From hailing a cab, to all hail Uber

Figure 1. Uber Australia. Image: Uber Australia. All Rights Reserved.
Figure 1. Uber Australia. Image: Uber Australia. All Rights Reserved.

Uber has become synonymous with getting from A to B, becoming the global leader in ride-sharing while revolutionising uses and understanding of the internet. Being a prime example of John’s (2018, p. 69) “sharing economy”, where user-to-user engagement drives new digital based economies, the platform has undoubtably democratised online economic engagement. This is evident in its transformative effect in creating the new “on-demand” marketplace that while politically abrasive with its questionable employee relations, destruction of the taxi industry and circumvention of local laws, has nonetheless completely evolved internet culture. Its widespread social acceptance and popularisation has changed not only the culture of transport, but the reliance on platform based intermediaries to solve everyday problems (Okun, 2019). Therefore, Uber is a global behemoth that has evolved  social practice where the idea of “Ubering it” is just as common as “Googling it”,  transforming the uses, understanding and application of the internet with every trip.

What is Uber?

Uber is a mobile phone internet application that offers on-demand, location based ride-sharing services between individuals who require car transport and drivers who conduct these fares (Hall et al, 2018, p. 37). Existing within John’s (2018, p. 69) “sharing economy”, the platform connects user-to-user instantaneously with solutions to transport (Uber), food (Uber Eats) or parcel delivery (Uber Freight), with the facilitator receiving payment. While Scholz (2016, p. 9) is hyper critical of the entity for promoting “unregulated and exploitative work”, Uber remains a global leader in the digital economy that thrives off connectivity, 24/7 operation and fierce competition. With its seamless operation of requesting, riding and reviewing each trip, the application offers unmatched convenience that has been embraced worldwide.

Figure 2. What is Uber? Video: Mashable YouTube. All Rights Reserved.

History

Uber was conceived by Travis Kalanick and Garrett Camp in 2008 after being stranded in Paris with no means of getting back to their accommodation (Uber, 2020). The pair realised the unmet need of rapid, location based assistance aided by the internet to solve this problem, and thus developed the application which launched in March 2009 as UberCab at the San Francisco App Show (Uber, 2020). With tech-industry acclaim, the application garnered capital investment enabling expansion across the US in 2010, Paris in 2011 and London in 2012, with a $2.1 billion capital raising in 2015 expanding its product offering into Uber Rush (couriers), Uber Eats (food) and Uber Jump (bikes) (O’Connell, 2020). To further expand its market reach, the application developed tiered offerings; budget conscious (Uber X), communal (Uber Pool) and full service (Uber Premium) (Uber, 2020). While not immune from failure, evident in the cessation of Uber Black,  driver misconduct (e.g. passenger raped), and lawsuits from the taxi industry, the platform remains the world leader in ride-sharing, operating in 65 countries, 700 cities and boasting 5 million users worldwide (Pepic, 2019, p. 28). 

Figure 3. “LE Web Conference Paris 2013 – Travis Kalanick”. Image: LeWeb14, CC BY 2.0
Figure 3. LE Web Conference Paris 2013 – Travis Kalanick. Image: LeWeb14, CC BY 2.0.

Uber Effect

Uber has developed such a transformative effect through the sheer breadth of its offerings, immense user uptake and penetration of the market despite industry kickback. Existing alongside AirBnB, Amazon and eBay, the platform does not stand alone, but rather as Lessig (2008, p. 118) argues, operates as part of the new “sharing economy for all possible forms of exchange”. By riding such waves of change that have democratised the internet marketplace, this only strengthens its aggressive growth strategy. While Horan (2019, p. 119) argues this reflects a “path of destruction” towards established industries (e.g. taxis), “the Uber effect” has been aided by development of the sharing economy on a whole, delivering its enviable 93% stake of the Australian ride-sharing market (Roy Morgan, 2020).

Ownership

Being listed on the New York Stock Exchange, Uber is owned by shareholders with the largest investors being SoftBank Vision Fund, Matt Cohler, Travis Kalanick and Garret Camp (Wilhelm, 2019). The ownership strategy is pivotal in furthering Uber’s operations with capital investment aiding innovation (Pathak, 2017, p. 193).

Business model

Being centred on the internet, Uber’s business model utilises smartphone technology to offer driver-to-rider connectivity through its real-time, on-demand, payment processing application. Nawaz et al (2019, p. 27) argues its “overthrow towards traditional industry models” by eliminating the middleman employer, taxi licenses and company cars is Uber’s greatest advantage. While controversy arises from drivers not being employees but rather contractors, failing to receive annual or sick leave, it eliminates overhead costs, thus increasing profit. Revenue is obtained from fare fees of 25-27%, brand partnerships (e.g. Qantas, Dettol and American Express) and 30% delivery commissions (Uber Eats), contributing to a $15 billion profit, while driver’s struggle to meet minimum wage (Jordan, 2017, p. 13). By integrating reviews as part of its business model, Uber instils accountability among users who risk losing the service for violations. However, biased reviews remain most significant with driver’s being incentivised to offer more to riders to gain a higher review yet such high service expectations threatens their star rating and thus opportunity for business, so further refinement is most necessary (Shokoohyar, 2018, p. 89).

Figure 4. Uber Business Model: What makes it so disruptive? Video: Business Disruptors YouTube. All Rights Reserved.

Uber’s ecology

Industry positioning

Being a part of the “sharing economy”  (John, 2018, p. 69), Uber exists alongside AirBnb, Airtasker and Menulog, driving the clogs of innovation in the ever expanding “internet of things” (Bunz & Meikle, 2018, p. 45). While ride-sharing remains the heart of its business, its vast brand portfolio (Uber, Uber Eats, Uber Jump, Uber Freight etc.) marks its place as the leader for internet based logistics economies.

Partnerships

With its industry stranglehold, Uber does not partner with other ride-sharing companies such as DiDi, Ola or Lyft. However, it partners with non-competitor brands such as American Express for preferred payment, Woolworths for grocery delivery and the Melbourne Cup Carnival to expand market reach.

Competitors

Primary competitors within Australia include Ola, DiDi and the taxi industry, meanwhile overseas competitors include Lyft, Grab and Curb (Business Strategy Hub, 2020). Competition exists due to near identical business models, application based platforms and pricing strategies (e.g. tiered offerings: Lyft Original, Lyft Premier etc).

Suppliers

Uber’s primary suppliers are drivers who facilitate fares. While not being employees, having Uber licences or company cars, they are nonetheless the life source of the company as without plentiful drivers the demand for rides could not be maintained.  

Regulators

Within Australia, regulation falls under state jurisdictions, being legal everywhere except in the Northern Territory, meanwhile the NSW Point to Point Transport Regulations mandates criminal and car safety checks for drivers and ID verification for riders (Uber, 2020).  

Users

The main users of Uber are riders (Uber), food consumers (Uber Eats) or leisure seekers (Uber Jump), with the primary Australian market being tech savvy 18-34 year old’s, with 4.7 million rides taken every quarter  (Roy Morgan, 2019).  

Figure 5. Uber's Internet Ecology
Figure 5. Uber’s Internet Ecology

Innovation

Uber is most innovative having completely transformed how users interact and mobilise themselves from the internet. Undeniably a “digital disruptor”, Uber has changed the way the world moves by utilising technology to offer cheap, easy and flexible travel that is superior to non-digital based offerings Christen et al (2015). The functionality and seamless end-to-end operation encourages repeat patronage harvesting “collaborative consumption” for shared exchange, undercutting industry expenses (Berger et al, 2018, p. 197). Uber continually innovates to maintain its market leader position, challenging new sectors (e.g. Uber Eats – take-away, Uber Jump – bike hire), going beyond its competitors and asserting its digital might to assure its longevity in similar fashion to Google (e.g. Google Search to Gmail, Google Home etc).

Figure 6. “Travel NYC with Uber watch application innovation”. Image: Samsung Newsroom, CC BY-NC-SA 2.0
Figure 6. Travel NYC with Uber watch application innovation. Image: Samsung Newsroom, CC BY-NC-SA 2.0.

Social

While Uber itself is not a social media platform, it has undeniably created a new means of social exchange. With Uber being a popular “side hustle” for drivers to “meet new people” while getting paid (Banister at al, 2017, p. 7), Uber markets itself as a “friendly” platform offering unique social interactions, evident in their “Be a Friend” and “Arrive in Style” campaigns. It has become a social norm for “drinking wise” and “stress free travel”, with the fare taker being more than merely a driver (Ads of the World, 2017). Such transformations are reinforced in now commonplace phrases such as “I’ll Uber it” or “let’s get Uber Eats” which reaffirm the resounding social effects of Uber on internet users (Berger et al, 2018, p. 197).  

Figure 7. “Uber Ads of the World”. Image: Ads of the World. All Rights Reserved.
Figure 7. Uber Ads of the World. Image: Ads of the World. All Rights Reserved.

Political

However, not all individuals share societal love for Uber, with the application being banned in Denmark, Hungary and Bulgaria (Splend, 2020). Political pressure has been strongest within Europe where it’s taxi culture resulted in a 2017 European Court of Justice ruling allowing any EU country to ban Uber (Forbes, 2019). Furthermore, with violent protests in Paris in 2015, court battles in the UK over workers’ rights and 16,000 taxi related job losses in Australia, Berger et al (2018, p. 197) argues the “Uber effect” drives disruption worldwide as “gig work” becomes a highly politicised norm that regulators struggle to grapple with. Thus, Uber has completely changed political relations by revolutionising the means, conditions and nature of digital based work.

Figure 8. “Taxi Cabs vs Uber”. Image: Aaron Parecki, CC BY 2.0.
Figure 8. Taxi Cabs vs Uber. Image: Aaron Parecki, CC BY 2.0.

Economic

Economically, Uber’s new “on demand” business model extended the capabilities of the “sharing economy”, redefining the digital marketplace (John, 2018, p. 69). By unlocking new means of self-employment and paid private car transport that is cheaper than taxis, Uber enabled everyday internet users to engage with a new online workplace that was previously non-existent. Benkler (2004, p. 273) argues such use of online devices to market private, excludable services from user-to-user democratises access to internet based economies. With such economic freedom beginning at the touch of a button this “new work, supported by digital intermediary platforms” reiterates Uber’s transformative role in reshaping the internet landscape via innovation, competition and digital solutions (Groggin et al, 2017, p. 74).

Figure 9. “Rides and Revenue at the touch of a button”. Image: Uber. All Rights Reserved.
Figure 9. Rides and Revenue at the touch of a button. Image: Uber. All Rights Reserved.

Cultural

Culturally, the widespread adoption, convenience and popularisation of Uber reiterates the sheer breadth of its historical effect on the internet and its users (Abbate, 2017, p. 13). Uber completely reshaped the culture of transport, which now relies on digital intermediaries to facilitate the preference for private car hire where in Australia 42.6% of users utilise the application in a three month period (Masige, 2019). This reveals the integral role of the internet in facilitating such cultural shift in favour of innovation to assist everyday living. As Banister et al (2017, p. 1) argues, such a cataclysmic shift has also forced archaic industries to adapt, adopt or become inept in the new digitally driven world that better connects users with what they want, when they want.

Figure 10. “Percentage of Australians who used each service in three months”. Image: Roy Morgan. All Rights Reserved.
Figure 10. Percentage of Australians who used each service in three months. Image: Roy Morgan. All Rights Reserved.

New regulation

In Australia, regulation varies between states with the Northern Territory banning the service, Western Australia creating new license categories for ride sharing and NSW leading open regulation by legalising airport based fares in 2015 under their Point to Point Transport Regulations (Splend, 2020). With the new regulatory processes differing within each city or country Uber operates in, it is clear that the platform’s immense growth, influence and uptake remains a key regulatory concern worldwide. However, this has not stagnated its growth, instead, regulation has adapted to the platforms market position.

Figure 11. “Putting up protest signs won’t save the taxi industry. Only innovation can do that”. Image: Jon Masters, CC BY-NC-SA 2.0.
Figure 11. Putting up protest signs won’t save the taxi industry. Only innovation can do that. Image: Jon Masters, CC BY-NC-SA 2.0.

Ultimately, Uber is an intrinsic feature of the “sharing economy” (John, 2018, p. 69), transforming user-to-user economic, social and cultural exchange, while remaining politically divisive. It has driven the incessant desire for an “on demand economy”, or revolution towards instantaneous solutions heralded through digital platforms. The sheer breadth of its operations reflect its significant influence in redefining internet uses for income, travel or be a part of a truly “interconnected world” that is reliant on technology (Kelty, 2014, p. 196). Therefore, the platform has completely reshaped how individuals live, with on-demand delivery of services becoming core features of everyday life, income and recreation, with Uber being the preeminent option of getting from A to B.

1924 words (10% lee-way applied).

Category tag: #arin2610 #assignment3

2-4 Relevant Tags for Post: #uber #sharingeconomy #internettransformations #ondemandeconomy

Blog post URL: https://www.arin2610.net.au/2020/11/15/from-hailing-a-cab-to-all-hail-uber/

Contact: Email: jsha4340@uni.sydney.edu.au. Twitter: @jackshawusyd

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About Jack Shaw 3 Articles
21 year old city slicker who loves a morning run around the Opera House or sweaty workout at Barry's Bootcamp. I love to explore the city and beyond for the latest and greatest restaurants, health bars or experiences to share with family and friends. I am massive concert goer and traveller who is a natural workaholic. I love to work hard, but play harder, and strive to maintain a healthy body, mind and soul to live a happy wholesome life!