It takes Americans nearly two trillion minutes on commuting to work (Shuter, 2019). The development of GPS-based location services has been accompanied by new startups that offer new categories of vehicular transportation services. Smartphone ridesharing apps are regarded as the outcomes of the urban transport industry revolution (Anderson, 2014). Uber is a typical representative, which provides a competitive and convenient alternative to taxis (Ross, 2015). Although the positive effects Uber brings are crucial to the website ecology, the negative influences are also likely to post threaten the continuing transformative industry.
This essay seeks to introduce Uber and its development firstly, then explain the transformative impact of the operation of Uber. The question of how the service is operated in transformative ways and how they alter business models online will be addressed from several aspects. Besides, this essay will demonstrate how Uber independent in nowadays competition by the infographic. Ultimately, I will discuss the regulatory debates internationally through several examples.
What is Uber?
Uber (originally called UberCab) is an American transportation company, which operates worldwide to apply for-profit on-call taxicab and ride-on-demand service for customers (Weber, 2016).
It allows passengers to search nearby taxicabs, limousines, and other categories of vehicles by GPS locating. The passengers are required to pay the suggested fare, which is calculated by distance instead of a set rate of the fee (Anderson, 2014).
Uber could be regarded as the agent in the market process, which create and maximize its value in the sharing economy (Schneider, 2017).
It is a technology platform with various groups of the client, which need to interact with the market. And it could not be denied that the innovative and practical advancement of the ‘sharing platforms’ — Uber is driven by new technology (John, 2016).
Besides, Uber also get involved in plenty of public-spirited activities. For example, Uber developed a perfect partnership with an animal shelter in America to bring benefits to them; donate clothes to Goodwill; showed support to the LGBT group on the marriage equality anniversary (The History of Uber – Uber’s Timeline | Uber Newsroom Australia, 2020).
The history of Uber
- According to The History of Uber – Uber’s Timeline | Uber Newsroom Australia (2020), Travis Kalanick and Garrett Camp preliminary came up with the idea of Uber in December 2008 after they experienced a cold evening, which could not get a ride in Paris.
- In March 2009, two entrepreneurs developed Uber, which allowed people to get a ride by tapping the button on the smartphone.
- Then, Uber launched in San Francisco, California in 2010.
- In 2011, Uber launched internationally in Paris.
- Uber has gradually emerged as the ridesharing behemoth, which expands its services into more than 270 cities in five years, as well as is selected as the most successful Silicon Valley startup after six years of Uber was founded (Ross, 2015).
“Uber iPhone app” by freestocks.org is marked with CC0 1.0
The innovative business model of Uber
The terminology around business models (BM) origin in the e-business field at the beginning of the 21st century (Tesch, 2019). According to the scholar, Jan F. Tesch quoted Al-Debei and Avison’s (2020, p. 373) opinions, the organizations achieve their strategic goals and potential economic values by focusing on co-operational and financial arrangements, as well as the core products and services. The business model of Uber reflect in peers could offer and purchase products and services through the online platform, and continue to apply in the new industries of carsharing (Schneider, 2017).
With the ‘sharing economy’ popularized in various fields, it made everyone have opportunity to become micro-entrepreneurs. Carsharing alter the original car-service market which dominant by taxis to large extents. The concept of ‘collaborative consumption’, which refers to sharing resources and services spread widely and became acceptable (Shaheen, 2015). To compare with the traditional taxis, Uber adopts a simplified pattern combine with smartphone technologies, which solve the problems of dispatch and payment. The application charge fare from passengers’ account directly, which avoid drivers to raise the price after rides. All transactions are automatically billed from users’ credit cards by the system of Uber (Weber, 2016). In 2013 — at the beginning of Uber had been established, the public opinion survey underscores that over 50% of the passengers satisfied with their service (Ross, 2015).
As the carsharing market is continuely dynamic and expanding, the innovation is not only driven by entrepreneurs and agents, but also depends on the cooperative practices of the whole society. As an important part of their business model, Uber treat their drivers as independent contractors but not the employee, which purpose is to minimize the costs of labor (Ross, 2015). Additionally, this service establish more trackable and flexible connection between drivers and consumers through bypassing traditional administrate patterns.
To compare with traditional carriage of passengers, Uber takes its main advantages of road service providers. That means it only permits the vehicles which meet both safety and technical standard (Marin, Petrović, Mudrić & Lisičar, 2020); and the car owners who have compulsory licenses, and satisfying driving background, as well as self-information check to pick up passengers by using this app geared at realizes the safeguard (Weber, 2016). Thus, the consumers who provide valid information could book the rides through the search of the nearest available drivers.
“Google maps con Uber” by DownloadsourceES is licensed under CC BY-NC-SA 2.0
What are the problems behind the innovation?
For the aspect of drivers, it does not mean that they under any obligation to Uber, and just doing a free-time job could receive extra income (Larkins, 2016). Nevertheless, it is difficult for the drivers to achieve real advantages from remedial labor statutes because basically, as the employees are classified as independent contractors, they could not get employee benefits. Also, the operating fee should be paid by themselves, as well as the minimum wages and overtime salary could not be guaranteed (Ross, 2015).
Some doubters pointed out that Uber is not actually for ridesharing but is an unregulated and exploitative system, which fails to protect the social rights of the employees (John, 2016). Although it seems like employees’ workplaces and personal rights could be guaranteed, and the independent contractors are focus on their own business scopes and duties. According to Anderson (2014), the standard to identify the employee or independent contractor is controversial and usually be muddled.
In the case of O’Connor v. Uber Technologies, Inc., the plaintiff in California stated that Uber uses improper independent contractor designers. Thus, the reason why Uber could develop precipitously possibly is that Uber deprived employee benefit to reduce labor costs. The “economic realities” test is applied to protect the rights and interests of workers by determining whether the workers are satisfied with the standard of the independent contractor but do not receive minimize wages. This evaluation is likely to post challenges to the original operating pattern for Uber (Ross, 2015).
Besides, the ‘surge-pricing’ method makes numerous consumers discontent because Uber continuing brand itself as an ‘economy-friendly’ car-sharing companies previously, which means during the commuting peak, passengers are charged increasingly (Ross,2015).
Uber’s strategy in Internet ecosystem
According to the perspective of ‘Strategic-Choices’, ‘business model phenomenon’ concludes by the enterprise’s strategic decisions, and the strategic considerations are one of the major triggers for business model innovation (Tesch, 2019).
Uber is geared to solve the problem of inefficiencies existing in the contemporary market, and capitalizing after correcting them. That means Uber has no purpose to destroy the competitors’ market — taxi but demonstrates differentiation and complementarity (Schneider, 2017).
As the services Uber provides to attract people who have different requirements, Uber also provides several options of service, such as for low-cost — UberX, luxury cars — UberLUX, and for larger group — UberXL. It just applies more broadly, and more focus on publicity (Schneider, 2017).
According to Anderson (2014), Uber has considered the motivation of these commuters and observed the urban drivers’ choices. From the interview conducted with drivers from ridesharing companies in San Francisco, the researchers found that the popularity of carsharing depends on geography and people. The agents of Uber have different aims to gain, which are considered significant in different periods or stages (Larkins, 2016).
For example, entering the market is the most important thing to increase the profit, raise the valuation, as well as have a good reputation. After that, the priorities are likely to change due to the level of development, such as improve the relationship with their suppliers and partners; create more workplaces; and attract increasing consumers through promoting quality of services (Leesa-nguansuk, 2015).
How Uber regulate in local and international?
Uber implementing policies to promote transparency by improving the quality of facilitates and services, as well as presetting the fare. Besides, Uber provides a new approach to regulate the service, which is using the comment from clients to realize the performance of drivers, and regulators remote monitor the drivers through the company (Ross, 2015).
However, several problems with Uber operation cast it in a bad light. Initially, according to Ross (2015), the service of Uber is not deemed to conform to some local regulations, but Uber didn’t show a positive attitude to deal with them. For instance, the executive of Uber Emil Michael state that personal data is likely to be used to detract the journalists who have unfriendly attitudes towards Uber (Ross, 2015).
From the international view, California-based Uber, Malaysia-based Grab Taxi, and Brazil-based Easy Taxi jointly drew up the ‘Transport Act’, which allowed the smartphone carsharing companies could legally operate base on the traditional operation patterns in 2015 (Leesa-nguansuk, 2015).
Africa had a poor urban transportation system previously, and Uber helped Nigeria to expand its public transport network. With the support and joint regulation with Nigeria Federal House of Representatives, while the popularity of ridesharing, the rights of riders and passengers are also guaranteed (Nigeria leads the way promoting ridesharing in Africa, 2016).
Jakarta police investigated strictly and cracked down on the taxi licenses of these Uber car owners in Indonesia (Resty, 2015).
To be concluded, Uber made a preliminary attempt at ridesharing service with a range of strategies, which influence contemporary transportation models and car-services patterns to a large extent. Although there are still some problems accompany the advancement of Uber, the benefit it brings to the urban public transport development could not be ignored. Through the new framework, Uber had established into the internet ecosystem, and it also helped to provide considerate, humanized, as well as personalized services to passengers. It is also established a large transportation platform to connect passengers and drivers.
Anderson, D. (2014). “Not just a taxi”? For-profit ridesharing, driver strategies, and VMT.(Report). Transportation, 41(5).
Dara Khosrowshahi – Executive Bio | Uber Newsroom Australia. (2020). Retrieved 8 November 2020, from https://www.uber.com/en-AU/newsroom/leadership/dara-khosrowshahi/
John, N. A. (2016). The age of sharing. ProQuest Ebook Central https://ebookcentral-proquest-com.ezproxy1.library.usyd.edu.au
Larkins, J. (2016, Oct 27). Have a car, have a job: Ridesharing apps create extra student income. University Wire Retrieved from http://ezproxy.library.usyd.edu.au/login?url=https://www-proquest-com.ezproxy1.li brary.usyd.edu.au/docview/1832778366?accountid=14757
Leesa-nguansuk, S. (2015, May 01). Regulator kills proposal to legalise ride-sharing apps. TCA Regional News Retrieved from http://ezproxy.library.usyd.edu.au/login?url=https://www-proquest-com.ezproxy1.li brary.usyd.edu.au/docview/1677309567?accountid=14757
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Resty, W. Y. (2015, Nov 20). In indonesia, ride-sharing apps enter a new cycle — smartphone services book two-wheeled transport to beat traffic. Wall Street Journal Retrieved from http://ezproxy.library.usyd.edu.au/login?url=https://www-proquest-com.ezproxy1.library.usyd.edu.au/docview/1734531937?accountid=14757
Ross, H. (2015). Ridesharing’s house of cards: O’Connor v. Uber Technologies, Inc. and the viability of Uber’s labor model in Washington. Washington Law Review, 90(3), 1431–1469.
Schneider, H. (2017). Uber Innovation in Society . Springer International Publishing.
Shaheen, S. (2015). Perceptions of Peer-to-Peer Carsharing in the San Francisco Bay Area, CA, USA. Institute of Transportation Engineers. ITE Journal, 85(5), 39–42. http://search.proquest.com/docview/1682435559/
Shuter, J. (2019). Passenger or Patient? The Automobile: A New Frontier in Health Promotion. Health Promotion Practice, 20(3), 328–332. https://doi.org/10.1177/1524839919830653
Tesch, J. (2019). Business Model Innovation in the Era of the Internet of Things Studies on the Aspects of Evaluation, Decision Making and Tooling . Springer International Publishing. https://doi.org/10.1007/978-3-319-98723-1
The Companies That Are Funding Uber and Lyft. (2020). Retrieved 9 November 2020, from https://www.investopedia.com/articles/markets/011516/companies-are-funding-ub er-and-lyft.asp
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Top Uber Competitors You Didn’t Know About. (2020). Retrieved 7 November 2020, from https://bstrategyhub.com/top-ubers-competitors/
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