In this week’s roundup, senior RSG contributor John Ince covers the news about Uber letting drivers set their own prices in California, how making drivers actual employees might be cheaper in the long run, and more.
Uber tests letting California drivers set their own prices [Verge]
Sum and Substance: Uber is experimenting with a new feature in California that allows drivers to set their own prices for rides in some circumstances instead of accepting Uber’s set price, according to a report from The Wall Street Journal. The new feature allows for drivers to increase fares to up to five times more than Uber’s original price, and it follows other major changes Uber made in California in response to the new gig work law.
According to the WSJ, the new changes let drivers increase fares in 10 percent increments, up to five times what Uber sets the base price of the ride. The new feature effectively creates a bidding system where drivers with lower prices get the first customers. As demand increases, drivers who had set higher prices will be matched with riders, too.
Right now, the test is limited to drivers who are going from airports in Santa Barbara, Palm Springs, and Sacramento. Uber reportedly wants to see how it works with smaller cities in California first before it decides whether to roll it out statewide to far larger markets like Los Angeles or San Francisco .
My Take: It’s difficult to know how this will play out since this is only a test, but it looks like Uber is going in the direction of market economics. If this were to be widely adopted, it would have a profound effect on the business.
Uber vending machines didn’t work, so now your ride is a moving billboard [Mashable]
Sum and Substance: Uber vending machines didn’t work, so now your ride is a moving billboard. In-car vending machines — as the snack boxes from companies like Cargo and Vendy were called — in your Uber or Lyft have either moved onto the next idea or stalled out. Uber drivers with Cargo boxes filled with snacks, water, and other goods, like phone chargers, recently received an email that the vending machines were done. No more depending on your rideshare for post-bar crawl chocolate bar and condom purchases.
Emails shared with the Rideshare Guy ride-sharing driver blog explain how Cargo, which had partnered with Uber back in 2018, told its drivers the “store” program was “paused.” Instead, the company is working to “double our efforts” on a car-top advertisement option for drivers. The Cargo website says, “We’ll install a display on top of your vehicle which shows ads while you drive. Make extra cash, even when you’re not taking Uber trips.”
It all comes down to advertising. Of course. Just like YouTube is filled with more and more ads each year, Uber is the next frontier for product placement. The Cargo vending machines served as a bridge to full-blown mobile advertising. Sound familiar? If you’ve been in a traditional taxi cab in the past 20 years, you’ve heard the blaring commercials coming from a backseat screen or seen an add plastered onto the mini-billboard on the car’s roof.
My Take: Do we really want cars acting as billboards? Can you imagine having cars, each with an ever changing message on the top? Somehow this is not what we signed up for. But it seems to be the direction we’re moving.
Uber stock surges after it offloads food delivery in India in bid for profitability [CNBC]
Sum and Substance: Uber announced Monday it sold its food delivery business in India to competitor Zomato. Uber executives have said they would look to exit markets where they couldn’t be the No. 1 or No. 2 player. The company has been seeking to carve out a path to profitability under the pressure of investors.
On Tuesday, the company announced it sold its Uber Eats food delivery business in India to Zomato, its competitor backed by Alibaba affiliate Ant Financial. The all-stock deal gives Uber a 9.99% stake in the business. The deal could leave Uber out of a significant chunk of the food delivery market. Asia’s market has become the largest for online food delivery in the world, with over $45 billion in revenue in 2018, according to an October report from Frost & Sullivan. India holds the second-largest percentage of that market share at 13.2%, after China’s 73%, according to the report.
But Uber’s decision falls in line with its stated strategy to dominate or ditch, and Wall Street cheered the move, sending Uber’s stock up more than 5% Tuesday morning, adding about $3 billion to its market cap. Uber’s market value is now around $63 billion.
My Take: This looks to be a good direction for Uber. They get 10% of the business and don’t have to invest any more. The question then becomes, 10% of what? Let’s hope it’s not 10% of nothing.
OK, But Have You Tried Just Making Them Employees? [Gizmodo]
Sum and Substance: Uber is still doing everything in its power to fight the implication of California’s new independent contractor law, likely working its developers into the ground to roll out product features designed not to improve driver or rider experience, but to create flimsy legal defences against an increasingly indefensible business model. You’d think there’d be an easier way. …
Keep in mind, AB5 is merely an incremental escalation of what was already the letter of the law, as per a California Supreme Court ruling made nearly two years ago.
Muddying things further, Uber has made it a high priority to add features to its app only for users in California specifically to undermine the case that the company is in any way controlling the course of work for its drivers. In Uber’s view, it’s a platform for connecting drivers with passengers, not a taxi company, if you can believe that.
So, what’s the latest piece of misdirection? As the Wall Street Journal reported today, a small subset of drivers performing a small subset of rides in three small cities in California will get an obtuse bidding system for fares, which, one assumes, is meant to show that drivers are able to set their own prices—an important element of true contract work.
Uber’s latest changes will set up a bidding system that lets drivers increase fares in 10% increments, up to a maximum of five times Uber’s set price […] Uber will match the rider with the driver who has set the lowest price […] Starting next week, Uber plans to let drivers also set fares lower than Uber’s price. In addition to choosing a higher multiple, drivers will be able to charge as little as one-tenth Uber’s set price, decreasing fares 10% at a time. They will also be allowed to opt out of surge pricing. …
According to one estimate, if Uber were to treat its drivers as employees it would cost them in the ballpark of $US500 ($730) million, annually. With all the work Uber has piled onto its developers to get out of this jam (at whatever salaries those people pull), with all the confusion it’s putting drivers through (who are now more likely to predominantly use a competitor rideshare app), and all the money this deeply unprofitable company has or intends to blow fighting AB5 (in ballot measures, astroturf campaigns, legal fees etc.), you have to wonder: Did they ever think making the drivers into employees might just be easier?
My Take: It’s a point of view worth considering. Why not comply with the law? It would cost $500 million, but in comparison to what they’re doing now, that might be a bargain.
The dehumanization of Uber [The Observer]
Sum and Substance: … This is why when Uber launched a new ride option allowing customers to request a “quiet ride,” I couldn’t help but raise an eyebrow. As part of the Uber Comfort option, riders can control car temperatures, enjoy extra legroom, and make requests about the conversations, or lack thereof, during their ride. Talking to strangers is not, by any means, my forte, but I would like to think I wouldn’t pay a higher fare to have my Uber driver take a vow of temporary silence while he, a fellow human, transports me to my destination. …
After some initial backlash this past spring, the company defended their new feature by claiming that it was all a part of their efforts to achieve an overall “elevated” riding experience. When you think about it, the option could actually be useful. Some people may feel uncomfortable answering a complete stranger’s questions about themselves, where they’re going, etc. Sometimes customers wish to sleep or catch up on other tasks during longer Uber rides.
Then there are people (like me) who do sometimes just enjoy the peace and quiet of a car ride or the alone time before the start of a class. But there has to be a line between enjoying silence and necessitating it. The ”quiet ride” preference allows an awkward silence to become a mandated silence, but we have to ask ourselves: is this what we want?
Dehumanization — that’s what it is. People are becoming closer friends with their phones than with other humans. A phone knows all your secrets, the people you interact with most, your every move, your favorite songs….
My Take: It’s an interesting point of view – coming from a college student at Notre Dame. I’m not saying it’s right, but it’s certainly worth considering.
CONGESTION AT THE CURB: An Analysis of Ride-Hailing at LAX and Recommendations to Optimize the TNC System at Airports [ComotionNews]
Sum and Substance: If you’ve followed ride-hail at airports over the years, you’ve probably seen a lot of changes: from pick-up and drop-off points to fees and regulations. Airports around the country are dealing with a number of major issues: a growing number of passengers, aging infrastructure, and an influx of new mobility options like Uber and Lyft. This report uses our extensive knowledge and expertise from covering the industry for over 5 years to analyze what went right and what went wrong with LAX and make concrete recommendations that can be adopted by LAX or other airports facing similar challenges.
The intended audience for this report is obviously airport officials, but also regulators, industry insiders and really anyone with an interest in ride-hail. Efficient pick-up and drop-offs are a huge challenge for airports and TNCs but the more data that’s out there, the better the system we can come up with.
My Take: This is a good start in thinking about possible solutions to the airport problem. Whether it goes any place is another question. Disclaimer: One of the report’s co-authors is Harry Campbell.
Readers, what do you think of this week’s roundup?
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-John @ RSG