Uber: How to Change the World with Controversies

Uber strike
"Fluid traffic in SF for two days? Or the opposite ? #uber #strike" by ant0ine is licensed under CC BY 2.0

Uber has restructured the world’s mode of transport and transformed people’s use of the internet by its revolutionary innovation of on-demand ridesharing mode. It launched a third phase of internet history after Google and Facebook to expand the digital domain into the physical realm and inspired a variety of new industries such as food delivery and package pickup (Stone, 2017). However, Uber’s brand-new contract labour model has also brought ceaseless controversies about driver’s rights that triggered a variety of new policies to regulate this new digital ridesharing industry.

This essay will critically analyse the transformative impacts Uber’ revolutionary innovations bring to the individual, social, and political world both from its affirmable and criticized sides. The first section will provide a basic introduction of Uber, while section two will examine Uber’s historical development. Section three will introduce Uber’s business model, while section four will discuss its industry ecology. In the last section, there will be an exploration of Uber’s controversial innovations which redefined the role of the internet and triggered new regulatory processes.

 


What is Uber

Uber began with an idea of “Tap a button, get a ride” which offers a type of on-demand ride service by creating a platform that connects the consumers with the drivers (Sultana, 2016). It is the pioneer in developing sharing economy and gig economy, and has now expanded its service to food delivery (Uber Eats), package delivery(Uber Connect), and freight transportation (Uber Freight). According to Uber’s Annual Report (2019), as of December 31, 2019, this San Francisco headquartered company has already operated in over 1000 cities across 69 countries, having over 111 million monthly active platform consumers worldwide. Different from traditional taxi companies, the Uber drivers are designed as ‘independent contractors’ of Uber which means that they are not under obligations to Uber but cannot enjoy the security of permanent employment (Stone, 2017, p14), which created more possibilities to the industry while bringing itself to the center of the storm.

 

Uber’s History of Success and Controversies

Ten years ago, Uber was born out of a watershed moment in technology. The rise of smartphones, the advent of app stores, and the desire for on-demand work supercharged Uber’s growth and created an entirely new standard of consumer convenience.

—————Dara Khosrowshahi, 2019

 

As Stone (2017) states, back to 2008, San Francisco regulated that the legal taxi drivers must have taxi medallions which limited at approximately 15,000 for decades, this regulation caused that demand of taxi badly exceeded supply so that the taxi service in San Francisco has complained unceasingly. At that point, after another unpleasant taxi journey, Garrett Camp came up with an idea of combining Google Maps and accelerometer on the iPhone to build a platform allowing ‘tap a button get a ride’. After Apple announced that iPhone would run its App Store in 2009, Garrett Camp and his partner, Travis Kalanick who then became the most controversial CEO of Uber, started signing up with more private car owners and launched their smartphone App, originally named UberCab in 2010 after over one-year development. 

Travis Kalanick
“Travis Kalanick, Co-Founder & CEO, Uber @ LeWeb Paris Day 1 2013-2555” by Kmeron is licensed under CC BY-NC-ND 2.0

 

At first, Uber was only offering limousine rides, but due to its success in San Francisco, Kalanick started to expand the business to other cities. To compete with Hailo in Chicago, Uber launched Uber Taxi in April 2012 which provided taxi service with lower price; To compete with Lyft – which was established in 2012 and getting popular among young people due to its lower price, Uber launched UberX in July 2014 to offer four-door hybrids as low-cost options for the public which is described as ‘the first big step Uber is taking to go to the masses’ (Chen, 2012). In the next few years, Uber has efficiently applied its ‘Point A to Point B’ technology deeper to people’s everyday life by successively launching Uber Pool which supports ridesharing service, Uber Eats which focuses on food delivery, etc (view more on Uber Website).

 

Uber X

“Google maps con Uber” by DownloadsourceES is licensed under CC BY-NC-SA 2.0

 

However, along with the rapid growth globally, Uber was facing more and more complaints from legislators, taxi companies, transportation unions, and also the public due to the different local regulation and also Uber’s immature business decisions (Isaac, 2019, p9). For example, it was accused of illegal operation and received a cease from California Public Utilities Commission in 2011; it infuriated Australian citizens due to the high surcharge during the hostage crisis in 2014; it led to the #DeleteUber because the suspicion of supporting Trump’s travel ban from Muslim countries in 2017; and it has been accused of sexual harassment for numbers of times around the world. For more information, here is a YouTube video from Company Man that introduces Uber’s controversial history over these 10 years in detail.

 

Business Model

As Schneider (2017, p47) says, a strategy is an indispensable tool which provides a company with a long-term direction in the variable market, while business model provides a plan for a company on how to use strategies to engage in a long-term market process, and Uber’s business model success stems critically from it capitalizes on convenience by aggregating and allocating idle capacity. 

 

You can first watch this 4-minutes YouTube Video from Business Disruptors to have a basic understanding of Uber’s business model.

 

As we know in this video, Uber does not own any cabs or employ any drivers, instead, it plays the role of intermediary which matches a ride provider with a passenger, which creates possibilities of lower costs, and the low costs allows Uber to create value-add on improve the level of convenience of the service such as making finding a car easier and quicker, offering more option of rides and proving more easier payment methods (Schneider, 2017, p61). Furthermore, the consumers will public their rating of drivers after each ride which will be available to all user, keeping the transparency about the driver and ushering in a trust economy which helps ordinary folk to negotiate transportation in the current digital era (Stone, 2017, p13).

Another critical element that safeguards Uber’s convenience is its contract labour model. Any car owner who passes Uber’s assessments can sign up with Uber as an independent contractor rather than an employee who have a more flexible working arrangement but will bear their own expenses and proceed at their own risk including insurance, which has been constantly accused of infringing divers’ rights of receiving workplace protections such as minimum wage, unemployment insurance and compensation (Employee vs. independent contractor, 2016).

 

Industry Ecology

Uber is a pioneer of developing sharing economy and it is a giant in the global ridesharing industry. As it is running worldwide, Uber has different competitors in different domains, such as Lyft in North AmericaOla in Australia, Didi in China, Grab in Southern Asia, and also taxi all around the world. 

 

The core suppliers of Uber are the car owners who are also the partners of the company, and Apple IOS and Android who provide a platform for consumers to download. Additionally, Uber also has partnership with Google who provides an estimation of routes and prices, and other online booking apps which will automatically recommend the users an Uber ride to go to the destination (Schneider, 2017), and also online payment companies such as Paypal, Apple Pay and Google Pay.

 

The core suppliers of Uber are the car owners who are also the partners of the company, and Apple IOS and Android who provide a platform for consumers to download. Additionally, Uber also has partnership with Google who provides an estimation of routes and prices, and other online booking apps which will automatically recommend the users an Uber ride to go to the destination (Schneider, 2017), and also online payment companies such as Paypal, Apple Pay and Google Pay.

 

The core users of Uber are the travelers who do not have a car, and the main users’ group of Uber is aged between 16-34 years old that accounts for 65% of U.S users, which shown on Global Web Index. Furthermore, Uber is regulated by the governmental regulators (such as the City of Sydney Council) and industrial regulators (such as Australian Taxi Industry Association) to maintain a fair competitive market (Schneider, 2017)

 

Here is a diagram of Uber’s ecology below. 

 

Uber’s Ecosystem

 

 

Uber ecology

 

Uber’s Controversial Innovations Restructured the World

 

While Uber facilitated people’s way of transport, Uber was keep being questioned about the legitimacy of its sharing economy service, or being doubted the purposes of its contract labour model, since 2010 Uber was born as an unprecedented industry of ridesharing. The controversial innovations not only transformed people’s everyday lives, but also triggered new regulatory processes worldwide.

 

Sharing economy

“Is Uber (and are other sharing economy companies) just exploring legal loopholes or is it setting up a legitimate business?”

—————Henrique Schneider, 2017

Sharing economy is a form of social exchange associated with new technologies of digital sharing with the absence of money and has always referred to both production and consumption (John, 2018). As Posen (2015) notes, due to the development of technology and the faster-paced lifestyle over last decade, the consumers have become more preferred easier access to ownership, that is why more and more sharing- economy companies emerged including Uber. Uber’s revolutionary innovation of on-demand ridesharing service revolutionizes the world’s transport industry by connecting riders and driver by a mobile app to make consumers’ transport much faster and convenient than before. 

 

Nevertheless, there was no specific law regulating this brand-new industry of ridesharing, and its quick expand injured the interests of the taxi industry, so Uber had been accused of illegal operation, unfair competition, deceptive business practices or violating local taxi regulation from different states and cities. Finally, as consumers’ enthusiastic supports of Uber and other ridesharing companies, the legislators were trying to make policy for this industry, it has been 14 cities and states passed pro-ridesharing legislation by October 2014, including Washington, D.C. who has approved a bill legalizing Uber, The Vehicle-for-hire Innovation Amendment Act of 2014, which has been a model sample for other cities (Posen, 2015).

 

 

Gig Economy

“Does it bring more wage-earning opportunities to more people or is it just reducing the costs of employment?”

——————Henrique Schneider, 2017

Gag economy is prominently increasing in the 21st century after on-demand online platforms were getting popular, especially Uber which is called the flagship of the gig economy (Berger & Frey & Levin & Danda, 2019). Uber sign up with its drivers as ‘independent contractors’ which are also gig workers who have flexible working time but do not have protection as a permanent employee.  The driver’s rights have always been a nonstop debate on the driver’s rights.

From the positive aspect, the gag economy provides more available jobs to the unemployed people; it helps the people who want flexible working time to achieve work-life balance; and it offers opportunities for people who want to make additional money when needed, as Berger (2019) shows that there are 81% of the respondents in London preferring to keep independent contractors due to the flexibility.

From the negative aspect, the critics state that Uber has exploited the employees’ benefits to lower the labour costs in the purpose of achieving its rapid growth, and it has no protection for the drivers which injured their workplace rights (Ross, 2015).

 

 

To conclude…

 

Overall, from the analysis above, Uber applies the digital technologies to people everyday lives that changes people’s use of internet and makes the life especially the transport more convenient by its revolutionary innovations of on-demand ridesharing mode, whereas bringing nonstop controversies about its sharing economy and gig economy that triggered new regulatory processes globally.

 

 

Reference List

Berger,T & Frey, C.B. & Levin, G. &  Danda, S.R. (2019). Uber happy? Work and well-being in the ‘Gig Economy’, Economic Policy, 34 (99), pp 429-477. DOI: https://doi.org/10.1093/epolic/eiz007

Chen, B. (2012, July 2). Uber, an App That Summons a Car, Plans a Cheaper Service Using Hybrids. New York Times, B.3. http://search.proquest.com/docview/1022828317/

Employee vs. independent contractor: is there a middle ground? (2016, May 21). Payroll Manager’s Letter32(10), 1–3. https://link.gale.com/apps/doc/A454608731/AONE?u=usyd&sid=AONE&xid=fdededde

Isaac, M. (2019). X to the X. Super pumped : the battle for Uber (First edition.). W.W. Norton & Company, Inc.

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

Khosrowshahi, D. (2019). A letter from Dara Khosrowshahi, Chief Executive Officer [Letter]. Retrieved from: https://investor.uber.com/a-letter-from-our-ceo/?_ga=2.102127553.1996271581.1605447972-1954978068.1605447972&uclick_id=e4cf4c50-2f13-4809-b11c-113abb9eaaff

Posen, H. A. (2015). Ridesharing in the sharing economy: should regulators impose Uber regulations on Uber? Iowa Law Review, 101(1), 405+. https://link.gale.com/apps/doc/A435356567/AONE?u=usyd&sid=AONE&xid=bdaacda1

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. Retrieved from http://ezproxy.library.usyd.edu.au/login?url=https://www-proquest-com.ezproxy2.library.usyd.edu.au/docview/1764374791?accountid=14757

Schneider, H. (2017). Creative destruction and the sharing economy Uber as disruptive innovation (pp36-62). Edward Elgar Pub. doi: https://doi-org.ezproxy2.library.usyd.edu.au/10.4337/9781786433435

Stone, B. (2017). The upstarts : how Uber, Airbnb, and the killer companies of the new Silicon Valley are changing the world (First edition.). Little, Brown and Company.

Sultana, S. (2016). Uber. In J. Wener (Ed.), Minicars, maglevs, and mopeds : Modern modes of transportation around the world (pp.321-323). Santa Barbara, CA: ABC-CLIO, LLC.

Uber Technologies, Inc. (2020). Uber: 2019 Annual Report. Retrieved from: https://s23.q4cdn.com/407969754/files/doc_financials/2019/ar/Uber-Technologies-Inc-2019-Annual-Report.pdf

 

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About Katy Li 4 Articles
Second year at USYD. Majoring Film Studies and Digital Culture. Studying 'Internet Transformations' this semester.