Uber's Still Not Profitable(pluralistic.net)
pluralistic.net
Uber's Still Not Profitable
https://pluralistic.net/2022/08/05/a-lousy-taxi/
104 comments
> From a business point of view thats exactly what it should be doing. Increasing margins and paying contractors less is what a business. I understand the ethical questions about minimum wage and pay for drivers, but from a purely business POV shareholders would be happy to see wider margins.
Until we get "fair trade" taxicabs.
Until we get "fair trade" taxicabs.
> Cabs are terrible. Driver's are mean.
I'm sorry they hurt you, but I assure you this is not a universal trait of taxi drivers everywhere in 2022.
I'm sorry they hurt you, but I assure you this is not a universal trait of taxi drivers everywhere in 2022.
I don't get the endgame here. Uber provides super cheap cab rides by going into a loss so competitors don't spring up. then eventually when they've dominated the market they do what? increase prices? so competitors spring up again? makes no sense
The idea is that Uber will develop a self-driving car that will ultimately offset its loss leader, much like Amazon and AWS.
That was the idea once; They gave up on that part, their self driving car division has been shuttered and they don’t plan to replace it. From the article:
> Uber's bag of tricks is nearing its bottom. Its fantasy of magic, self-driving robo-taxis is over (the company spent $2.5b to make a car that had a fatal crash every 0.25 miles, and then had to pay another company $400m to take the division off its hands):
> https://pluralistic.net/2020/12/08/required-reading/#gooberHuh. A piece of news perhaps many missed due to other events overshadowing it completely? I had no idea.
2.5b seems like a drop in the bucket for what would essentialy revolutionize the world of transportation.
Not when competitors are achieving better results with less. The first to full vehicle autonomy will reap the majority of the rewards and market share.
Also, we'll never really know the exact numbers and how much of it went to actual R&D and miles-driven testing.
Also, we'll never really know the exact numbers and how much of it went to actual R&D and miles-driven testing.
Now this has been proven a pipe dream, I really don't understand the current valuation of Uber.
Regulatory capture most likely.
As shitty as cabs were, they also had regulations to follow (in theory). Sooo they'll do something similar. Lock up the market, do all the suuuper unethical political junk they're known form, and make it impossible for anyone to compete with them.
THEN they'll jack up the prices.
As shitty as cabs were, they also had regulations to follow (in theory). Sooo they'll do something similar. Lock up the market, do all the suuuper unethical political junk they're known form, and make it impossible for anyone to compete with them.
THEN they'll jack up the prices.
That's not very bright proposition. Suppose they have captured the market regulatorily and jacked up prices. Sure they have defended from new start-ups. What would prevent a big player such as Amazon or Meta from entering their market? They can surely afford to allocate tens of billions to do so. They can also hire an expensive team of lawyers and execs to enter this regulated market.
There is no end game. It's a pump and dump scheme.
Early investors get insanely rich, whereas later investors pay the price.
Early investors get insanely rich, whereas later investors pay the price.
I wonder if part of the root cause is allowing non profitable companies to list publicly. For early investors, listing is the end game and not having profitability as a goal means investors are more incentivized to grow hype than in sustaining the business.
I don't think there is anything wrong with unprofitable companies getting to list. Problem is the investors. That there are enough people both private and institutional that even consider buying an company that has and does not generate profit. And even more so does not seem viable route to such.
Maybe fund managers should not be allowed to invest in such companies. At least outside qualified investors.
Maybe fund managers should not be allowed to invest in such companies. At least outside qualified investors.
End game of taxi industry is self-driving cars.
This is what Uber has been betting on but they estimated that the transition would come much earlier than it is.
This is what Uber has been betting on but they estimated that the transition would come much earlier than it is.
If that were the end-goal, what's the point of operating their current business at all? Seems like a waste and entirely pointless.
And why wouldn't some other company without all the current baggage needed for operating a taxi service with human drivers be able to steal Uber's business?
And why wouldn't some other company without all the current baggage needed for operating a taxi service with human drivers be able to steal Uber's business?
Uber is not profitable and DiDi which takes less cut as middle man is profitable. In Central and South America, I prefer to use DiDi as it is cheaper and app experience is about the same.
https://www.forbes.com/sites/bradtempleton/2021/02/04/didi-m...
https://www.forbes.com/sites/bradtempleton/2021/02/04/didi-m...
What is Uber's "moat"? After all, it's "just an app" and there are so many of them now. Most drivers here have like 5 different ride hailing apps installed and take a ride from whatever shows up.
I knew this whole space was a race to the bottom business wise the first time I had a driver rock up with multiple phones on the dash and he described how all the drivers in the area arbitrage the different companies against each other. I joked as a rider I had just done the same thing and taken the cheapest one. I certainly enjoyed my VC subsidized transportation while that craziness lasted.
Uber will learn to satisfy riders' preferences: Some riders what VIP treatment, others want the fastest possible service. Some riders live in a bad neighbourhood and want a driver to take them there.
Uber is also learning which drivers are not trustworthy and removing them from their system.
Over time users will have bad experiences with competing apps and delete them from their phones.
Uber is also learning which drivers are not trustworthy and removing them from their system.
Over time users will have bad experiences with competing apps and delete them from their phones.
On one hand, I hate Uber/Grab sham financials. And how it pretends it’s “car sharing” and not just regular taxi.
(Also the Grab/Uber deal was explicitly illegal and was even ruled illegal in Singapore. Note that Grab and Uber are both owned by Masa and own each other.)
And their explicit business plan of “losing on each sale in ordering to monopolise and then increase prices” is idiotic. (People always cite Amazon and their razor thin margins, but… Amazon never lost money on every sale.)
On the other hand, they vastly improved experiences of both sides of the taxi deal. That’s just the truth. And articles like this pretend the state before these apps was beautiful pristine state of perfect taxis and public transport and they destroyed that. No? They didn’t.
So… I’m glad that those apps exist, even when their economics make no sense.
(Also the Grab/Uber deal was explicitly illegal and was even ruled illegal in Singapore. Note that Grab and Uber are both owned by Masa and own each other.)
And their explicit business plan of “losing on each sale in ordering to monopolise and then increase prices” is idiotic. (People always cite Amazon and their razor thin margins, but… Amazon never lost money on every sale.)
On the other hand, they vastly improved experiences of both sides of the taxi deal. That’s just the truth. And articles like this pretend the state before these apps was beautiful pristine state of perfect taxis and public transport and they destroyed that. No? They didn’t.
So… I’m glad that those apps exist, even when their economics make no sense.
As someone who has used Uber quite a bit across Europe I cannot understand how they are not profitable. They take what 10/20% of the ride and they do millions of rides every day. I myself have spent few thousands in their service alone.
How can they not be profitable after all these years.
How can they not be profitable after all these years.
If the costs per ride are higher than the fare, it doesn't matter how many they do.
In the end they have to pay for all the maintenance and initial purchase of the vehicle as well even if they manage to put those on the driver's as well.
Their "independent contractor" employment model doesn't work in some markets where they end up paying regular benefits and taxes.
In the end they have to pay for all the maintenance and initial purchase of the vehicle as well even if they manage to put those on the driver's as well.
Their "independent contractor" employment model doesn't work in some markets where they end up paying regular benefits and taxes.
Is there a break down on their cost per ride? Infra/engineering/marketing/local regulation/etc. ?
There's the ride subsidies of course, which have never gone away really.
But also, Uber is a valley tech firm, meaning it has extremely high overheads. To service all those markets Uber employed 29,300 people last year, a roughly 30% increase from 2020, and note that isn't including the drivers. That's nearly 30,000 people in operations and software development of various kinds.
Uber probably can't make money even if it stops subsidizing rides because the extra added value of a ride-hailing app (which is certainly non zero) is nonetheless not enough to offset the cost of having such a massive company, especially given that so many are earning some of the world's highest salaries.
But also, Uber is a valley tech firm, meaning it has extremely high overheads. To service all those markets Uber employed 29,300 people last year, a roughly 30% increase from 2020, and note that isn't including the drivers. That's nearly 30,000 people in operations and software development of various kinds.
Uber probably can't make money even if it stops subsidizing rides because the extra added value of a ride-hailing app (which is certainly non zero) is nonetheless not enough to offset the cost of having such a massive company, especially given that so many are earning some of the world's highest salaries.
Author hears the bells, but can't quite put a finger on it.
If a highly successful company is not profitable, then it usually means only one thing - they are very good at tax avoidance. Profit attracts Corporation Tax, so big corporation use creative accounting techniques to transfer it somewhere where they don't have to pay tax or it is very very low. There are other reasons why one would want to pocket the profits / hide - for instance when a salary attracts very high tax - paying a CEO level salary may seem like a waste. So what often companies do, they are signing a contract with a company indirectly controlled by a CEO level for services that sound legitimate and pay the fees. Then that company is doing it's own creative accounting.
People forget that a company does not have to have profit to be healthy. Profit comes after all obligations and investments are paid. It is actually in the company interest to not have any profit, so they reinvest money and pay good salaries. Only people interested in profit are shareholder and usually it comes at the expense of people who actually do the work.
If a highly successful company is not profitable, then it usually means only one thing - they are very good at tax avoidance. Profit attracts Corporation Tax, so big corporation use creative accounting techniques to transfer it somewhere where they don't have to pay tax or it is very very low. There are other reasons why one would want to pocket the profits / hide - for instance when a salary attracts very high tax - paying a CEO level salary may seem like a waste. So what often companies do, they are signing a contract with a company indirectly controlled by a CEO level for services that sound legitimate and pay the fees. Then that company is doing it's own creative accounting.
People forget that a company does not have to have profit to be healthy. Profit comes after all obligations and investments are paid. It is actually in the company interest to not have any profit, so they reinvest money and pay good salaries. Only people interested in profit are shareholder and usually it comes at the expense of people who actually do the work.
Uber has also just gotten really bad from a product standpoint in so many cities too. Canceled rides, terrible customer service. It seems like other app platforms are attracting more/better drivers. Plain old taxis are better than Uber in many cities again.
Quite ironically Uber has become the terrible bloated transportation option with a bad customer experience that they set out originally to replace.
Quite ironically Uber has become the terrible bloated transportation option with a bad customer experience that they set out originally to replace.
This article's tone is so over the top negative that I think it hurts its credibility. Most of its criticisms are directionally valid, but overstated.
If you dig down into the source that this article is based on ( https://www.nakedcapitalism.com/2022/08/hubert-horan-can-ube... ), which is also pretty grumpy in tone but not quite as over the top, I think what you see is that Uber has genuinely improved its finances materially -- it's not all accounting tricks.
But it's still hard to see how Uber gets from here to the kind of sustainably significantly profitable place it will need to get eventually in order to justify its valuation.
If you dig down into the source that this article is based on ( https://www.nakedcapitalism.com/2022/08/hubert-horan-can-ube... ), which is also pretty grumpy in tone but not quite as over the top, I think what you see is that Uber has genuinely improved its finances materially -- it's not all accounting tricks.
But it's still hard to see how Uber gets from here to the kind of sustainably significantly profitable place it will need to get eventually in order to justify its valuation.
The post only mentions Uber Eats in the article’s tags. That lowers credibility a bit I think? Uber Eats seems like it has the potential to level out the lack of profitability on the rides side. And they have a better, more reliable service than Doordash, imho, which has a 32B market cap.
But they haven't run out of VC money so who cares, right?
It’s a public company. VC funding necessarily implies pre-IPO. They absolutely have run out of VC money and are now preying on investors in the stock market.
I stopped reading at the claim that Uber provides worse service at a higher price than traditional cab companies. No one who experienced the hell of taxis could ever say that with a straight face.
100x more true for places like India which has notorious taxi and auto drivers who would charge you anywhere from 2x to 10x if you don't know the area or see you in need.
For all the things uber has done wrong they have done a lot of right too. It was truly a nightmare to get a taxi here and most autos and taxis won't even stop or refuse fare outright if it wasn't for a profitable route.
For all the things uber has done wrong they have done a lot of right too. It was truly a nightmare to get a taxi here and most autos and taxis won't even stop or refuse fare outright if it wasn't for a profitable route.
Taxi quality varies wildly by location.
In a lot of places that's absolutely true.
In a lot of places that's a laughable idea that will probably never be true.
In a lot of places that's absolutely true.
In a lot of places that's a laughable idea that will probably never be true.
This is very location dependent.
Uber has a still? Uber whiskey is coming??
I think this article conflates two different things: the concept of app-based ride-hail services like Uber, for which there is clearly a huge amount of demand even without VCs juicing it; and the actual implementation of it by Uber, which is a hugely bloated and unsustainable company that's proven primarily to be an unparalleled bonfire of VC money.
> That is, rather than having to wait longer because drivers tapped "accept," realized they'd lose money on your business, and tapped "cancel," you would now wait longer because drivers just didn't accept your run.
The blog is implying this is a bad thing, but this seems preferable both from the driver and rider's POV?
> Today, Uber offers the same poor service as traditional taxis, but must charge enormously higher fares because of its much higher cost structure.
No, Uber's model of being able to order a car from anywhere to anywhere with transparent location tracking, routing and pricing (as in, you know what you'll pay) has always been and remains superior to "traditional" taxis. In some markets taxi companies have finally followed suit, down to fares fixed in advance, but by doing so they've also shown the superiority of the Uber model.
> That is, rather than having to wait longer because drivers tapped "accept," realized they'd lose money on your business, and tapped "cancel," you would now wait longer because drivers just didn't accept your run.
The blog is implying this is a bad thing, but this seems preferable both from the driver and rider's POV?
> Today, Uber offers the same poor service as traditional taxis, but must charge enormously higher fares because of its much higher cost structure.
No, Uber's model of being able to order a car from anywhere to anywhere with transparent location tracking, routing and pricing (as in, you know what you'll pay) has always been and remains superior to "traditional" taxis. In some markets taxi companies have finally followed suit, down to fares fixed in advance, but by doing so they've also shown the superiority of the Uber model.
Where I live, Rotterdam NL, traditional taxis work pretty well. Not everywhere is as fucked up as America.
Never really understood why people use uber either until I went to Austin. They are not filling a gap in taxis in my opinion but in public transport.
In America, that's a pretty big gap.
Two words: gig economy. Or put another way: shite.
Shouldn't at least several people go to prison for this kind of thing? If my personal accounts were 'works of absolute fiction' I certainly would, what gives?
A company only needs to be able to claim that they really believed someones fair market value estimation of a company and they are good.
I think they were really betting on autonomous driving, fueled by Elon Musks lies and hype. They built up the digital infrastructure and so much clout their company name & product became a verb on the level of googling.
But now taxi-level 100% autonomous no-driving-wheel cars are farther away than ever. The current broad generation of machine learning and sensors reached its maximum and it‘s looking bleak.
But now taxi-level 100% autonomous no-driving-wheel cars are farther away than ever. The current broad generation of machine learning and sensors reached its maximum and it‘s looking bleak.
Wow. ..I'm really surprised by this comment..what do you mean by "farther away than ever" . I just recently started learning to code and I really want to go into machine learning ..does it mean there isn't any major innovation right now in the field ?
Modern ML/AI became a fully accepted, mature part of the "production software engineering world", it's a solid career choice, from everything that can be predicted right now. Existing, non-startup companies are using ML/AI to solve real problems and its buzzword powers are shrinking every day.
But regarding autonomous driving, there seems to be stagnation. We now got cars that can "autonomously drive in most conditions but required a driver at the wheel at all times" for many years now. Tesla FSD updates seem to be incremental at best. Is there any company left still planning 100% autonomous taxis that can get drunk people home? I don't think so. And that would be the fucking holy grail of the transportation business. There are about 18 million taxi drivers in the world and most of them would lose their job, saving customers and companies billions.
But regarding autonomous driving, there seems to be stagnation. We now got cars that can "autonomously drive in most conditions but required a driver at the wheel at all times" for many years now. Tesla FSD updates seem to be incremental at best. Is there any company left still planning 100% autonomous taxis that can get drunk people home? I don't think so. And that would be the fucking holy grail of the transportation business. There are about 18 million taxi drivers in the world and most of them would lose their job, saving customers and companies billions.
That's probably not what they meant.
What I interpreted it as was that the current iteration of machine learning will not be able to satisfactorily solve full self-driving cars.
What I interpreted it as was that the current iteration of machine learning will not be able to satisfactorily solve full self-driving cars.
> That's probably not what they meant.
It is, somewhat. The current generation of software and hardware was pushed to its limits by the smartest AI/ML engineers in the world and the best we got is Tesla FSD which is in no way ready to replace taxis and still needs someone at the wheel at all times.
100% self driving taxis for drunk night crawlers are not on the horizon anymore.
It is, somewhat. The current generation of software and hardware was pushed to its limits by the smartest AI/ML engineers in the world and the best we got is Tesla FSD which is in no way ready to replace taxis and still needs someone at the wheel at all times.
100% self driving taxis for drunk night crawlers are not on the horizon anymore.
I don't know if Elon Musk's nonsense was involved - they had their own autonomous driving project in-house didn't they?
Have you forgetton the whole Google lawsuit against Uber? Anthony Levandowski. Uber’s self driving project is still no where near production ready.
What does that have to do with Musk? Musk never worked at Google and Tesla s self driving technology lacks key sensors compared to what Waymo and Uber were working with.
/u/failingknife, I cannot reply to you, but thanks for making only relevant comment on this entire thread.
I can't see why it's relevant. We're talking about Uber's bet on self-driving cars and this person commented with an bitter, offtopic gripe about how they think HN commenters are losers.
I think you mis-read - I'm saying they did have a self-driving car project, not that they didn't. And yeah nobody has production ready self-driving tech, it wouldn't surprise me if they had canned it.
So the self driving talk was all a lie ?
I don't know which part you mean, so you might have to clarify. But I don't think they were lying about having a self-driving car program - as someone else mentioned there was a pretty famous lawsuit about this very topic. I don't really remember much about how far along they claimed to be, but it's definitely possible they exaggerated how successful their efforts were - so that could be construed as lying I guess? But it's a tough nut to crack, as evidenced by Tesla's ongoing FSD problems.
It was ... over-optimistic.
I would -suspect- that we'll get full self driving -eventually-, but which of the companies attempting it will succeed first and how many years from now I have no idea.
I would -suspect- that we'll get full self driving -eventually-, but which of the companies attempting it will succeed first and how many years from now I have no idea.
Oh you are right. I definitely mis-read your comment. Apologies.
Just forget about me naming him. What I really meant was simply the whole autonomous driving bubble that just had him as its figurehead.
Yes, they quite famously killed a person
To be fair they are not going away soon, perhaps in a decade the initial investors will make $100 from it.
i am not siding with Uber but to claim that they are going to fail is a bit of hyperbole . the value proposition is quite simple for both drivers and passengers . for drivers you would make more income by driving more consistently , for passengers you get a cab instead of shouting like a cave-person on the street. It is true that there is an element of bezzle with money pumping and dumping over the last few years . They can be profitable as a much smaller company.
>for passengers you get a cab instead of shouting like a cave-person on the street.
Maybe I'm a cave person but to me just waving to hail a cab or just entering the first car in line at a taxi stand seems much more convenient than having to fiddle around with a mobile app and wait until it arrives.
Maybe I'm a cave person but to me just waving to hail a cab or just entering the first car in line at a taxi stand seems much more convenient than having to fiddle around with a mobile app and wait until it arrives.
Maybe if you live in the very heart of big cities. Otherwise there’s no way most of the US can flag a taxis. Uber replaced limo service which costs atleast three times as much.
It's convenient to you to wait for a cab to appear for 20 minutes in rain and snow instead of opening an app inside?
In addition to taxi ranks in popular areas, my local area (U.K.) has local taxi companies with their own apps. You can even still call them on the phone (quaint as it is) to make a booking.
Same in my bit of .uk.
Now, admittedly, the app I use most often is stunningly ugly and has almost zero features, but it -does- have the feature of 'reliably producing a taxi when I type my name and location into it' and so long as that part works I don't really care much about anything else.
(in several areas of .us I've found that the taxi experience is "call them, one might turn up at some point" so I can see uber's tracking of the car as it approaches to be a welcome security blankie for people who've been traumatised by the local taxis)
Now, admittedly, the app I use most often is stunningly ugly and has almost zero features, but it -does- have the feature of 'reliably producing a taxi when I type my name and location into it' and so long as that part works I don't really care much about anything else.
(in several areas of .us I've found that the taxi experience is "call them, one might turn up at some point" so I can see uber's tracking of the car as it approaches to be a welcome security blankie for people who've been traumatised by the local taxis)
[deleted]
Not if these taxi drivers do their best to scam you.
Many cities in the world have cabs on equally capable apps now so that competitive advantage is gone. Nobody screams like a cave person on the street anymore
And even before apps became common-place, in Europe it was common to call a dispatch and ask for a cab at an address.
Uber was founded because the same was true in SF; however then oftentimes the cab only arrived after an hour, if at all.
I live in rural UK. We have several local taxi companies that reliably turn up within minutes. It's been that way for decades.
The only really interesting value add to Uber was app-centric interactions (as opposed to a phone call), giving the ability to pay by card (instead of cash), and to track the taxi in the app.
Many local taxi firms are using apps too, so those advantages are gone. If this plays out the same in all geographies then Uber has already lost the taxi game.
The only really interesting value add to Uber was app-centric interactions (as opposed to a phone call), giving the ability to pay by card (instead of cash), and to track the taxi in the app.
Many local taxi firms are using apps too, so those advantages are gone. If this plays out the same in all geographies then Uber has already lost the taxi game.
Same in rural area I grew up. If anything, the monopoly on being a taxi drivers is what made it possible to get a taxi year round, not just during tourist season. So we could call a cab at a random weekday and probably be the driver's only ride that day. Then they would make most of their money during high season.
Now, lots of randoms dip into the high season using these apps. No longer profitable for the taxi to operate year around. So for the locals there is no longer a reliable taxi service most of the year...
Now, lots of randoms dip into the high season using these apps. No longer profitable for the taxi to operate year around. So for the locals there is no longer a reliable taxi service most of the year...
It's a fair value prop in SF, where you have to scream like a cave-person while wading through poop-filled streets with gun-wielding semi-homeless trying to mug you at each corner. Unfortunately for Uber the rest of the world doesn't look quite like that and normal taxis work just fine...
> Unfortunately for Uber the rest of the world doesn't look quite like that and normal taxis work just fine...
Not in the slightest. One of the biggest problems with normal taxis in Shanghai is that they won't stop if it's raining. And it rains all the time. I don't suddenly need a taxi less if it starts to rain; if anything, I need one more.
Not in the slightest. One of the biggest problems with normal taxis in Shanghai is that they won't stop if it's raining. And it rains all the time. I don't suddenly need a taxi less if it starts to rain; if anything, I need one more.
What is the reason behind that?
you make the car wet with wet clothes and shoes , smell wont go unless you dry it in the sun ... and if you dont dry it out it will smell like wet socks ...
Walking is less attractive while it's raining.
Yeah, and god help you if you were somewhere other than a major city.
I remember calling cabs multiple times in Southern California suburbs and waiting for hours only for them never to show up.
Taxis essentially didn’t exist outside of downtown/airports. Ridesharing apps were a revolution, not that I’m defending their practices here.
I remember calling cabs multiple times in Southern California suburbs and waiting for hours only for them never to show up.
Taxis essentially didn’t exist outside of downtown/airports. Ridesharing apps were a revolution, not that I’m defending their practices here.
I requested a cab through the local cab app here and four turned up.
I mean, I guess it worked for me.
I mean, I guess it worked for me.
> but to claim that they are going to fail is a bit of hyperbole
They make a loss on every ride, but don’t worry they’ll make up for it in volume!
They make a loss on every ride, but don’t worry they’ll make up for it in volume!
OP post mentions that they were profitable in Q2 2022 by raising rates . did you not read the article .
They could raise prices, reduce volume and turn profitable.
Predatory pricing should be made more illegal than it is. No one wins when a company operates at a loss to kill incumbents in a market.
At least for markets where the incumbents have no other protections (unregulated taxi markets). This is very few of Uber’s markets and probably not those where they do best, but the principle of not being allowed to operate at a loss with investor money year after year feels sound.
At least for markets where the incumbents have no other protections (unregulated taxi markets). This is very few of Uber’s markets and probably not those where they do best, but the principle of not being allowed to operate at a loss with investor money year after year feels sound.
This only occurred to me now in reference to Uber and other serial offenders, and I don't know what the situation in other countries is, but... In Switzerland there's actually a law against unfair competitive practices, and it has a clause prohibiting you from constantly or repeatedly (i.e. not as a one-off clearance sale or whatever) offering goods or services below cost! Wonder how it would go if you were to sue one of these companies operating here under that...
Uber operates in "strict" (as in 'technically correct') adherence to local policy. That means, in places where the policy is strict, like for example Italy (Milan), they have only licensed taxi drivers with licensed taxi cars. And where law allows (even with a loophole) they have less.
Uber is structured so that each country has one business entity, thus it's very easy for them to say "our Swiss entity does not do any such thing in Switzerland". Many EU countries have similar laws too, btw - and they have a very clear separation of base price and promo price here, and the base price is regulated.
Uber is structured so that each country has one business entity, thus it's very easy for them to say "our Swiss entity does not do any such thing in Switzerland". Many EU countries have similar laws too, btw - and they have a very clear separation of base price and promo price here, and the base price is regulated.
This sounds like a great way to quantify policy/law impact on businesses, by comparing their financial performance.
Obviously to an extent it can be compared, but considering laws aren't the only difference (economics of how many people in each country need work at what price, culture of who owns cars vs uses taxis vs cycles, etc etc) it would take an awful lot of analysis to compare them usefully (which no doubt various people both inside and outside Uber are doing, of course - and Ive no knowledge of how successful they are at that).
You couldn't just look at one being twice as profitable and say "that's the effect of country A's legal regulations vs. country B's".
You couldn't just look at one being twice as profitable and say "that's the effect of country A's legal regulations vs. country B's".
Also I'm not sure the data is available, does the US entity which is publicly traded have to report on all subentities' financials separately? Don't they usually just consolidate the financials?
The individual local business entities have their own mandatory data publication requirements. At least in EU, it's usual for companies to have to share some economical data publicly (usually there's a minimum on revenue but Uber certainly is over).
Lots of countries have laws like that, not only Switzerland, but they are hardly ever enforced because it would make people very upset. Way too many things are priced below production cost like e.g. the web browsers we're using to have this conversation.
Also, although this article describes Uber as a transfer of money from "labor to capital", in reality it's been the other way around. Uber and the like have been massive transfers of money from capital to labor - that's exactly why they're unprofitable. They pay labor more money than they get from customers and make it up from investor cash. This sort of thing is very popular with voters, even if the more astute may think about the longer term effects on competition etc, most don't care. What they see is that they can order a really cheap taxi ride via a nice app, and if the government demanded it be profitable, that wouldn't exist.
Don't under-estimate how much people love free/cheap stuff. Market dumping is bad in the long run but imagine what would happen to the software world if these laws were actually enforced. Open source would probably be made illegal!
Also, although this article describes Uber as a transfer of money from "labor to capital", in reality it's been the other way around. Uber and the like have been massive transfers of money from capital to labor - that's exactly why they're unprofitable. They pay labor more money than they get from customers and make it up from investor cash. This sort of thing is very popular with voters, even if the more astute may think about the longer term effects on competition etc, most don't care. What they see is that they can order a really cheap taxi ride via a nice app, and if the government demanded it be profitable, that wouldn't exist.
Don't under-estimate how much people love free/cheap stuff. Market dumping is bad in the long run but imagine what would happen to the software world if these laws were actually enforced. Open source would probably be made illegal!
Wouldn't such a law stop Google from releasing Android as open source? AOSP cost hundreds of millions of dollars to develop, but it doesn't cost anything to use.
In such a world, could companies even contribute patches to Linux? Making Linux better without expectation of profit could be considered predatory pricing against Microsoft.
In such a world, could companies even contribute patches to Linux? Making Linux better without expectation of profit could be considered predatory pricing against Microsoft.
There should be difference between releasing something for free like Open Source. And then providing real product or service for less than it costs to produce without any alternative income streams.
How would you even define that? Aren't you asking for other people's market dumping to be illegal, but not the type you like?
And what if android charged a penny a year?
The difference is that predatory pricing includes an expectation of future profits from that product. So it makes sense to exclude perpetual free licenses like open source from the definition.
Presumably Google benefits financially from the Android ecosystem. Play store if nothing else.
You can imagine a different world where many mobile OS providers exist, charge you for the system, then comes out Google with free Android, kills the competition and then milks monopoly pricing.
You can imagine a different world where many mobile OS providers exist, charge you for the system, then comes out Google with free Android, kills the competition and then milks monopoly pricing.
Not presumably. Around the release of android, google was quoting estimated earnings in the billions of dollars from a free and open source Android, purely from capturing mobile ad views/clicks.
> In Q2 alone, Uber transferred $2.8b from its drivers to its shareholders.
From a business point of view thats exactly what it should be doing. Increasing margins and paying contractors less is what a business. I understand the ethical questions about minimum wage and pay for drivers, but from a purely business POV shareholders would be happy to see wider margins.
> Today, Uber is offering much worse service at much higher prices than the traditional taxi
I disagree. Many customers use Uber cause of the user experience, trust, easy of use e.t.c there's intangible value other than the sticker price. Cabs are terrible. Driver's are mean. You have to tell them you address, whistle down a cab. Even worse, in many foreign countries you have to haggle with the drivers or stare at the meter to make sure ur not scammed. not to mention the increased risk of theft. Personally, I've had so many nightmare experiences with cabs. Many Gen Zs/Millenials don't even know what a taxi cab is or how to wave one down. The proof is in the pudding. If customers are booking Ubers even if the price is more, it means they value the Uber brand and experience.
> But sloppy drafting errors led to the California Supreme Court striking down Prop 22
Missing context. Prop 22 passed the ballot i.e people voted for it. It was later ruled unconstitutional but will still be in effect until the appeals. The gig-worker economy is too important today that something has to be done. I don't know if Uber will win these cases but eventually some legislation will come up.
> Riders who face spiraling prices will drive their own cars, or take a bus, or take a cab, or take a Lyft.
Why? The data is not indicating that. I'm writing this from a $2,000 Macbook even though I know very well a $200 PC can do the job just as well. Brand/User experience matter. If Uber cultivates a strong brand it may very well prove to have pricing power the same way people dish out cash on overpriced and often inferior Apple products. It may seem dumb that many kids are willing to pay $20 to get a $5 burger delivered to their doorstep but some people value convenience.
I'm not saying Uber will succeed but they do have an opportunity. The TAM of their business is literally in the trillions. They probably have more data on transport and logistics than anybody else.