The [D]evolution of UBER
The controversy surrounding the world’s biggest new player in the transportation industry is everywhere. Everyone seems to be talking about the scandals surrounding Uber; but, other days, it seems as if all the people who talked about the negatives are ordering Uber cabs to get them to their next destination with the touch of a screen. Regardless of opinions surrounding the tech company, Uber is thriving and aggressively expanding throughout the world, sweeping bad press under the rug as they go. Initially an upstart company out of the infamous Silicon Valley, Uber has grown to have an appraised worth of nearly 50 billion dollars this year. Thus, understanding the controversy surrounding Uber is important, not only for users of the service, but for the general populations who may be in areas affected by the company’s presence, as well as anyone who wishes to know.
So What’s the Big Deal?
Over the course of the past five years of Uber’s existence, it has managed to get tangled up in quite a few major issues. Taxi companies, city laws(mandates, ordinances, etc.), and the public’s safety are all affairs Uber has had a negative impact on. It seems they never grew out of the “small-company”, aggressive mentality of doing whatever it takes to get ahead. This poses a major problem, as a company of that magnitude participating in ethically questionable business practices is a recipe for disaster.
What is it that Uber is doing?
Uber is doing a wide array of controversial things, so a list seems appropriate.
● The company is ignoring local laws regarding taxis and transportation, claiming that they are merely a technology company and therefore the law does not affect them.
● Uber has taken zero responsibility for not one, but several cases of violence, crime, and attempted acts of crime by Uber Drivers, claiming the drivers are acting as individuals, not employees.
● On multiple occasions, the company has been caught supporting and initiating the sabotage of other ride-sharing companies such as Lyft.
● Uber’s executive, Emil Michael, was reported to have proposed looking into reporters’ lives and families to get dirt on the reporters and publish it, in order to take the heat off Uber in the media.
● Uber uses something called “surge-pricing”, which is basically the practice of making normal rates a whole lot more expensive due to situations surrounding the location of the Uber app user.
● Uber has been known to pay its drivers as little as possible, while still increasing rates for users. Where is all that money going? People want to know, especially the drivers.
● Lastly, Uber is taking over the market that taxis once monopolized, and are severely decreasing the value of taxi medallions, which will be discussed next.
Needless to say, lots of people are not happy with Uber, and yet, Uber is making more money every year. Why is that? Well, keep reading.
What is a Taxi Medallion? How Does it Affect Uber?
Taxi medallions are basically like house mortgages. In most states and countries, taxi services are monopolized by the government, just like public property. Thus, to become a taxi driver, one must save up money to buy their taxi medallion. If you do not have a taxi medallion and you are acting as a taxi service, bad things happen. That would be similar to living in a house you haven’t paid for.
Taxi medallions can range anywhere from $15,000 to upwards of $200,000, so it is quite an investment for the individual, and is very much their livelihood. Now, imagine one is living in a house they are paying for, and someone else decides to live in the nicer house next door...for free. This is how taxi drivers are feeling. Uber has infiltrated the market, giving its drivers freedom to be a virtual taxi driver anywhere they want, without ever needing to pay for a taxi medallion. This not only puts taxi drivers’ jobs at risk due to the increased competition, but also rapidly decreases the value of their medallions. These medallions, worth hundreds of thousands at times, are able to be sold when a driver retires, similar to a car or a house. Now, their resale value is plummeting. That, along with the value of the hard work the drivers put in to earn them, is dangerous to those individual’s lifestyles and livelihoods.
Why can Uber come in and do this without being punished? One simple reason: they define themselves a technology company, only responsible for the app they created. They see their drivers as independent agents working with the app they created. This is one of the major controversies surrounding the company of late. It has sparked conflict all over the world with governments and taxi drivers.
In fact, riots have occurred, led by taxi drivers who oppose Uber in their cities. Paris is probably the most famous of these protests. Taxi drivers who opposed Uber’s “unfair” entry into the market blocked major streets into airports, the capital, and elsewhere. 70 cars were damaged, overturned, burned, and destroyed. 10 people were arrested, and 7 police officers were injured. This was all caused by the competition Uber introduced into France’s taxi market, and France has since cracked down on Uber’s services.
What Happened in New York?
Remember when Uber ignored the taxi medallion laws? New York City had a bit of a problem with that. There was an entire lawsuit surrounding the issue, with fair points from both sides. Uber wanted to resolve the issue, NYC wanted to prevent Uber from developing past a certain point in their city. To really get the most information, read this New York Times article on the conflict. In essence, however, the city wanted to cap Uber’s growth.
Uber knew this would “break them” in New York. They did everything in their power to make the decision go their way. Uber went as far as provoking the mayor’s young voter base to be against the cap. They also targeted the low-income working class in New York. Uber has reportedly spent around $225,000 lobbying the mayor’s office, using some of the most powerful lobbyists they could get. The first deputy mayor, Anthony E. Shorris summed up the situation. “I mean, at some point, there’s a public good here, which is a restricted capacity of the streets of Manhattan,” Mr. Shorris said when interviewed.
Tdeg15. “Uber's legal issues 2015-02-06.jpg” 2/11/2015 via Wikimedia Commons. Creative Commons Attribution-Share Alike 4.0 International license.
Needless to say, Uber is doing everything they can to keep their current business model. Even a major competitor to the company, Lyft, is opposing the cap on business in New York. However, their angle is that they don’t want Uber to consume the small part of the market they’d be allowed to have. Still, with all the rivalry that has occurred with Lyft and Uber, two Silicon Valley tech upstarts, the fact that Lyft is taking Uber’s side in New York is rather interesting.
With taxis being a government monopoly, should Uber become regulated by the government? Does the government have any right to claim that? In the name of capitalism, at least in the United States, no is the answer to both of those questions. Uber, as a private company, is absolutely correct to defy attempts to regulate its practices in places like New York. Communist countries such as China, however, have every right to regulate Uber. In China’s case, Uber was completely banned from the country due to its legal status. "Uber is illegal if it involves hiring private car owners to offer car-for-hire services, but the government should conduct innovations and reform in the transportation sector in the Internet era," Gu Dasong, a professor of transportation law at Southeast University, told the Global Times, which was reported by Ecns.cn.
And China isn’t the only one who has banned the ride-sharing company. Berlin, Mumbai, New Dheli, Thailand, Nevada, and other cities, countries, and states have all banned Uber’s services. Other areas such as Brussels, the Netherlands, and certain parts of Australia have simply put a partial ban on Uber, only passing policy about the company’s discount services: UberPOP and UberX.
Uber, on the other hand, has deliberately suspended services in certain areas. This is supposedly until political and social pressure subside. These areas include Panama City Beach, Florida; San Antonio, Texas; Spain; South Korea, and others. It almost seems as though Uber is using war strategies, focusing their efforts in certain areas, backing off until there is less pressure in others.
What is Surge-Pricing? Why is it Unethical?
Surge-pricing is a very aggressive technique employed by Uber, reportedly to “get more drivers on the road” in certain areas when demand exceeds supply. The problem is, what might’ve been a $10.00 ride turns into a $35.00 ride simply because Uber says so. Many users have strong feelings about this already, as Uber is effectively gleaning as much money from them as possible, and no one likes losing money. However, the real issue arises with situations like the one that occurred in Sydney, Australia last year, 2014.
During a hostage situation at the Sydney CBD, prices for Ubers rose nearly 400 percent. That’s four times greater than a normal payment. The public was outraged, and accused Uber of acting against the public’s best interest, raising prices to make money off of a crisis. Luckily, Uber did respond.
They released a statement on their blog, stating that surge pricing is based on an algorithm that would raise prices to get more drivers on the road so that supply could meet heavy demand, which was occurring during the crisis in that area. Officially, they did not at all intend for the surge-pricing to hinder people from leaving the CBD, but that is exactly what happened. In an effort to avoid the bad press, Uber refunded all the users who had experienced any surge pricing that day in Sydney, as well as granting free rides to those who rode out of the city.
“During a hostage situation at the Sydney CBD, prices for Ubers rose nearly 400 percent.”
In this instance, one can see why Uber’s actions may have seemed unethical to the general public. Uber did, however, back up its use of surge-pricing, stating that without it, Uber would not be itself. In other words, users have come to expect quick responses and service from Uber, and surge pricing ensures that speedy service is always part of Uber.
There is however, a study, which essentially finds that while service remains consistent in the area of surge-pricing, it may decrease in surrounding areas, due to the surge drawing Uber drivers from one area to the other. Nothing can be proven yet, but it is something to think about when considering Uber’s claims.
Who is Emil Michael? What Did He Do?
Emil Michael is Uber’s senior vice president for business. He, reportedly, has led Uber into some very big business partnerships with high profile companies. However, he made some unsavory comments at a private meeting last year about digging into reporters’ lives. Michael essentially proposed a scheme for Uber to dig up dirt on reporters, the personal lives of those reporters, and their families. With all the bad press Uber had been (and has been) receiving, Michael thought saying a few words about it in private wouldn’t do any harm. The problem was, he said it in front of the very same reporters to whom he was referring. Needless to say, the reporters did what reporters do and it was soon headline news.
Uber has since addressed the issue, defending the executive with claims of the words being told in private. He was not directly punished for this incident as far as the public knows, nor did he lose his job. This incident with the reporters of major media sources greatly contributed to the firestorm surrounding Uber last year.
Rivalry in Silicon Valley? You don’t say…
Uber and Lyft aren’t the first companies from the Valley to have an obvious rivalry. Apple, Google, and Facebook all sound familiar, and all have had rivalries with other companies, including each other. However, the aggression in the Uber/Lyft situation is seemingly unprecedented. Evidence of Uber giving disposable burner phones to “brand ambassadors” and instructing them to call and then cancel Lyfts has been found on multiple occasions. The independent contractors not only cancel Lyfts, but attempt to recruit the drivers from Lyft to work for Uber.
“While many companies take tactics to undermine their competitors, Uber has been known for its ruthless nature in going about it.”
While many companies take tactics to undermine their competitors, Uber has been known for its ruthless nature in going about it. This evidence simply proves what is being expressed about the company. Lyft has also been accused of sabotaging Uber, so the street goes both ways; however, Uber’s reputation precedes it, which is why Lyft is seen as the underdog in this situation.
Who is Accountable? Not Uber.
Several Uber drivers in the past five years have been tried and convicted of rape and murder, among other crimes. These horrible acts have been thrown at Uber by the media and the public, who want the company to take responsibility for some of it. Uber will have nothing to do with the situations though. The company dismisses these acts as individual acts, committed by drivers who were not currently acting as a driver for Uber. If the crime was committed during a drive with a user of the app, Uber dismisses it as a risk the user was willing to take by getting in the car with a stranger.
Much debate and controversy have been caused by these incidents, sparking calls for greater background checks for Uber drivers, and a higher barrier to entry into the company.
Fischer, Michael. Screenshot of Twitter, Umair @umairsaeed, December 7, 2014. Screenshot September 26, 2015.
Fischer, Michael. Screenshot of Twitter, Rohan @mojorojo, December 6, 2014. Screenshot September 26, 2015.
Uber has “considered” these claims publicly, and promised to address the issues. So far, no actions have been taken, so far as the public is concerned.
What Does Uber Have to Say About All This?
Much of Uber’s refutations have been covered above, but the major stance Uber normally takes is one of general indifference. Uber’s CEO, Travis Kalanick, often expresses his views rather brashly on social media, scorning officials or reporters when he disapproves. In fact, Kalanick offered a 13 tweet apology on behalf of Emil Michael. Here, all 13 can be viewed, but three are shown below.
However, the company itself is indifferent in many ways to the controversy surrounding it. And for good reason, as they’re worth more than major companies such as FedEx and Charles Schwab at this point. The indifference comes in the form of a lack of accountability for their drivers’ actions, as well as public apologies and positive PR only when required. Thus keeping the company in generally good standing. It is also seen in Uber’s brutal, relentless approach to the industry and their own expansion.
Fischer, Michael. Screenshot of Twitter, travis kalanick @travisk, November 18, 2014. Screenshot September 26, 2015.
What Do Customers Have to Say About All This?
With all the bad publicity Uber brings in, you would think the value of the company would be going down, but since last year it has more than doubled. Many people are aware of the company’s controversial stance on things, yet still use the app, which is something Uber obviously realizes. For instance, Seth Meyer, in his talk show, claims,“I don’t like that this[, the controversy regarding digging into reporters’ personal lives,] happened to Uber: I use Uber. Sure they price-gouge, sure they charge up to 4 times as much when it’s raining and 2 times as much when it’s cloudy, but it’s so much easier than taking taxis.” This shows that while Uber users acknowledge its questionable practices, they realize the benefits outweigh the risks.
And isn’t that what Uber is all about, judging from the evidence laid out above? Benefitting from risk? One can only hope that the risks Uber is taking don’t lead down a path that puts the public’s safety at stake, yet that may be what is already happening.
