Uber – an Innovation, a Lifestyle

Under the digital era and the emerge of sharing economy, Uber is not just a ride-hailing company, but instead exemplified how technology can effect people's life.

Uber app. Image: freestocks.org. Some rights reserved

Introduction

Uber, as an emerging technology company born in Silicon Valley, has aggressively transformed the traditional transportation industry through its novel technical operation. By being a representative figure in the sharing economy industry, Uber’s success also highlights the new possibilities to utilize possessions. This essay provides an overview of Uber’s historical developments, novel business model and its internet ecosystem. In the last sector, this essay discusses the transformations and innovations Uber bring to society. This essay claims that Uber has facilitated people’s participants of engaging in creating income but also altered the labour models by defining itself as the platform provider instead of the employer. Uber has also changed the traditional workplace pattern for its drivers and eliminating the social ties between drivers.

 

What is Uber – in a Nutshell

Uber is an internet-based technology company located in San Francisco, provides the on-demand car hire services by building an online network which effectively connects the drivers who are willing to share their car and the passengers who seek for a ride  (Kim, Baek & Lee, 2018). Following this operating pattern, Uber has become a part of the sharing economies, where individuals are encouraged to share of idle assets through digital platforms with others (Calo & Rosenblat, 2017).

 

The Historical Development of Uber

 As introduced by Uber official website, the very first incentive to launch Uber was born in 2008, when its founders, Travis Kalanick and Garrett Camp struggled to catch a taxi due to the bad weather. The desire for having transportation which was way easier and way faster is the root of Uber’s development.

The evolution

As the Business Insider’s article introduces, in the beginning stages, Uber, at that time named as UberCab, has launched in San Francisco in 2009 and soon became a big hit. In 2010, UberCab raised more than $1 million funding, and the company changed its name to Uber Technology as known today. The name change implies Uber’s self-classification as a technology platform that provides online ride-hailing services (Dudley, Banister & Schwanen, 2017). It proves the company’s determination to distance away from the taxi industry.

After Uber secured its position in the transportation industry and succeeded in its base camp, the company expanded its business to strengthen its competitiveness (Anwar, 2018). In 2011, the international offensives began in Paris, and one year followed, Uber launched UberX and UberPool, which aim to provide a different level of services to the passengers, from cheap to premium. From the ride-hailing services as the starting point, Uber also introduced the branch businesses such as the food delivery platforms UberEATS. In 2019, after Uber’s first appearance a decade ago, the firm owned $75.5 billion market value and successfully goes public in New York.

Controversy

Uber’s development is not always plain sailing, as the company has been accused of enjoying unfair advantages when competing with the incumbents, and thus aroused regulatory debates. A common concern of the sharing economy is the involved firms allow the service, which is non-professional and non-regulated  (Rauch & Schleicher, 2015). The same problem goes to Uber, by defining itself as a service provider, Uber cunningly bypasses the related strict requirements imposed on taxi businesses such as the driver qualification check (Rauch & Schleicher, 2015). Consequently, followed the Italy, French, and German, protests against Uber from taxi drivers and unions have occurred globally.

Turkish taxi drivers protesting Uber. Image: Serhat Cagdas. All rights reserved.

 

Uber’s Business Model

A firm’s business model is a system that reflects the structure of the firm’s operation and the inner connectivity of different components which generate value. (Ritter & Schanz, 2019, p. 321). The video below gives an overview of Uber’s basic business model, and the specific discussion will be presented in the next sections.

 

Intermediary

The premise of Uber’s business model is its utilization of technology to create a peer-to-peer platform which stimulates the collaborations between the drives and the passengers, while the company itself is just an intermediary between these two parties (Anwar, 2018), and generates profit from charging a fee of the transaction occurred between those two parties (Gillespie, 2018).

App-Based Operation

The entire process of the ride hire service is accomplished through Uber’s application. Uber’s interface is simple, passengers book a ride by merely type in their destination, and the system can locate the pick-up location via the GPS. Then Uber displays all the nearby drivers, and automatically calculate the estimated arrival time of the nearest driver. In the meanwhile, Users can then select their desired ride type. Owing to the help of technology to match the demand and supply efficiently and the easy operation, Uber provides convenience which especially appealing to the passengers (Harris, 2017).

Review System

The success of Uber’s business model can also trace to its two-sided rating and review system that helps to build trust between the drivers and passengers in the sense of sharing private resources with strangers (Schor, 2016). The review system is especially crucial for Uber as its operation bases on the interaction between drivers and passengers (Posen, 2016), and the reviews can be the key measurement of drivers’ performances and ensure the safety and quality of their services.

 

Uber’s Internet Ecosystems

Suppliers and customers

The service suppliers are drivers who are classified as the “registered partners” of this company rather than an employee (Dudley, Banister & Schwanen, 2017). The users or the platform consumers are people who seek for a ride, especially those who are expecting Uber provides the convenience to their trip. Until 2018, across the globe, there are 3.9 millions of drivers and almost 100 million monthly active users.

Partnerships

Uber is the most valuable technology company across the globe (Dudley, Banister & Schwanen, 2017); it is also the pioneer in the ride-hailing industry. The company has formed partnerships to foster its thriving. Uber has formed partnerships with intermediaries such as Google map for route directing, PayPal for convenient payment, and Uber also works with Google and Toyota to investigate self-driving cars technology.

Competitors

Although Uber has gained the “first-mover advantage” (Anwar, 2018, p.65) and thus establish its leading global position, however, the company still struggles to compete with its regional counterparts who provide similar app-based ride-hailing services (Dudley, Banister & Schwanen, 2017). Uber’s major competitors include the Lyft and Sidecar in the U.S market, Grab in south-east Asia, DiDi Chuxing in China, and Ola in India.

Regulators

As a part of the sharing economy firms, and the self-classifying as a technology company, the novelty of the nature of the company has given Uber a loophole to flout the regulation (Cannon & Summers, 2014). With the awareness of the unique operation model of Uber, regulatory bodies such as the national and federal government or the city councils have introduced new regulations which focus on the safety checks instead of requiring Uber to follow the rules of the taxi industry (Posen, 2016).

Uber’s interest ecosystem map. Image: Zixin Wang. All rights reserved

How Does Uber Effect Our Everyday Life?       

 New Possibilities to Create Economy

Just like Uber, the mobility and accessibility of the sharing economy firms provide a low barrier and a low cost to participants to enter the marketplace, and socially speaking, that inclusive market specially caters for the minorities. As mentioned in the previous section, the non-professional works permitted by Uber has opened new job possibilities for people who are excluded by the traditional workplace (Calo & Rosenblat, 2017). Except for the importance of inclusion, the launch of Uber was shortly after the global financial crisis. Hence, the company provides an innovative remedy for the depressed employees market caused by the financial crisis (Amato, 2016).

 

Uber driver and passengers sharing a ride. Image: LPETTET. All rights reserved.

The direct transformative effect is, Uber plays the role as a job creator (Dudley, Banister & Schwanen, 2017), and people who have a spare car and spare time can log in the platform to join in the marketplace and gain extra income. In the other hand, the implicit effect is, by building the online network between the drivers and the passengers, Uber successfully constructs the offline “social interaction” (Posen, 2016, p.416). That social interaction enables both the driver and passenger to socialize with each other, and may develop further connections and arouse exchanges of opinions and resources, and thus achieve the reciprocity through this process (John, 2016). While reciprocity is a critical belief in the sharing economy, Uber’ inclusion and collaboration allows people to become the “micro-entrepreneurs” (2016, p. 3) and demonstrates how technology can create economic value.

 

Transformation of Workplace and Labour Model

Uber also transforms the conventional workplace and the corresponding labour model, where drivers enjoy the work autonomy and freedom while being exploited by the algorithmic supervision imposed by the platform (Möhlmann & Zalmanson, 2017). Comparing with the traditional workplace, the works Uber’s drivers performed are directed by a mobile platform rather than the boss in the brick and mortar office, and they also do not need to work within a fixed working hour (Rogers, 2015). The flexibility in both the space and time provided by the platform is tempting. Still, the unignorable question is that drivers are classified as independent contractors rather than employees under that working pattern (Harris, 2017). The denial of drivers as employees allows Uber tactically bypasses the labour law, also put drivers at a disadvantage as they cannot receive their deserved rights like the employees. (Calo & Rosenblat, 2017). Moreover, the digital workplace also isolates driver from each other (Wells, Attoh & Cullen, 2020), which eliminates the social ties between drivers, prevent them from consulting with others about the concerns, and consequently hampering drivers to form unions. The video below reports the protest in San Francisco, where Uber drivers call for better wages and working conditions.

 

Apart from the controversial labour model, the “algorithmic management” (Möhlmann & Zalmanson, 2017, p.4) also poses a threat to drivers. As Möhlmann and Zalmanson (2017) discuss, platforms insert algorithm to the system and then govern and control the workers. Uber’s supervision reflects in aspects such as the continuous tracking of driver’s location and assessment of performance. These acts of management are essential, as the platform must moderate the participant’s behaviour to solidify its operating structure (Gillespie, 2018). However, the main problem behind Uber’s management is the information asymmetry between the platform and the drivers (Möhlmann & Zalmanson, 2017).

The working principle of the algorithm is too opaque for the drivers to know to what extents their works will be affected, and the system’s lack of ability to provide direct supports about specified driver’s request also leads to potential problems. One effect of the algorithmic managements is its change of the way drivers interact with the passengers through the review system. In the face of the pressure of being automatically kicked off by the platform due to the low rating, drivers have to cater the passengers to get a higher rating score intentionally. That form of “emotional labour” (Rogers, 2015, p.97) especially impacts drivers of colour who are more vulnerable to negative feedbacks caused by racial prejudices. 

 

Conclusion

Uber has revolutionized the transportation industry, and its fundamental effects as a part of the sharing economy are also noteworthy. Regardless of the resemblance of the services it provided, without the harnessing of the technology, taxi drivers have to bear the brunt brings by Uber. Uber has used the internet to create its unique digital marketplace, which is inclusive and invites people to join in and develop businesses. However, internet technology applied by Uber also seems like a trap, which disturbs the workplace and labour model. Whether sustaining or disruptive, the core nature of Uber needs to be examined by time.

 

Biography

Amato, A. (2016). Uber and the Sharing Economy. The Italian Law Journal, 02, 177-190.

 

Anwar, S. (2018). Growing global in the sharing economy: Lessons from Uber and Airbnb. Global Business And Organizational Excellence, 37(6), 59-68. doi: 10.1002/joe.21890

 

Calo, R., & Rosenblat, A. (2017). THE TAKING ECONOMY: UBER, INFORMATION, AND POWER. Columbia Law Review, 117(6), 1623-1690.

 

Cannon, S., & Summers, L. (2020). How Uber and the Sharing Economy Can Win Over Regulators. Retrieved 22 November 2020, from https://hbr.org/2014/10/how-uber-and-the-sharing-economy-can-win-over-regulators

 

Dudley, G., Banister, D., & Schwanen, T. (2017). The Rise of Uber and Regulating the Disruptive Innovator. The Political Quarterly, 88(3), 492-499. doi: 10.1111/1467-923x.12373

 

Gillespie, T. (2018). All platforms moderate. In Custodians of the internet: platforms, content moderation, and the hidden decisions that shape social media (pp. 1–23). New Haven: Yale University Press.

 

Harris, B., 2017. Uber, Lyft, and Regulating the Sharing Economy. Seattle University Law Review, 41(1), pp.269-285.

 

John, N. A. (2018). Sharing Economies. In The age of sharing (pp. 69–97). Polity.

 

Kim, K., Baek, C., & Lee, J. (2018). Creative destruction of the sharing economy in action: The case of Uber. Transportation Research Part A: Policy And Practice, 110, 118-127. doi: 10.1016/j.tra.2018.01.014

 

Möhlmann, M., & Zalmanson, L. (2020). Hands on the Wheel: Navigating Algorithmic Management and Uber Driver’s Autonomy. In International Conference on Information Systems (pp. 1-17). South Korea.

 

Posen, H. (2016). Ridesharing in the Sharing Economy: Should Regulators Impose Über Regulations on Uber?. Iowa Law Review101(1).

 

Rauch, D., & Schleicher, D. (2015). Like Uber, But for Local Governmental Policy: The Future of Local Regulation of the ‘Sharing Economy’. SSRN Electronic Journal, 903-943. doi: 10.2139/ssrn.2549919

 

Ritter, M., & Schanz, H. (2019). The sharing economy: A comprehensive business model framework. Journal Of Cleaner Production, 213, 320-331. doi: 10.1016/j.jclepro.2018.12.154

 

Rogers, B. (2015). The Social Costs of Uber. SSRN Electronic Journal. doi: 10.2139/ssrn.2608017

 

Schneider, H. (2017). What is Uber’s business model?. In H. Henrique, Creative Destruction and the Sharing Economy: Uber as Disruptive Innovation (pp. 36-62). Cheltenham: Edward Elgar Publishing Limited.

 

Schor, J. (2016). DEBATING THE SHARING ECONOMY. Journal Of Self-Governance And Management Economics4(3), 7-22. doi: 10.22381/jsme4320161

 

Wells, K., Attoh, K., & Cullen, D. (2020). “Just-in-Place” labor: Driver organizing in the Uber workplace. Environment And Planning A: Economy And Space, 1-17. doi: 10.1177/0308518×20949266

 

Zixin Wang
About Zixin Wang 3 Articles
A USYD Bachelor of Arts student, majoring in Digital Cultures and Accounting. I love social media, movies, and I love to explore every new technology in the digital era.