In this week’s round up, senior RSG contributor John Ince covers an investigation into Uber and Lyft’s new fare prices, plus an Uber co-founder buys a $72.5 million mansion as some drivers live in their cars. All that and more below, plus don’t forget to head over to the Rideshare Guy YouTube channel, where you can catch more Saturday roundup via video!
We Think Uber and Lyft’s New Surge Fares Screw Drivers and Riders. Help Us Prove It. [Jalopnik]
Sum and Substance: Uber changed how its surge pricing works last year. Not for riders, but for drivers. The changes have resulted in drivers earning less from surge pricing, but riders are still paying the same inflated costs, with Uber pocketing the difference.
We had heard from drivers that this was a big blow to their already precarious income. So a little over a month ago, we asked Uber drivers to send us screenshots of their surge fares to find out the extent of this pay cut. We received hundreds of responses, many of which included missives of desperation and anger at the unilateral price change from the ride-hailing giant, as well as pity for riders who are, as one driver from Phoenix put it, subject to “egregious price gouging.”
Surge pricing goes into effect when Uber’s algorithm determines there is more demand for rides than drivers available. The company then increases fares through what’s called a multiplier. The larger the multiplier, the higher the fare…
Although Uber and Lyft have often tinkered with their respective pricing algorithms, the change to how surge pricing works is particularly noteworthy because it undercuts the logic both companies have used to justify the controversial feature….
“Because of this new surge policy,” the driver wrote in an email, “I rarely drive during surge conditions because it’s not worth the traffic/risk of puke, etc.” The extra couple of bucks they make per surge trip is further counterbalanced by the fact that riders often tip less on surge trips, if at all, under the assumption drivers are making bank on the surge pricing.
My Take: We’ve been getting reports of fare shaving by Uber and Lyft for some time, especially after they announced their new up front pricing scheme. We’ve done investigations into upfront pricing too and the results suggest some kind of shenanigans by the companies.
Unfortunately, the processes used to calculate fares are so complex and opaque that it’s like trying to hit a moving target. Uber and Lyft always try to stay one step ahead. But it’s good to see Jalopnik tackling this issue. Can’t wait to see their results.
Today we’re launching a new project @Jalopnik to crowdsource ridehail fares to find out what percent of each ride Uber/lyft really take. This was spurred by recent changes to how surge works that enraged drivers (and ought to enrage riders, too) https://t.co/zNMDxAt6TN
— Aaron W. Gordon (@A_W_Gordon) July 1, 2019
As Drivers Live in Their Cars Due to Poverty Wages, Uber Co-Founder Buys Record-Breaking $72.5 Million Mansion [Common Dreams]
Sum and Substance: “It’s a slap in everyone’s face. The capitalist system we have has unduly rewarded him with extraordinary, in-your-face wealth.”
—Veena Dubal, University of California, HastingsUber drivers, many of whom are homeless due to the $82-billion company’s notoriously low rates, reacted to the Camp’s purchase with outrage, describing it as a striking encapsulation of how the wealthiest Americans live in luxury on the backs of exploited workers.
“This is a perfect example of the one percent stealing from the rest of us,” Nicole Moore, a ride-share driver in Los Angeles, told The Guardian in an interview. “Drivers are living in their cars. We’re fighting for fair wages. At least share that wealth with the people who have actually built your company.”…
Camp’s “residential splurge,” first reported Monday by Variety, comes just weeks after Uber and Lyft workers across the globe went on strike in May to protest poverty wages ahead of Uber’s stock market debut.
“It’s a slap in everyone’s face,” Dubal said of Camp’s mansion purchase, which comes in the midst of a homelessness crisis in Los Angeles. “The capitalist system we have has unduly rewarded him with extraordinary, in-your-face wealth…. This amount of money could change people’s lives.”
My Take: Of all the inequities involved in the ridesharing phenomenon, I can think of nothing more insulting and angering than to see one of Uber’s co-founders, Garrett Camp, now worth $4.2 billion, plopping down $72 million for an obscenely ostentatious Beverly Hills estate, while many the drivers who made this all possible are struggling to pay the rent.
Uber Eats now offers a dine-in option [CBS News]
Sum and Substance: Uber Eats has added an option that allows customers to order food via app and eat it in the restaurant it was ordered from. The service effectively eliminates the need for delivery drivers.
Diners aren’t charged for the service. Instead, restaurants pay a fee that varies by market. Launched in November, the new service is now being tested in several cities.
Uber Eats will now deliver food to customers in the most unexpected of places — restaurants. The food delivery and pick-up app’s “Dine-in” feature is now being pilot-tested in Dallas, Austin, Phoenix and San Diego, according to an Uber spokesperson.
The service effectively eliminates the need for delivery drivers, with whom the tech startup has long had a contentious relationship. In its pre-IPO filing, Uber acknowledged that its business model would be adversely impacted if it were to classify drivers as employees, rather than contractors.
My Take: Well, here’s an exciting new development – apparently now you can go to a restaurant and eat there too. Imagine that. Of course, the new wrinkle with Uber Eats is that you can call ahead so you don’t have to wait for the food to be delivered to your table.
Sorry folks, I just don’t get the innovation here. What was so inconvenient about dining out at a restaurant with friends and talking while the food was being prepared? It’s a social practice that’s worked for centuries, but now apparent it’s not good enough.
And with Uber Eats you can now even order food that wasn’t prepared in restaurants. They’ve got new kitchens built especially for the Uber Eats Marketplace. Never mind that these new fake kitchens are lax about things like sanitary precautions. In fact, one enterprising journalist faked a kitchen with a barbecue pit in the front yard.
Amazingly, he was approved by UberEats and soon drivers were coming by the house delivering his barbecued delights to unsuspecting customers. See: BBC Stings Uber Eats With Fake Burger Restaurant Investigation. Is this progress? Some people apparently think so.
Lyft is a better bet than Uber, analyst says [Marketwatch]
Sum and Substance: Lyft is a better bet than Uber, analyst says. Uber’s ‘long path to profitability’ is one reason why Stifel urges caution
Lyft shares are still trading below their IPO price of $72, but Stifel sees room to run. Only one of the ride-hailing stocks is a buy, according to Stifel analyst Scott Devitt.
He initiated coverage of Uber Technologies Inc. shares UBER, +0.52% with a hold rating on Tuesday, while raising his price target on buy-rated Lyft Inc. shares LYFT, +0.41% to $76 from $70. Though Devitt is upbeat about more “rational” price activity in the industry, which he expects to boost Lyft’s stock, he still worries about Uber’s valuation as well as its “significantly long path to profitability.”
My Take: Lyft’s associations with Alphabet’s self driving unit, Waymo, seems significant here. They’ve just received the green light in California for self driving cars, but only if you’re a Google employee or close friend.
Readers, what do you think of this week’s round up?
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-John @ RSG
Latest posts by John Ince (see all)
- California Passes Landmark Law Regulating Independent Contractors - September 14, 2019
- For Uber to Succeed, It Needs to Grow - September 7, 2019
- Are Uber and Lyft Taking More From Drivers Than Previously Thought? - August 31, 2019