Happy holidays, RSG readers! From the RSG team to you and your family, we wish you the best this holiday season! Don’t worry – we’re not going anywhere. You can expect to see our regularly scheduled content all next week – on Monday, we have an interview with Jay, who recently covered his deactivation by Uber here.
Today, senior RSG contributor John Ince covers a big news story coming out of the European Union that could have major implications for US drivers – as well as other stories involving increased competition for Uber and more.
Uber is finally getting called on its biggest bluffs [Quartz / Reuters]
Sum and Substance: The jig’s up. Uber’s greatest innovation was never really the technology, though the technology is very good: It was branding itself a technology platform. Those magic words have accompanied Uber since its earliest days, when the startup launched its on-demand ride service in San Francisco and embarked on its quest to convince the world that, despite appearances, it wasn’t really a taxi company.
The distinction mattered because taxi companies were subject to all sorts of burdensome regulations that Uber didn’t want to be bothered with or constrained by. “It’s a technology platform that connects riders and drivers,” Uber co-founder and former CEO Travis Kalanick was fond of saying.
So you can imagine the company’s dismay when, on Dec. 20, the EU’s top court ruled that despite all that—the smartphone app, the non-professional drivers, the dynamic fares, the technology—Uber wasn’t merely a platform that connected riders and drivers, but “must be classified as ‘a service in the field of transport’” and regulated like other taxi operators under EU law…. … It called Uber on its bluff.
The ramifications for Uber are far-reaching because it’s made not one but many bluffs. They include: calling itself a technology platform; assuring riders that it’s safe to get into a car with a stranger; branding dynamic “upfront” fares as better for consumers; classifying drivers as independent contractors rather than employees; and, perhaps most importantly, convincing many of those people that driving for Uber is a good job.
As 2017 draws to a close, Uber should be scared about what 2018 will bring. It has purged Kalanick and other troublesome executives, but the choices they made can’t be so easily undone. This week’s EU decision was a stinging rebuke to the way Uber has long done business. It won’t be the last.
My Take: This ruling is just one of many signals that TK’s oft repeated claim of being “technology platform” was more chimera than substance. If Uber can no longer legally claim it’s a not a transportation company, then this opens up Pandora’s box for the newly branded taxi company. Suddenly there are all kinds of rules and regulations that they have to respect.
This ruling comes from all the way across the Atlantic, but its reverberations will soon be felt here in the America. With over 100 lawsuits pending here in the United States, how many of the judges presiding over those cases will be aware of the legal arguments that went in into this decision?
Seems to me there’s a contagion here. As the author of this article states at the outset – the jig is up. The foundations of gig economy are being questioned all around the world. Uber was once out ahead of the law, but the law is getting wise to what Uber (and Lyft) were pulling off.
Uber’s $70 billion valuation just took a huge hit. Uber investors better hope that the Softbank deal gets wrapped up real soon (Dec 28th is the cutoff date), before Softbank has a change of heart. Heck, Softbank is part of a $4 billion cash infusion in Uber’s chief rivals, Didi (See Below). Uber’s got trouble big time now.
Chinese ride-hailing giant Didi Chuxing raises over $4 billion as battle with Uber intensifies [CNBC.com]
Sum and Substance: China’s ride-hailing giant Didi Chuxing has raised over $4 billion in its latest round of funding, the company said on Thursday, posing a challenge to its U.S. rival Uber in its efforts to branch out overseas. The latest investment values Didi at over $50 billion, according to Reuters, and equips it with the cash needed to aggressively pursue expansion opportunities abroad. Earlier this month, Reuters reported that Didi will launch in Mexico next year. The move would mark Didi’s first expansion of its services beyond China.
On Tuesday, Didi said it was it was looking to bring its ride-hailing service to Taiwan. Didi said it intends to use the proceeds to “scale up investments in AI (artificial intelligence) talent and technologies, to further build up its intelligent driving and smart transportation capabilities, and to bring more innovative and diversified transportation services to broader communities around the world.”
My Take: Here in the US, we tend to think of ride hailing wars as a battle between Uber and Lyft. But as this funding round testifies, Uber’s main competition is international with Didi leading the charge.
Much has been made of the quality of Uber’s investors here in the US, but Didi’s investors include Apple, Alibaba, and now Softbank – which is a pretty formidable array – with pockets as deep as they come.
Then there are the auto companies who all seem to be investing in ride hailing companies. GM has a major stake in Lyft. Alphabet has a big piece of Lyft. And just this week, Daimler acquired a big chunk of Chauffeur Privé, a French app that provides ride hailing services in Paris, Lyon and the Côte d’Azur (via Tech.eu)
Apparently that’s just the beginning. Daimler intends to acquire the rest of Chauffeur Prive by 2020. Stay tuned as everyone and his sister wants a piece of the action.
Uber accused of espionage, bribery and hacking by former employee [Techcrunch]
Sum and Substance: The $1.86 billion legal battle between ride-hailing giant Uber and Alphabet’s self-driving unit Waymo reached a pivotal moment today as the judge in the case released a damning letter based on the account of a former Uber employee. The letter alleges that a special division within Uber was responsible for acts of corporate espionage, the theft of trade secrets, the bribery of foreign officials and various means of unlawful surveillance.
The “Jacobs letter” was written by the attorney for Richard Jacobs, who previously worked as Uber’s manager of global intelligence before being fired in April. The highly detailed account brings about accusations of systematic illegal activity inside Uber’s Strategic Services Group (SSG) which allegedly sought to surface other companies’ trade secrets through eavesdropping and data collection. The letter alleges that some of the information gathered was relayed to then-CEO Travis Kalanick. …
My Take: Why am I no longer shocked by Uber news like this? For all the right moves DK has made, there’s always a wrong one that he has to undue – stemming from the legacy left by TK’s corporate culture. TK had an entire division dedicated to espionage and undercover activity, just like it was an integral part of the company, like marketing or finance.
I like what DK has been doing, but the ethical lapses flowing from this company go very deep into their DNA. It’s fascinating to see just how much one person can accomplish, when that person is CEO. Stay tuned for my upcoming piece taking a look at the job DK has been doing to undo the all the do-do of TK.
Readers, what do you think of this week’s round up?
-John @ RSG
