 and the passenger was jailed…
Uber and Lyft allow drivers to report incidents in the app or through a 24/7 call line. They’ve also recently added new safety features to the platforms, including the ability to easily call 911 in the app. Uber recently added a feature that allows drivers to share trips with friends and family, a capability that is offered to riders on both platforms…
But Harry Campbell, who runs the Rideshare Guy, a popular blog among drivers, says the companies can do more. “Both Uber and Lyft have been extremely innovative when it comes to transforming the rideshare and mobility industry, but there have been areas like safety where they have been a lot more reactive,” he said. “They should put their brainpower and innovation towards safety.”…
When a driver files a complaint about a passenger because of a safety issue on Uber, it’s flagged to a special team with training on dealing with high-sensitivity incidents, according to Bryson. Depending on the severity, the company will open an investigation to speak with the rider and driver before making a decision on next steps.
Lyft said On Lyft’s app, if a driver or rider rates someone 3 stars or below, they will never be matched with them again, according to a statement from the company. Lyft also said that that it’s announcing 15 new features by the end of this year, many of which focus on driver safety.
Editor’s Note: For as tough as Uber and Lyft are with drivers who receive ratings under 5 stars, you think they would put the same amount of pressure on passengers with low ratings, but that doesn’t seem to be the case. How many times have drivers been deactivated without cause based on inaccurate complaints/low ratings from disgruntled passengers?
On the other hand, how many times have you picked up a passenger with no or a low rating? Unfortunately, it seems like policing incidents of harassment (or worse, for men and for women) is up to drivers. Drivers, this is your reminder: protect yourself, invest in a dash cam and rate your passengers to give your fellow drivers a sense of who/what to expect.
Readers, what do you think of this week’s round up?
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-John @ RSG
Latest posts by John Ince (see all)
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- Putting Uber/Lyft Earnings Announcements in Perspective - August 10, 2019