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What did Uber in India do about it? Does it affect the prices that much and frequently?

Why would Uber do anything about it? Its in Uber's interests to not solve it. They get more money no? Same with its competitor in India, Ola.

This will be beneficial up to some point in the future, when riders decide to boycott Uber.

Well, this driver behavior will exist in all platforms and won't be in any platform's interest to solve it. Be it Uber, Lyft, Ola, Grab etc.