Italy demands €733M in fines from food delivery platforms
politico.eu
politico.eu
But on the other hand, it would have been a fucking travesty doing a lockdown without ordering on Uber eats and Co.
And those platforms were the innovators in the space. Restaurants who could develop similar platforms would have never allocated the money, and others who would never have had the opportunity to offer such services, would have never tapped the overall market (i.e. People with Internet who are hungry and need food for any reason, be it no groceries or just laziness).
Can't there be some sort of middle ground ?
Sure there is merit to them being "coordinated and continuous workers", I can see the argument for that regardless of the gig economy. But having to back-pay the taxes for said workers is close to extortion.
My Middle ground would be a mediator instead of an ultimatum.
> Should the platforms hire all 60,000 couriers, there's a high price to pay to catch up on previous, missed social security payments, said European labor law specialist Luca de Vecchi. Social security contributions in Italy can amount to up to 33 percent of an employee's salary and must be paid by the employer.
This is just crazy.. How can the government expect a company to backpay what the government allowed in the past ?
This is wrong.
You cant retrospectively change the status of their work status.
You didn't wrongly state your status at the time..
They accept your statement as a fair representation.
They can always go back and change things if you made a misrepresentation.
Typically in the US both individuals and businesses are expected to keep records for 7 years, in case the IRS wants to check things.
2) > They accept your statement as a fair representation.
Yup.. At the time, see above, FY2018 you were supposed to register as a self employed, now you need to register as employed, cool.. But Wait you need to pay last years tax as an employed too. Nonsense. Whoever you filed with owes you in this case, but I don't know why they would pay based on a retro change.
3) > They can always go back and change things if you made a misrepresentation.
There was no misrepresentation at the time. That's the point.
> Typically in the US both individuals and businesses are expected to keep records for 7 years, in case the IRS wants to check things.
It's called audits and its out of the scope or concern for this discussion.
You were talking about the IRS in the comment I responded to.
> Get over yourself
This is against HN guidelines. Please be civil.
2) > They accept your statement as a fair representation. > Yup.. At the time, see above, FY2018 you were supposed to register as a self employed, now you need to register as employed, cool.. But Wait you need to pay last years tax as an employed too. Nonsense. Whoever you filed with owes you in this case, but I don't know why they would pay based on a retro change.
No. You sign your own return even if you have a tax preparer.
Misfilings are your responsibility.
If it’s just a good faith error, usually there won’t be a fine, but if you owe more taxes you will have to pay them.
Re-fillings to correct errors are a normal procedure.
3) > They can always go back and change things if you made a misrepresentation. There was no misrepresentation at the time. That's the point.
The article says there was.
> Typically in the US both individuals and businesses are expected to keep records for 7 years, in case the IRS wants to check things. It's called audits and its out of the scope or concern for this discussion.
What an odd thing to say. An audit is the process of checking and correcting errors in tax filings when problems are suspected.
2) False. The delivery companies told drivers to register as self-employed, which was incorrect legal advice at the time it was given, under the laws governing contractor/employee classification (for tax purposes) of the U.S. and the E.U.
3) Absolutely false. The delivery companies misrepresented the tax classification of their employees and failed to pay the appropriate taxes on them. Full stop.
4) You brought this up. You keep claiming that filing a tax return automatically means its correct, which it does not. It merely means that you filed a tax return. The tax authority will audit returns randomly selected (or in cases like these, deliberately selected) for correctness and assess back taxes, penalties if appropriate.
This has nothing to do with taxation.
It's crazy how a company hire 60'000 employees and not know the labor laws of the country they operate in. Every private person that hires a house cleaner has to know and follow these laws.
Pull the other leg. It works once it works for them until now ? ? You're either not paying attention to the article, or you're set in your ways, which id love to hear.
> The company is responsible for correctly paying social security of their employees
Fine.. But that was not the agreement drivers had when they signed up. They signed up for cash on the job, gig economy. I'm not saying its good, I do think it should be unionized, but you guys are defending the same companies that are going to give the costs onto the riders.
Morons. Not seeing the trees for the forest. YC
That's not an excuse. If someone is caught for murder and during the investigation it is discovered that they murdered 60 people over the last 5 years. Should they only be prosecuted for the most recent murder because it worked for them until they got caught?
> Fine.. But that was not the agreement drivers had when they signed up. They signed up for cash on the job, gig economy.
Exactly but the agreement the drivers signed falsely classified them as contractors. This is called false self-employment [1]. So the courts decided gig workers are classified as employees according to current laws which means the employer was acting illegally. These laws exist because food delivery apps aren't the first to try to get out of paying social security and other obligations from having employees by declaring they are contractors.
They knew the laws.. Italy is changing them retrospectively.
Both are bad, but changing the past ticks my : "That's bad form" box
It was a pretty balanced trade-off.. To which both concerned parties did agree.. Goverment wasn't even needed here. I feel worse for the delivery people in all this because they wont have that extra money, instead deliveroo and co will just reduce their earnings to compensate.
It's stupid.
The problem is not that Uber Eats and Deliveroo are making too much money, it's that they're making it over the backs of their employees.
European employment regulations have strong protections of workers, and these companies try to work around those regulations by classifying their employees as gig workers. Delivery drivers used to be regular employees until these companies swept in and used investment money to work the competition out of the market.
It's no wonder the government is stepping in to end this. In the US, this would never happen, because the right to start a job without too much paperwork or get fired on the spot is deeply ingrained in the laws of many US states, at least compared to European labour relations.
The middle ground here is that delivery drivers need to be paid fair minimum wages with the relevant job protections so that restaurants can compete with their own delivery crew without major (foreign) investment. Your local pizza joint can never compete against Uber or Deliveroo without some kind of tax evasion, that's part of the design of the Big Delivery business structure.
These delivery companies make plenty of money, there's no risk of them running into impossible to overcome that their general investment-based mode of operation hadn't already planned for. They may need to raise prices to pay their employees decent wages, but that's only healthy for the free market. In some countries (like mine), delivery companies take a whopping 12-14% of the entire bill as compensation for delivery, which is often listed as free, yet it's economically inviable to go up against these giants now that they control the market.
Last I checked, none were yet profitable so unless that has changed, this should probably read "These delivery companies lose plenty of money" and we should stop making arguments based on the false assumption that they are making plenty of money and can shoulder additional costs.
Then we should start accusing them of "dumping" and prosecute accordingly.
Being able to drown all the small players because you have the connections to raise a Gigabuck of VC cash isn't something we should condone.
Even if that wasn't the test for it, my understanding is that they have unit positive economics (positive EBITDA), but are losing money because they haven't yet amortized overhead like SG&A. This is not atypical with any new venture scaling up until their positive unit economics are sufficient to dilute overhead and turn the company profitable.
It is normally applied to international trade because such an action generally requires systemic support from a government to continue for a sufficiently long timescale.
However, it can certainly be applied to local economic products and regions--Rockefeller and Standard Oil being one of the notable examples.
After these companies close up shop, taxpayers can pay the unemployed workers who at least aren't being exploited.
There is a reason why Italy historically has a huge gray market, particularly young people working under the table, as it's tough to operate legally in Italy unless you have both a monopoly and pricing power, or are at least politically connected enough to avoid many of your financial obligations, which on paper are quite burdensome.
That creates a vicious circle where the government is drained of funds as income goes unreported, so they make it harder on those legal companies left, which then either need to sell out to a politically protected monopoly or themselves go into the gray market and the cycle gets worse.
The problem with these delivery companies was they they tried to be legal -- only a fool or a monopolist does that in Italy. With the right connections they would have been protected.
You have similar problems in Greece, for similar reasons. Both of these nations have shadow economies that are estimated to be 20% of GDP. To put that into perspective, the Government share of GDP is 50%, so of the share of GDP attributed to the private sector, 40% of that consists of unreported income. Italy ranks 137 out of 189 in terms of tax evasion, the biggest problem being unreported business income. https://www.oecd.org/tax/administration/italy-tax-administra...
This was before Covid. Now, who knows what state their business sector is in. It's a big mess, and no one has been unable to unravel it. Staying away from that mess, unless you know how to play the game, is a good idea.
I eat plenty of takeout (much more than average) but never use apps, way too expensive.
I think restaurants would love to pay $xxxx upfront and a small monthly or annual fee for updates.
But software developers want a slice of the revenue.
It’s greed in a low margin industry.
It’s a perfect Open Source project.
Open Source would only work if there were vendors to sell a packaged solution that restaurants can just plug into their systems (menu/ordering), no small restaurant will want the headache of maintaining their own software infrastructure...
Why? I know a lot of people who didn't order food online. I get it if you say that restaurants needed it, but do most people need to order food online during a lockdown?
> And those platforms were the innovators in the space.
The main innovation of Uber Eats and Deliveroo was using fake self-employment to reduce costs and scale faster.
> Can't there be some sort of middle ground ?
Yes. There are already companies (Just Eat comes to mind) that do hire workers and do not rely on fake self-employment, and they're able to do delivery just fine. I also know a lot of restaurants that hire their own delivery employees.
Just Eat is on the list of companies impacted by this in the article.
Even with a much higher level of investment, willingness to play dirtier than previous attempts and a huge increase in demand because of the pandemic there doesn't seem to be money to be made here.
Eh? Just Eat/Takeaway.com has operations in 23 countries and made more than €400 million in revenue pre-pandemic (according to Wikipedia).
When I get a 50% discount I sometimes am tempted to order. But with additional surcharges now the discount is usually gone. Then I realise I'm a massive slob and there's perfectly good food in the fridge.
Consumers do not, in fact, have to be willing to pay more. Not at all.
European countries have already decided that we want workers protected with minimum wages and other rights and that there are limits to free market.
It is understood that large number of people just need to be protected because they can't do it for themselves. If you are willing to honestly work 40 hours a week you should be compensated enough to pay at least for very basic existence.
Can we put these in specific and measurable criteria? What you've written is a great sound bite and easy to get behind as written, but it's meaningless unless we all agree on what constitutes a "very basic existence". I doubt you'd find consensus on what qualifies as a "very basic existence".
there doesn't need to be concensus from unrelated parties to the transaction.
If the deliverers accept the conditions (assuming they understand and isn't lied to about it), then that's the level.
That said, I think you do need consensus beyond those that are party to a transaction because you're arguing that the rest of society needs to be involved via the legislative process (politicians, voters, etc.). If enforcement society, society needs to be involved in the consensus. If society isn't involved in enforcement via any laws, yeah, only those involved need to be involved.
Yes. A single young person on a minimum wage needs to be able to at least rent their own flat, put food on a plate and be able to party.
I think we can consider case of Sweden. Norway isn't good case because they struck gold with oil and gas which puts them in privileged situation. Sweden has no special resources that would put them in privileged position.
In Sweden where I lived on a 6 months contract, minimum wage is around 180SEK or 21USD. Sweden has costs of living very comparable to those of US.
What this means, is that even if you are young person without special needs, without support from parents, working basic job like support phone you still can rather comfortably pay for your necessities.
The minimum salaries are set by the unions in negotiation with the government and employers' organisations.
In summary: minimum wage only exist in Sweden in connection to national unions, not directly to the government.
Why exclude the possibility of having roommates? I and I'm sure many others here had at one point or another a minimum wage and roommates and perfectly acceptable livable existence. The idea that you need to have your own place all to yourself on a livable wage is laughable and so out of touch of how much of most people in the world have lived at one point in their life. Not even a majority of Americans in any age cohort live alone. 60 years ago it wasn't even 1 in 5.
https://ourworldindata.org/grapher/percentage-of-americans-l...
> In 63 of the 113 nations (56 percent), fewer than 5 percent of the young adults, ages 25-29, live alone.
https://www.psychologytoday.com/us/blog/living-single/202002...
Living alone is a luxury. Any attempts to paint living alone as a necessity for a livable condition when most of the world experiences a livable condition without it is so out of touch with reality that it's impossible to take someone making this argument seriously.
Sure, these services bring joy to people and create low paid jobs.
But, I think the more essential service is the general grocery delivery and supply chain.
It seems so inefficient to have someone make a toasted sandwich, and then drive it half way across a city burning fossil fuels because customers do not want to cook their own meals.
Seen like that it is no difference to rush fast and masked through some supermarket, or emergency food collecting point by the red cross, military, FEMA or something.
edit: I mean why should food delivery services being exempt from being locked down? Makes no sense to me when it's just for convenience and not part of emergency distribution, or when other, though limited options exist.
Given that all other businesses pay these taxes, it's only fair that gig economy startups pay theirs.
If they prosecute UberEats, who exactly would be the one serving prison time?
At some point maybe we should consider that this model is completely broken. The gig workers hate it, the restaurants hate it, and the delivery companies can't make a profit. What in the fresh hell are we doing where nearly every part of this "economy" is mad about it?
[0]: https://www.marketwatch.com/story/doordash-shares-sink-as-re...
Now it’s time to legislate it away, just like many have done with Uber/Lyft.
I bet they'd quit if they knew how miserable they were.
Top comment is arguing that these people should be laid off as part of a government initiative to reshape the economy. If these people can't quit, what will happen if they are laid off? Is there any policy that could help these workers? My best guess is UBI, but that is another discussion.
When the comment is just "this job should not exist" I just know there's no intellectual consistency behind it. They want to punish employers they don't like, and don't especially care who is hurt in the process.
In this case, I'd also want to see some form of UBI.
If you want to protect the workers, set up a UBI now. Then destroy the jobs. Don't talk about hypothetical-might-maybe-work solutions to fix the problem you're about to create. Focus on making things not worse, not punting and hoping you can save the workers from homelessness later.
It doesn't change the fact that the job is rubbish.
I honestly can't tell if this is sarcasm.
The Italian government can't do much when a Chinese factory pours chemical waste into the ocean. They can stop Uber Eats from screwing over Italian delivery drivers.
We're at the point in the hype cycle where the service has become popular, so the media has flipped to the contrarian takes about how it's bad, actually. It wasn't that long away that we were reading stories about how food delivery services were providing restaurants an opportunity to keep their doors open during COVID lockdown.
Restaurants only hate food delivery when the companies try to force them to lower prices (so the delivery service can capture the margin) or when they perform bad-faith actions like misrepresenting themselves as an official partner of the restaurant when no such deal has been made.
The restaurants who simply prepare orders at their normal retail price and hand them off to delivery drivers who deliver to customers who know what they're getting into are actually loving this boom. It's extra business without the hassle of dealing directly with customers.
That's actually the driver of the problems: Restaurants have been so eager to get a piece of this booming business that some of them have given up their own margin to partner with delivery services looking to squeeze every dollar out of the restaurants. I suspect that era won't last long as restaurants do the math on what it's costing them.
Can you link to some stories? I didn't see any in my bubble.
They don't have a choice, with covid etc. Many restuarants would rather not have delivery, or delivery that didn't cost them 20% of gross.
Restaruants HATE internet food delivery companies. Claims to the contrary aren't true at all.
Outsourced food delivery services are a large uncontrolled expense which dine-in restaurants just weren't structured to handle. Low liquor sales on take-out and delivery orders are also a huge problem.
Food creation & delivery: A hyper competitive, low margin, inventory rotting, regulated, logistical & insurance nightmare.
Restaraunts don't hate it because they don't have to have staff hired to deliver, infact all the logistics of delivery are removed for them.
> The San Francisco-based company reported a fourth-quarter loss of $312 million
Excuse me while I shed a tear for the billion eur company over the riders who will get screwed for this ruling.
DoorDash's business management is not reflective of its customers, who are the riders and restaurants. Who, in this scenario are the losers.
> Operating at a substantial loss as a strategy to expand your market footprint is pretty textbook anticompetitive.
No it's not actually.
That would entice people with a better twist on the idea to do things differently.
Regardless of both our ignorance of market philosophy.
The riders will get screwed here. I'm not gonna applaud the debt of companies like Deliveroo, Ubereats, JustEat etc etc being shafted to riders long term.
Bravo
Other comments mention that delivery "worked fine" before, which implies DoorDash can't argue that they were perfectly innovative against a "dumping" accusation.
I got injured and disability decided to play hard ball.
Working whatever hours I could be functional and being able to stop and rest, or wait for medication side effects to ease off. These are the only thing that kept us off the street.
Eat operates similar to Uber Eats here while paying a higher wage than Uber Eats after they payed social security and provide a bike. Meanwhile Uber eats drivers have to pay social security and their vehicle from a lower wage. The social security is what keeps them off the street in the case they are out of work or disabled.
Why are some people defending companies that try to go around existing labor laws by claiming their employees are different contractors just because everything is done over an app?
Luckily our laws are relatively clear and the courts will probably keep on ruling against Uber.
I was in bed 16 hours a day nearly blind and extreme agony for nearly a year.
Disability laughed at me. Said I had a desk job so it was fine, all I had to do was sit their.
It's a modernization of an already-proven business model. Chinese food and pizza was orderable by phone, and delivered for free or a small fee, 30 years ago.
So, the pizza restaurants proved that there's enough margin in a 25$ pizza to pay a minimum wage driver to drive it to your house. Delivery platforms come in and break this up: instead of the restaurant having someone on payroll to deliver orders, you just outsource that to another party (and pay them a fee, which is passed-through to the customer, and replaces money you would've paid the on-staff driver otherwise).
Why can't the food delivery companies provide delivery services for basically the same total cost as before, and subsist on extracting a small percentage of the value, which is freed up by the massive economy of scale that they can create by aggregating orders from several restaurants into a single pool?
Ditto for Uber... it's possible to operate a taxi company profitably, and has been for a hundred years. Shouldn't Uber have basically the same economics / cost per mile as a traditional taxi company, except be more efficient thanks to top-notch demand prediction that no local taxi company could ever build?
Also note that plenty of delivery workers have, historically, been paid under-the-table. Can't get away with that if you're uber
I guess when you pay a part timer to deliver you’re not paying for the added overhead for a whole new division of highly paid engineers, marketing folks, advertising, expansion budget, underselling, etc.
Or would literally just running a giant call centre that manually routes orders/drivers be more efficient, like in the old days.
I just can't figure out how Uber Eats and Deliveroo charge higher fees, underpay their drivers and have 10000x the scale, use technology to reduce costs - yet still can't make a profit in a proven market. It's mind boggling.
Because they let me order food from a restaurant that is 20 minutes away, w/o traffic, in a suburb.
First time I visited Manhatten I was blown away by what I could delivered. Economy of scale, amazing! I could get a single chocolate chip cookie delivered at 2 in the morning! But that only works because the bakery that makes it was only a few blocks away.
Food Delivery companies try to bring the convenience of living in a big city to low density suburbs.
Of course that failed.
Some delivery services offer order a head of time where you place an order a day in advance and they batch up deliveries from one restaurant going to a given area. That is a sane model.
Even better, pre-pandemic, services like chow-bus that did orders and then large pickup sites in cities. You'd walk a few blocks from your work place to a pickup site where your food was waiting for you.
An actual innovative business model! Using technology to improve logistics. It was great, Seattle's business district has horrible food choices, being able to be part of a mass group order of food from a good restaurant was great! Wonderful idea.
Uber Eats is, outside major metros (of which America has very few) not a great idea.
Yes I acknowledge that density is on your side, but the pizza business has been able to make things work even in low density localities.
Pizza has very cheap ingredients and has a consistent highly transportable form factor. A kebab (Schwarma) contains a lot of expensive meat and will fall apart in transit. Therefore pizza has long been available for home delivery and kebabs haven’t.
I suspect a lot of restaurants are willing to stay open using deliveries just to stay open, even if they get no profit of make a loss, just to stay open. At least they get to pay some of the rent, keep staff and hopefully keep a customer base until they can open properly again.
Hubert Horan made this claim in a (very long) series of articles starting in 2016. He based these claims on the history of the taxi business.
https://horanaviation.com/publications-uber
It agrees with my biases so I think he's right.
They will spend big over the next couple of years to see which markets they become dominant in. Once the land has settled they will do deals with competitors to exit certain markets so each can extract margin from that geography.
The only innovation was exploiting regulatory sluggishness to nationalize the taxi monopoly instead of a series of regional (and heavily regulated, for this and other reasons) taxi companies. I'm also not sure that Uber has a significantly better idea of what demand is compared to the New York taxis who have been doing that business for ~100 years now. None of this is to defend the taxi companies either - Uber blew up in popularity for a reason, but they aren't profitable because their economic model doesn't work if they have to pay their workers fairly.
Food delivery seems more straightforward as a largely unnecessary middleman, but comes from the same broken, VC-subsidized model. They acquired customers using anti-competitive pricing models, then they lost customers as they started charging the full cost of service. In addition, the food delivery companies have less incentive to perform, because the restaurants take the blame when something goes wrong. None of that is efficient, or worth the tax being placed on them. I don't think very many restaurants are benefiting from an increase in business, and the companies aren't making money by lowering costs - they add huge fees to every order, so things cost 50-60% more than they would if you picked it up yourself.
I honestly think companies should have to be profitable / trending towards profitablity to IPO. Otherwise you get situations where investors pay people to use the service, and then go public saying "look how many users we have". No proven business model and not a single cent of profit.
https://www.icaew.com/insights/viewpoints-on-the-news/archiv...
Different business model.
Drivers went back and forth to a single location, and had a fixed delivery radius. A driver who wasn't delivering could also be helping out at the restaurant.
Orders could be batched up, go and deliver multiple pizzas in a row.
Uber Eats is super inefficient, drivers aren't based at a restaurant, the delivery radius is much larger, density isn't taken into account, and orders aren't batched up from a single location.
Or to put it another way, I live in a major suburb of Seattle. All the years prior to Uber Eats, my only delivery options were Pizza from a handful of places. That is it, they had the scale, and I was in their delivery radius, those small # of restaurants had determined it was profitable to deliver to me.
Uber Eats comes along, and now restaurants that, honestly, are far enough away that I wouldn't consider driving to pick up food from them, are available to deliver to me.
Of course none of that is economically feasible. As stated above, Uber Eats is already less efficient than directly dispatching from a restaurant. In super dense areas (e.g. NYC, SF) maybe couriers can be kept so busy that bouncing from place to place all night long to pick up and drop off food makes sense, but in the suburb of a third tier city? No way is that a good business model.
Owning taxi medallions was a pretty profitable business. Driving? Not so much.
Basically the medallions were often rented to middlemen who would also maintain cars and then rent them for the day (or night, a lot of these cabs were on the road 24/7). All paid upfront each night by the driver who then had 12 hours to try to break even and get a profit. No guaranteed minimum wage here.
https://ny.eater.com/2020/4/23/21231943/grubhub-nyc-phone-or...
... but for some reason they keep doing it.
Also, I assume the consumer is very happy that he's getting a venture capital subsidized food delivery service.
That's parasitic behavior. In the end society has to pay the long-term cost for their short-term gain.
Depends where you live, for me, it worked for pizza and that's about it. I was unable to get pretty much anything else delivered locally, now I've got a few dozen options. Most restaurants just wouldn't bother hiring additional staff to do delivery.
Even big chain fastfood places like Subway and McDonalds weren't available for delivery here before Uber Eats picked them up.