Uber has emerged as a market leader in the transportation industry since 2009. They have changed the way consumers catch rides through its easy to use technology platform where consumers can request a ride from a user-friendly mobile application that is also GPS tracked, has a review system and transparent payment values.
As mentioned in digital.hbs.edu by Sidharthmishra, “Uber is becoming more entrenched in the transportation fabric of today’s world not only through its simple on-demand car application but by diversifying into UberEATS, Uber for Business, Uber Freight and its ambitious investments into AI for making the dream of driverless cars come true”.
In this essay, I will provide an overview of the operations of Uber in Australia and explore how the company have transformed the ride-sharing industry by offering on-demand ride-sharing and food delivery services. I will also be exploring some controversal regulations on Uber over the past few years and related controversy of their business model for their drivers.
What is Uber?
Uber is a transportation network using digital technologies to connect drivers to consumers. They provide consumers with a user-friendly mobile application which will be used to request for car rides or food delivery, anywhere that Uber is offered.
The company’s easy to use mobile application can be downloaded by smartphone users who will then be able to request services from the touch of a button, from the comfort of their homes or anywhere that the service is offered.
In 2014, Uber originally chose Sydney as the first city in Australia to operate in, and to this date, the ride-sharing company is operating in 37 cities in 7 states in Australia. And the list of cities continues to grow (Adam, 2020. Rideshareaunz).
As Suzor (2019) argues, “Network effects mean that the value of a connected system grows exponentially with the addition of new connections.”
Below is a table of the Australian States and Cities that Uber is operating in.
The Historical Beginnings of Uber
The beginnings of Uber started in 2008 when co-founder Garrett Camp became frustrated when he got “stranded on the side on the curb of San Francisco so often” (Camp, 2016, Youtube video). Camp thought that the taxi industry wasn’t “very good” and knew he had to make his own. Another idea that came to Camp was GPS tracking, which sparked when he was watching ‘James Bond: Casino Royale’ and liked how the location of a car could be GPS tracked by a phone – and how you could watch the car arrive at your destination (Mango Research, 2017. Youtube video).
The second co-founder, Travis Kalanick was initially uninterested with Uber. However, this changed in 2008 when Camp and Kalanick went through a bad taxi experience in Paris, France. The pair were attending an annual tech conference, the Economist, described as “where revolutionaries gather to plot the future” (Blystone, 2019. Investopedia.com). The driver of the cab that Camp and Kalanick was taking threatened to kick them both out if they did not quieten down. This incident stuck with Kalanick and now he was more eager to work on Uber.
The video below explains how Uber was born.
How Did Uber Start? The Birth of Travis Kalanick & Garrett Camp’s Uber by Mango Research on Youtube
In 2017, Kalanick resigned from his Cheif Executive position after 6 months of scandal (Wong, 2017. The Guardian). Uber currently has 2 leaders in the company, co-founder, Garrett Camp, and Dara Khoscrowshahi, the company’s newly appointed CEO who joined in August 2017, succeeding Travis Kalanick.
Uber’s Internet Ecology
Since the introduction and expansion of Uber in Australia in 2014, they have continued to grow and offer its service to more and more cities. The company filled a much-needed gap in the market and currently has a valuation of $82bn.
Similar rideshare companies have since begun popping up in the market making the competition ferocious. Lyft, a company launched in the United States came out in 2012, which is one of Uber’s biggest competitors.
In Australia, Uber continues to dominate the market, however, 2 other rideshare companies have since entered the Australian market. Uber is facing competition with companies; Ola, a Indian company launching in Australia in 2018 and DiDi, a China company launching in Australia in 2018. Lyft as yet to enter the Australian market.
An Uber spokesperson told Business Insider Australia in an email, “We remain focused on delivering a great experience for our customers and our driver-partners – not on other operators” (Masige, 2020. news.yahoo.com)
The diagram below show’s Uber’s Internet Ecology.
As seen from the diagram above, a major part that plays into Uber’s ecology is the drivers who are both the User and Supplier of the internet ecology. They play a crucial part in Uber’s operations.
Uber’s mobile payment system also cooperates and supports each other through partnerships with Paypal, Apple Pay, Google Pay, VISA and Mastercard. And since COVID-19, Uber has partnered up with Woolworths to deliver groceries and Dettol to supply cleaning products. This is one of the ways Uber uses technology to be more efficient and build on smart cities.
Uber’s Business Model – Be Your Own Boss
Initially, Camp wanted to purchase a fleet of Mercedes Benz and lease out an entire parking lot, however, Kalanick disagreed and did not want to own the assets and hire drivers (Mango Research, 2017. Youtube Video). Instead, they decided to pitch a mobile application is existing cab drivers to get them on board.
According to Uber, “Opportunity is everywhere” (Uber website, 2020).
The video below by Oz Rideshare TV shows how easy it is to become a UBER driver.
How to become UBER, OLA & DIDI driver in Brisbane Australia Step by Step by Oz Rideshare TV on Youtube
This business model is different and transformative due to its use of digital technologies. Compared to the current travel industry where consumers have to find a taxi stand, bus stand, or train station. Consumers are able to order an Uber – on-demand, wherever they are. The mobile application is also user-friendly and has security features such as GPS-tracking and information on your driver.
As shown from the video above, the process of becoming an Uber driver is not complicated and each driver will be in control of the hours they work or don’t want to work. Suzor (2019) argues, ‘social media platforms make design choices that affect how easily people can upload and share content”. Uber uses this strategy to advantage such as having a rating system (passengers rate the Uber driver and the Uber driver can rate the passenger). This creates a community of trust between drivers and passengers and also peace of mind when passengers are aware that their Uber driver has a good rating.
Uber’s Transformative Disruption
The idea of Uber would soon take the travel industry (namely taxi) by storm and continue to revolutionise the way we travel. But this was only the beginning, Uber has since launched other ranges of services such as UberPool, UberXL, Comfort, Uber Pet, Assist, Premier.
When passengers book for a car ride, they are prompted to select which type of vehicle they are after. UberX is the most common vehicle offered, offering a private ride for up to 4 passengers at a time. Special services that were not available through Taxi’s include Uber Pet, where pets are also allowed to ride in the care (with safety equipment available) and Assist, if elderly passengers need help reaching the car and getting out of the door (help with opening car doors, giving them more time to settle in etc).
Uber also introduced UberEats in the Los Angeles in 2014 and that service launched in Australia 2 years later. The introduction of UberEats was a success, as Sadler (2016) states, “It comes as the food delivery market in Australia is increasingly heating up, with the likes of Deliveroo, Foodora and Menulog competing for our appetites”.
Uber and Driver Controversy
Although Uber is a successful business, they have come under fire multiple times over low wages for their drivers. In 2013, Uber embroiled a class-action law suit filed by 35,000 company drivers in 2013, who claimed their independent contractor status was unfair. The drivers sought full employment, and the better wages and benefits that go with being full-time employees (O’Connell, 2020. thestreet.com).
John (2008. Pp. 69) argues, “Uber is not a platform for car sharing, but rather an unregulated and exploitative system whereby people work without the faintest hint of employee protection or social rights.”
In May 2019, Australia joined a worldwide protest in a bid for Uber to prioritse safety for its drivers (SBS news, 2019). However, shortly after, in June, The Fairwork Ombudsman has found its investigation that Uber drivers to ber independent contractors and not employees. FWO (2019) argued, “Uber Australia drivers have control over whether, when, and for how long they perform work, on any given day or on any given week”. Which means that “Uber drivers are not entitled to receive the minimum wage, annual leave, sick leave or any benefits that employees receive.”
In a book about Innovation in Society, Schneider (2017) argues, “Without regulation, Uber would not have to engage in regulatory entrepreneurship nor would the government have to engage in restraining, regulating, and controlling Uber”.
In the most recent controversy since COVID-19 and lockdown. There has been major concern over safety and protection over riders who have been delivering meals for UberEats and other delivery service providers. The most recent death being a 27 year old man who was killed in Sydney’s South.
“A NSW government report released earlier this month found gig economy workers receive only limited safety advice from food delivery platforms, suffer abuse and often fear reporting incidents” (Bonyhady, 2020. smh.com). Michael Kaine (2020), the national secretary of the Transport Workers Union, has claimed, “the federal government should act to change the legal regime that allows gig economy companies to classify their workforce as independent contractors, who do not get the same benefits like a minimum wage, workers compensation and superannuation that employees receive”.
Uber is currently the only company which offers insurance to its workers, Bonyhady (2020) states, “Under the policy, riders can get $150 a day for 30 days if they cannot work because of an injury acquired while on a trip. It also includes lump sum payments if a rider dies.”
In a 2019 statement by Uber: “Drivers are at the heart of our service – we can’t succeed without them – and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road.”
Overall, Uber has conquered the travel industry by offering on-demand ride-share and food delivery services whilst implementing a simple to use technology to track each vehicle. The rating system for each driver and passenger was what differentiated the company from existing Taxi business models. This was innovative because it built a community of active users and well as security for its users.
Although Uber has controversy over the wage gap and safety for its drivers. Hopefully this can be resolved with Government regulations.
Written by Jeanny Hen
Market and Digital Cultures Major at the University of Sydney
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Bonyhady, N (2020). ‘UberEats rider killed in Sydney’s south identified as Bangladeshi student Bijoy Paul’. Retrieved from https://www.smh.com.au/national/nsw/ubereats-rider-killed-in-sydney-s-south-identified-as-bangladesh-student-bijoy-paul-20201122-p56gv5.html?utm_medium=Social&utm_source=Facebook&fbclid=IwAR1DJf7fD7DhxDZMXaHDzdPw3OEqWNfClEVhgT-WLgaOBmE65ARHgPh12QU#Echobox=1606035006
‘How Did Uber Start? The Birth of Travis Kalanick & Garrett Camp’s Uber’ by Mango Research. Retrieved from https://www.youtube.com/watch?v=wDgCNCd7KzY
‘How I Invented Uber | Garrett Camp | Google Zeitgeist’ by Google Zeitgeist. Retrieved from https://www.youtube.com/watch?v=_vxk4Z1u7RE
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Schneider, H (2017). ‘Uber, Innovation in Society’. Pp. 55
Sidharthmishra (2017). ‘Uber: Revolutionising Transport – One ride at a time’. Retrieved from https://digital.hbs.edu/platform-digit/submission/uber-revolutionizing-transport-one-ride-at-a-time/
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Wong, J (2017). ‘Uber CEO Travis Kalanick Resigns After Months of Chaos’. Retrieved from https://www.theguardian.com/technology/2017/jun/20/uber-ceo-travis-kalanick-resigns