After rolling out guaranteed whole-ride pricing (as opposed to metering) Uber is allegedly testing algorithms to bid different prices for rides to both driver and passenger. i.e., passenger sees a fare of $X, while driver sees a fare of $Y, where presumably $Y < $X.
Passengers' fares can be "optimized" by estimating a specific passenger-trip's price ceiling, and driver payments can be "optimized" by estimating the driver-trip's price floor.
To be clear, I find this entire concept incredibly abhorrent, but apparently this is being trialed.
[1] https://nakedsecurity.sophos.com/2017/04/10/uber-showing-dri...
Adding fees on top of that, though...
IOW it's not the spread mechanism that's wrong, it's everything on top of it.
What is it, free market only works for Uber but not for the drivers?
They're not insane, though. They're buying market share and betting that they can pull self-driving cars into their fleets while they still have the market on lock. Without having to pay drivers or deal with their whiny attempts to enforce employment laws (against an app! Crazy,) they see themselves being able to print money hand over foot.
This is how you get away with being a dirtbag, in any situation. Move very quickly, and get to where you're going before anyone manages to claw you back far enough. Possession seems to be 100% of the law, when it comes to companies in this country.
Uber thought that they had a viable business model based on human drivers, and that their markets would settle down into profitability once they established market share. They were wrong. They thought that they could successfully expand into a logistics business -- that was a big element of their redesign, which only landed 6 months ago, for god's sake. Now you never hear about logistics (because the only people who might conceivably want Uber-for-packages, Amazon, just went ahead and built the service in-house).
So now they're saying that they're a big bet on driverless cars.
Driver (D): I want to drive for Uber!
Uber (U): Sure! Do you have a car that is safe and less than 5 years old? (I have no idea what the car reqs. are)
D: No
U: Ok, well, we can loan you one! Just sign this!
D: Great! I signed! What are the loan repayments like?
U: Well, you owe us, per the 3 year contract, $100/week (I have no idea what the actual loan terms are like, but 100 is a nice round number so lets use that)
D: Ok! That's not bad!
U: It gets better! We'll just auto-deduct the money you owe us from your driver's account, after that, all the money is yours! You don't have to worry about any of it, just drive for us, we'll take care of it.
D: Cool! What happens when I get sick or something and can't drive?
U: Well, then you still owe us the money, plus a 10% fee on that week's loan payment (again, I have no idea what the loan agreement is like, YMMV) that we'll automatically tack on to the next week's loan payment.
-A week goes by-
D: Oh man, the weather was great this week, not a lot of people needed me to drive them around! I only made $90!
U: Ok, well, per the loan agreement, you owe us $10 more then (100-90=10), plus the 10% late fee, making your next week's payment $100 + $10 + (0.1 x $100) = $120.
D: Oh man! I better hope that the weather is bad so people want to take an Uber that I am driving!
-Another week goes by-
D: The weather was really rainy, but even still, I only got notifications to pick up $90 worth of people! Not again!
U: Well, now you owe us $120 - $90 = $30 plus the 10% late fee on the $120, making your next week's payment $100 + $30 + (0.1 x $120) = $142.
D: Well, darn, I thought a lot of people wanted to take Ubers! All my friends take them! But I don't get enough notifications to pick people up from Uber!
U: We know. We are the people that are giving you a loan and simultaneously are the ones that control how much of that loan you can pay back because we are the ones that tell you how many people you pick up and we also set the 'surge' rates and regular rates that we tell you. Also, we have something of a history of acting in morally reprehensible way without shame.
D: Wait, what did you say?!
U: Nothing! Nothing at all! Get back to driving! That car we bought isn't going to pay itself off, you are!
A predatory auto-loan company is not a $70B business.
And there's externalities. No properly run bank would issue a car loan to an Uber driver, they'd run the math for the applicant and find it isn't going to work out. But Uber with its infinite pockets does not have to consider profitability, and eventually the driver has to declare bankruptcy and becomes a burden on the public pocket. It's a disgrace.
Also, what is stopping them, or anyone else, from running the same scam with other large capital expenditures? AirBnB could do this with houses, DoorDash could do this with heavy industrial kitchen equipment, etc. It's evil as hell, but Wall Street backed VCs have no issues finding people to do it.
"Flexible leases from Xchange Leasing, LLC are potentially up
to 36 months with the flexibility to return the vehicle as
early as 30 days after the first payment due date with a
payment of a $250 disposition fee. Not all applicants will
qualify for this program. Certain items present on your
credit report, and other information, may cause you to be
excluded from this offer, including without limitation, a
repossessed vehicle within the last 12 months, a pending
bankruptcy, or a discharged bankruptcy within the last 12
months."
It's their xchangleasing leasing program. It's basically a sub prime car loan like from the housing bubble days.
if Uber cuts it's rates they still have same payment but less fare money each month. They did this to a lot of people and it's well known within the company that a lot of Uber black drivers were screwed when this happened.
So yeah, there were plenty of people who were looking at that. I think they just didn't know how expensive that long con would wind up being
Huh.
https://techcrunch.com/2013/08/25/uberauto/
https://www.quora.com/Uber-in-2013-How-can-Uber-survive-driv...
https://www.forbes.com/sites/roberthof/2013/08/23/as-google-...
That's very different from the revisionist rationale that Uber was always themselves making a long term play for driverless vehicles, or that Google got into Uber because Google wanted to invest in driverless vehicles.
The narrative at the time was that Uber was going to become a dominant rides-for-hire business (a real business, not a gaping wound hoping that technology would catch up to them) and at least a player in logistics, and then when driverless cars came along, everything would be even better for Uber.
You'll note that as that narrative was increasingly pounded into the dust, Google never invested further in Uber and relations between them have at this point obviously completely soured.
But yes, the investment thesis has always depended on passenger taxi being a decent business for Uber in the midterm.
The claim at the time was that Uber would ferry both passengers and goods. And we agree that the value Uber was claiming was dependent on being a decent business.
I think that what happened since was they were forced into the "build" side of the build/buy decision when it became increasingly clear that they didn't have a decent business in passenger taxi, and they weren't getting traction in logistics. At that point, if they bought driverless cars, you would be forgiven for asking what value exactly Uber was bringing to any business. Now they have to bank on their differentiator being that they have unique access to valuable driverless car tech, which still strikes me as grossly unlikely.
Now everybody has one. 33 companies have registered with the California DMV to test. Five more accidents are listed for March and April. Cruise has three; they were rear-ended twice while stopped, and were clipped once by a pickup trying to drive around a double-parked mobile crane. Waymo was rear-ended once, and was forced off the road into a curb once by a vehicle drifting out of lane.
This is progress. Cruise is getting hit when it's not their fault, which is way ahead of their earlier driving record. We're seeing more unusual situations, where the other driver did something weird. Nobody was hurt in any of these.
The auto industry is indicating that the 2020 model year is when self-driving starts to ship. They have to be public about that, because the parts suppliers need to get their production lines ready to make the components in quantity. It's not going to be just Uber. It's going to be all the big automakers.
Should that in some way magically exempt them from hard won (with blood [1]) labor protections?
It was also expensive, and nowadays known as UberBlack, and is a market many times smaller than Uber's ambitions.
UberBlack was a great product with unit economics that would allow for a high-quality product that was a win-win for both drivers and Uber. But it was not a big enough product to justify Uber's stratospheric valuation - hence UberX.
I think we're running into the fundamental truth here that providing high-quality taxi rides at such cut-rate prices is not possible, at least not when a human is at the wheel.
Cutting corners and playing dirty are IMO a manifestation of this fundamental problem.
Why prefer having a huge valuation (based on thin air) when you can have a more modest but totally profit generating business?
This is a question that many in the Valley should answer honestly.
So there will basically be no transparency to anyone involved in the transaction except Uber if this is adopted?
The company seems to be guided by a culture of manipulation - manipulate the drivers with erroneous information, the riders with surge pricing, regulatory agencies with different screen views and now the possible manipulation of the bid ask spread.
Uber just seems rotten to the core.
If Uber charges X for trip, and pays the driver Y for the service, it's obviously a taxi company. As such, I expect authorities to enforce the licensing laws, especially that the public support of Uber starts to diminish.
why?
Worse even, the information asymmetry isn't meant to favor one side of the transaction over the other (say, passengers over drivers), but is meant to favor the exchange (Uber) itself.
Imagine if you went to your stock broker to buy 10 shares of XYZ. Your broker tells you that the market price is $100 per share, but in reality found a seller at $80/share and is pocketing the difference, without disclosing this to either party in the transaction.
Besides the ethical shadiness of this kind of action, functioning markets are predicated on buyers and sellers having sufficient information, and the exchange behaving in consistent and transparent ways. This sort of double-dealing undermines it.
Another poster snidely speculates that I may operate on a moral framework that finds profit-seeking intrinsically objectionable. This seems like a straw man that's intended to erase the difference between unfair market practices and fair market practices.
That's a poor analogy, because the stock is an exchange value, but the car ride is a use value.
A better analogy would be buying a pear, and getting angry that the fruit stand bought the pear really cheaply, without passing the savings on to you.
In a nutshell, uber is changing their business from charging a commission to acting more like a retailer: buy low (from drivers) and sell high (to passengers). The problem is that normally the two far ends of that transaction only ever interact with the middleman, but here they're literally sitting in the same car. Hard for both the buyer and seller not to feel (justifiably) ripped off when they can actually compare notes. Especially if even after their margin Uber is still taking a percentage of the driver's pay.
It's not clear to me why it's abhorrent. Doesn't every company optimize their vendors and customers separately?
Is this not a business trying to maximize profit for itself? If you find this abhorrent than you must also despise capitalism because that is all this is. I may not personally like it as a consumer of their product but I find this to be a clever way to maximize profits for a middle man.