Once upon a time, if you needed to get from one place to another and you either didn’t have a vehicle or you didn’t want to take your vehicle for various reasons such as having to pay for parking or not wanting to leave your car somewhere that it won’t be safe, you either called for a taxicab or relied on someone you knew to give you a ride. Now, you simply request an Uber driver.
The taxi is such a staple sighting and transportation system in places like New York that they appear in countless movies and television and are one of the first things you think of when you think of large city traffic, but this form of transportation service has fallen into the shadow that Uber and other rideshare services have cast. This is only aided by the additional attention Uber receives for its food delivery services, making it possible to eat the food of your favorite restaurants in your own home or while at work, even if those restaurants don’t offer delivery.
History
It all started with frugal thinking. Garrett Camp was a bit put off by the high price of hiring a private driver. He was looking for a change in business since he had recently sold his startup business, StumbleUpon and as he and some friends spent $800 on New Year’s Eve 2008, something he could afford since the sale, he still felt the weight of such a large amount just for one evening. There had to be a better way to get around.
In an effort to find a more affordable option, Camp came up with the notion to develop a ridesharing option that you could obtain by the simple push of a button on your phone. Knowing he couldn’t do this alone he enlisted the help of his friend and fellow entrepreneur Travis Kalanick to help him hash out the details. Early on, Camp knew he would need some smart individuals behind the steering wheel, figuratively speaking and so they also sought the aid of Oscar Salazar and Conrad Whelan, Camp’s friends from graduate school, to develop the prototype that would eventually become the most used ridesharing service available. Two years later in February of 2010 Ryan Graves joined the team as Uber’s first official employee.
About three months later in May of 2010 Uber launched its beta version. It originally operated as a luxury black car service and was priced higher than that of most taxis. It operated under the name of UberCab and was focused in San Francisco, a city that is heavily populated and a popular spot for tourist activities.
Local taxi companies were soon aware that UberCabs would grow to be a tough competitor and they began to complain about the name UberCab. Uber changed its name to what it is now in 2011 and by the time April of 2012 came they were successfully launching in Chicago. Through their mobile app people were able to get both an Uber driver and a regular taxi. The innovative and simplistic operating design as well as the immeasurable convenience it offered quickly appealed to many people and soon Uber was growing faster than anyone could have predicted.
In July of the same year, they released UberX. This allowed people who had passed background checks and had met their other vehicle requirements and standards to use non-luxury vehicles for a ridesharing option that was more affordable. This only opened the gate to more business and in 2013 Uber was available in 35 cities. Their growth only continued with UberPOOL in 2014, an option that allowed shared transport. In the same year, they also came up with Uber Eats. This worked like DoorDash and made it possible for people to order food from restaurants that don’t offer delivery service.
As Uber expanded internationally, they faced some steep competitors. They sold their operations to DiDi in 2016 in China for an 18% stake in DiDi and with the agreement that DiDi would invest $1 billion in Uber. In 2018 Uber made the decision to roll its operations in Armenia, Belarus, Georgia, Kazakhstan, Azerbaijan, and Russia into one with Yandex.Taxi. They did the same with their Southeast Asian operations with the company Grab.
Despite a drop in shares causing a loss and hiring freeze, as well as layoffs, Uber was able to acquire a vehicle for hire company based in Dubai called Careem in 2020, but they also sold their Uber Eats operations in India to Zomato, a food delivery service and restaurant aggregator that provides information, menus, and reviews as well.
The pandemic caused a lot of problems for businesses around the globe and Uber wasn’t any different, though they continued to branch out their services options with Cornershop, a grocery delivery service in Latin America, Miami, Dallas, and Canada. They would also acquire Postmates, another food delivery service and bought Drizly, an alcohol delivery service.
Financials
Uber went public in 2019 on May 10 through an initial public offering. Soon after, their shares dropped by 11%. This was the largest dollar loss of an IPO on the first day in United States history and led to the loss of employees and a reported loss of $6.2 billion in the first two quarters of 2019. Because of this, Uber was forced to cut many positions, dropping their marketing team by a third and laying off 400 employees. Uber completely stopped hiring for certain departments and later on in the same year laid off another 435. As the pandemic wreaked havoc on jobs and businesses all over the world, Uber announced on May 5 of 2020 that they would be seeing further layoffs to the staggering sum of 3,700 people. This would account for 14% of their employees. On May 18, they announced 3,000 more cuts and the closure of up to 45 of their offices.
Uber shares seem to have struggled the last two years as the company made some pricey decisions, faced uncertain legal challenges, and the global pandemic happened. It saw a victory with Proposition 22 that was voted on in California allowing it to continue with its current business model and its bookings have been increasing as the limits of the pandemic begin to minimize showing a promising future, though there are still many things standing in its way.
Controversies with Uber
- How they treat their drivers
Since the beginning, Uber has had a history of issues with their drivers. From short-changing them to sexual harassment, they’ve made the news multiple times for all the wrong reasons. In May of 2018, Economic Policy Institute released a report that showed Uber drivers made an average of $9.21 an hour while implying drivers could make $20 an hour. This implication led to Uber needing to pay out $20 million to the US government. Another report found that very few drivers stayed with Uber for more than a year. In fact, only around 4% stayed due to the low income. When Uber was found to also be paying their drivers less than the percentage of the ride fares they were supposed to, it led to a class-action lawsuit for thousands of drivers. Uber had to admit their mishandling of the situation and agreed to pay the difference, with interest included.
However, this all happened in 2017 and things may have improved for drivers since then. A study released in 2019 found that driver was able to earn twice the amount they would in a more rigid work environment. The flexibility Uber drivers experience is partly because they are not considered actual employees. While this difference in status has led to its own set of issues, including causing several antitrust investigations due to Uber setting the prices despite their drivers working for themselves. This pricing control is against antitrust laws, but Uber is fairly confident the law would be on their side if an antitrust lawsuit came up.
Compensation isn’t the only area in which Uber has been under fire for the treatment of their drivers. It’s also seen its share of sexual harassment claims. Kalanick, one of Uber’s bright creators, was forced to take a leave of absence and resign from his place as CEO and from the board of directors after an in-depth investigation into sexual harassment claims. 20 other employees were also fired as a result of this investigation.
This all started when an engineer stepped forward and reported that she was being sexually harassed by a manager and threatened with job loss by another to keep her quiet. Kalanick was one of the people keeping silent about this and other incidents, including several involving Emil Michael the senior vice president.
In 2018, Uber agreed to pay $7 million to 480 different workers as a settlement for all the harassment, gender discrimination, and workplace hostility they were being accused of.
- Underhanded ways of dealing with opposition
Uber is not known to deal with opposition in a classy or even legal way. They have taken steps to inhibit their competitors multiple times. In 2014, Uber had to apologize for using their employees to order services, then cancel those services from a competitor in New York City. These fake orders would cause issues with their competitor’s drivers and reduce the number of real bookings they could take. This was only discovered through leaked documents.
When Lyft, another competitor, came to New York City, Uber went so far as to enlist people to create fake Lyft accounts to cause problems for the company. They provided valid credit card numbers and two iPhones and were encouraged to gather information on Lyft. This wasn’t all. Uber also repeated their underhanded method of ordering a multitude of fake bookings, only to then cancel. Lyft reported that about 177 people working for Uber cause 5,560 fake bookings. Lyft was able to determine this by cross-referencing the numbers used. One Uber number alone had canceled 300 rides with Lyft. Uber never admitted to this and never apologized. They simply stated that this must have been a large number of individual people trying to recruit and make money.
Uber’s interference with those working against them doesn’t limit itself to competitors. Starting back in 2014, Uber used software called Greyball. Through the use of ‘ghost drivers’, Uber’s real drivers were able to cancel rides requested by possible law enforcement officers and transportation officials in areas they were working illegally. Uber claimed Greyball was only used to avoid giving rides to people who were violating their terms of service, which included those in sting operations. However, there were reports of Uber using the software to establish if someone was a government official by whether they frequently opened the app in or by government offices or by social media profiles.
In 2017, Portland, Oregon began an investigation into this and determined that Uber had intentionally obstructed the Portland Bureau of Transportation through Greyball, evading its officers and refusing to answer ride requests. In light of this, there was talk of forcing Uber to disclose how it used this software to avoid law enforcement and Uber admitted it was true, stating they would never use it in such a manner again.
This caused further worry from law enforcement officials all over and the United States Department of Justice began to investigate if Uber has been using Greyball to avoid law enforcement operations elsewhere.
Greyball isn’t the only law enforcement avoidance tactic Uber has used. A system called Ripley was also used to inhibit police raids in other countries. Ripley was reported to have been used at least 24 times from 2015 through 2016. This system was called the ‘unexpected visitor protocol’ and it consisted of locking all the computers, powering them off, and automatically changing all passwords.
- Safety issues
Taxis have had some bad publicity for violent crimes through the years, with cabbies often being portrayed as rough and tough men in popular depictions. Uber has also had its share of violent history. There have even been situations when a murder was committed by someone posing as an Uber driver. Despite doing background checks on their drivers, rideshare companies have been fined for not doing enough to ensure the safety of their riders and for also violating the background check process. In fact, in November of 2017, Uber was fined $8.9 million by the Colorado Public Utilities Commission when they found out that Uber had 57 drivers with violations on their background checks. Uber had also given special permission to a felon to drive under an alias.
Because of Uber’s relaxed and downright dangerous tactics in the past when it came to screening their drivers, London’s Transport for London rejected their application to renew their license and in 2019 announced they still would not renew it as Uber never answered for this issue. They also found that there was an issue of people using fake IDs, meaning that even if Uber completed a proper background check it would be useless.
Other issues tied to rideshare companies is the increase in automobiles for transport rather than public transportation. The Becker Friedman Institute of the University of Chicago attributed this increase as a leading factor in a rise in traffic accidents and pedestrian injuries and death. There has also been concern over the way rideshare drivers disregard certain traffic patterns when picking up or dropping off passengers and with how the entire use of the service requires drivers to review their phones periodically in order to view requests and destinations.
- The misuse of private information
In 2011, it was revealed by a venture capitalist that Uber was using its technology to essentially spy on politicians, journalists, and regular users through the app. This ‘God View’ function allowed staff members to view the location of users and they did so casually, so much that someone interviewing for Uber was even allowed to view it without any restrictions. This serious breach of privacy was questioned in 2014, on November 19 by then US Senator Al Franken. He sent a letter to Kalanick about the privacy and his concerns about how casually the workers used this data.
Not treating private information with enough care also became an issue in 2015, when Uber reported a data breach. Data breaches sometimes happen, even to the most secure companies. The main issue with this was that the data breach had occurred five months before Uber reported it to those affected. About 50,000 drivers’ names and license plate information was leaked. Uber waited another four months after notifying the drivers affected to make a public report.
Another incident of a data breach happened in 2016 when 600,000 drivers and 57 million riders’ personal information was compromised. This information included names, phone numbers, drivers’ license information, and email addresses. Through a previous breach, hackers were able to use the employee login information to access the private information. These hackers demanded Uber pay them and it did. The hackers demanded $100,000 in exchange for their promise to delete the information. Again, they waited to notify anyone this had occurred until almost the end of 2017. The delay caused a great deal of mistrust and agitation with Uber and they issued an apology. In September of 2018, Uber had to pay the Federal Trade Commission $148 million and they admitted that they didn’t do enough to provide security for the data they acquired. In November of the same year, the British division of Uber also had to pay the Information Commissioner’s Office £308,000.
Uber has changed the way we get around and travel. Some of the ways they’ve changed things have improved certain aspects of our lives and some have caused more problems. One thing is sure, Uber seems to be a company always looking for new ideas and innovative ways to continue to shape how we get from point A to point B.
References
- https://www.investors.com/news/technology/uber-stock-climbs-on-record-bookings/
- https://www.investors.com/research/uber-stock-buy-now/
- https://www.thestreet.com/technology/uber-vs-taxi-14872678
- https://www.businessinsider.com/uber-travis-kalanick-bio-2014-1
- https://www.businessinsider.com/ubers-history
- https://en.wikipedia.org/wiki/Uber#cite_note-206
- https://www.canadianbusiness.com/lists-and-rankings/richest-people/2016-garrett-camp-uber/
- https://www.epi.org/publication/uber-and-the-labor-market-uber-drivers-compensation-wages-and-the-scale-of-uber-and-the-gig-economy/
- https://www.uber.com/newsroom/introducing-grocery-delivery/
- https://www.businessinsider.com/uber-to-pay-20-million-to-ftc-over-driver-earning-claims-2017-1
- https://www.businessinsider.com/report-uber-system-disrupted-government-investigations-2018-1
- https://www.washingtonpost.com/technology/2018/09/26/uber-reaches-million-settlement-over-its-data-breach-which-affected-million-globally/
- https://www.theguardian.com/technology/2014/nov/20/us-senator-al-franken-uber-answers-privacy-fiasco