What started as a quick and easy alternative to hailing a taxicab, has turned into a global sensation that’s effects have not only transformed the way we ride but the way we live. This essay will aim to explore the transformative effects this platform has had on not only web technologies and the taxi-cab industry, but its wider implications on society’s economic infrastructures.
The structure of this paper will first seek to provide a historical account of the applications beginnings to enable identification of substantial and succinct definitions of what Uber is and how it operates today. The essay will then provide a brief analysis on the Ubers unique business model, before providing a breakdown of the ecology of which it circulates within. Finally, the essay will endeavour to conduct a critical analysis of the technology’s transformative effects regarding its association with the gig and sharing economy.
Understanding Uber; what is it and how did it develop?
When Travis Kalanick and Garret Camp couldn’t find a taxi in the middle of a snowstorm in Paris, a new idea was born that would effectively transform both society’s economic and transportation sectors, called Uber. (O’Connell, 2020)
Put simply, Uber is a technology that is most known for its ability to allow users to hail rides from their mobile phones. Founded in San Francisco in 2009, the company brands itself as a technological platform that “connects users: driver-partner to riders and delivery-partners to consumers.” (Uber, 2020) Through its web-based access the platform acts as an intermediary between drivers and riders that allows private cars to be rented by third parties, while providing platform for drivers to advertise their service. (Schneider, 2017) Uber became a technological service for both drivers and riders to interact under the banner of Uber and their ‘rules of the road’. (O’Connell, 2020; Uber, 2020)
The application is a service accessed through mobile technologies that determines the terms in which independent drivers are allocated customers and the prices that will be charged. Its basic level of service allows a private ride in a standard car with up to four passengers. Optional extras allow the use of luxury vehicles, minivans, and Uber pool. Through the app both drivers and customers can create personal profile that produces an identity inclusive of name, phone number and credit card/payment preferences that attaches them to ratings deemed by their use or service. Its use by drivers requires access to smartphone, a driver’s licence, car and further background checks that are determined under Ubers rules of the road.
Since its inception in 2009, Uber has accumulated a worth of US$70 billion that has established it as the largest service provider in the transportation industry. (Nina, 2018; Anwar, 2018) In the beginning UberCab was a service that allowed the rental of luxury cars through mobile application, which was priced 1.5 times higher than that of a taxi. Recognising, potential opportunity to become a price competitor with the taxi industry the company changed its name in 2011 to Uber and in 2012 launched UberX which allowed for the rental of non-luxury personal vehicles.
This wild ride has led it to a consumer base of 75 million global customers and three million drivers that operates across 83 countries worldwide. (O’Connell, 2020) The ride sharing business that started as a simple idea as an alternative to taxis named UberCab, has now grown into a global brand with services offering food delivery (uber eats), package delivery, couriers and freight transportation. (Anwar, 2018) In recent years, the company has been shifting into higher gears with its pioneering in the development of self-driving cars and Uber air/elevate.
The road to global phenomenon, however, has not been without its bumps. In 2010 the company received a cease-and-desist order from the San Francisco Municipal Transportation Agency, with issue arising from the use of cab in their title. (Blystone, 2019) This fierce resistance from the taxi industry and government regulators has become a common thread for the company. In 2014 taxi drivers across London, Berlin, Paris and Madrid staged large scale protests against the platform. (Blystone, 2019) The treatment and employee status of Ubers drivers has long been criticised by governments and advocacy groups across the globe, with notable court decisions occurring in New York, London and Australia. Moreover, the company has received backlash from consumers in relation to its automated algorithm that increases prices based on supply and demand in the market, such as the surge pricing controversy of New Years. (Blystone, 2019) Ubers increased criticism has been the result of its innovative business model that has led it to become a transformative force in the sharing economy. (John, 2018)
Video with Founder Tracis Kalanick explaining Ubers beginnings, uses and challenges.
The company’s worldwide success can be attributed to its revolutionary business model that has been founded in the what Nicholas John (2018) refers to as the ‘sharing economy.’ The rhetoric of the sharing economy promotes individuals to rent out their assists in return for profit. In capitalising off the sharing economy Uber has been able to establish a business model that utilises online platforms to facilitate a cheap and easy, streamlined service for drivers to rent out their pre-owned assets to passengers. This allows the company to operate as purely an intermediary between drivers and customers, significantly reducing operational costs as there is no physical employees or inventory. (Schneider, 2017)
Essentially, the company functions through the domain of an advanced computer program which has propelled its appeal. The web app increases its on demand availability allowing customers with an iPhone and connection to order an uber from anywhere at any time. The apps GPS allows matches drivers and riders close by which reduces passenger waiting time. What’s different to a taxi is that their pricing model allows customers to see an estimated cost at the beginning of the ride, which calculated on the distance, service level and demand period which is deducted from customers credit card stored on the app. The fare fee is initially transferred to Uber which then withholds a 20-25% of the fare charged for its service rendered to the driver in providing technology to connect with customers. (Nina, 2018) Moreover, the apps rating system provides accountability for both drivers and passengers to perform well increasing customer satisfaction and feedback loops that were lacking in existing transportation services such as taxis.
Video explaining the economics of Uber
Ubers internet ecology
Ubers global adoption has led it to dominate the industry and internet ecology in which it circulates within. This however hasn’t stopped the app from experiencing competition in the ride sharing industry. Other apps and similar services however have not succeeded permeating global markets to the extent that Uber has therefore competition differs country to country as seen in figure 1. In America the country’s biggest competitors offering similar ride share based application services are Lyft and Sidecar. (Dudley, Banister & Schwanen, 2017) A study conducted by Roy Morgan (2020) in Australia round that Ubers competition is rapidly increasing with rival apps such as Ola and Didi gaining significant ride shares.
To compete globally the application has had to deal with an array of government and non-government regulatory agencies both in established and emerging markets. (Anwar, 2018) These regulatory bodies have notably been back lash from the transportation and taxi industry in various countries, or union groups for fair work such as Transport for London. The quest to regulate the global tech giant is still under operation in many countries according to Dudley, Banister and Schwanen (2017).
The structure of Uber allows for Uber to serve as both as a service provider and a partner. This is due to the contractual relationship that Uber has with its drivers where they embody the suppliers of the service. Uber however also has had numerous partnerships over the years with major ones being, the service is also dictated by the use of technological infrastructure being the application which can be downloaded onto a mobile device. The users of Uber are the drivers looking to make money and the passengers looking for a ride.
The company is dictated by an ownership of stakeholders with the two largest holders notably being the company’s founders Travis Kalanick and Garret Camp owning 8.6% stake and 6% stake respectively. (Bloomenthal, 2020)The company has 105 investors with 20 leader investors, Softbank Vision Fund being the apps biggest investor. (Bloomenthal, 2020)
Transformative transportation: the app that’s driving change in society
As the face of the sharing economy and gig economy, Uber has transformed not only the transportation industry but wider political and social traditional infrastructures in relation to the workplace that have triggered an array of regulatory concerns across the globe.
Ubers unique business model has flourished within the bounds of the sharing economy as it feeds of its innovative technological infrastructure to provide a service in that connects providers and users, without incurring the expenses of goods. (Schneider, 2017) This is enabled through the use of a lucrative revenue sharing contract that defines the relationship with drivers as a partnership, allowing them to also avoid employment regulation and the costs that are attached to it. (Leighton, 2016; Schneider, 2017)
Ubers success in utilising the efficiency and immediacy of technology to exploit the rhetoric of the sharing economy has seen scholars such as Schneider (2017) afford the company its own neologism. Uberisation or Uberification refers to the ability of apps to provide on demand services for needs and preferences so that apps can “discover the service needed to fulfil the need in question or intermediates with a decentral supplier of the good that best matches the need.” (Schneider, 2017, p.458) Uber is therefore becoming a blueprint for convenience tech, in which the app has been successful in delivering value by reducing time and effort costs. This convenience is recognised when comparing to its new features that were lacking in the taxi industry such as decision, access and transaction convenience. (Schneider, 2017)
Ubers revolutionary business model has led it to become what Petroivic and Jaksic (2020) as a disruptive force on the transportation industry, specifically regarding taxis. Schneider (2017) refers to disruptive innovation as “process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up the market, eventually displacing established competitors.” (p.167) The taxi industry worldwide have criticised the unfair competition that rivals with Uber as it avoids regulation due to its claims that it not a taxi service but an information society service. (Bruhn, 2014) This disruptive energy can be made evident through the applications triggering of legislative concerns in various countries concerning its place, purpose and role in the transportation industry as a company grounded in information technology. (Petrovic & Jaksic, 2020)
This business models rapid success, however, has triggered regulatory concerns across the globe in relation to its association with the growth of the gig economy and what that means for employee rights. The gig economy is defined by Zwick (2017) as a term to describe the commonplace of gigs, temporary and flexible jobs in opposition to the traditional economy of full-time workers, with stable, long-term careers. Uber has been at the forefront of the gig economy and has raised questions about the nature and culture of the workplace and workers rights through various legal battles across the globe.
In the UK, Uber drivers have been given awarded more protections that allows their legal status to fall in between the definitions of employees and contractors. Most notably, in Australia a legal case that determined an Uber driver was not an employee of the company has set a new tone and sparked debate over what constitutes casual employment and how government should regulate it. The adoption of Ubers modern workplace has challenged existing legal institutions whose laws are grounded in traditional notions of work. (Leighton, 2016) Countries across the globe have therefore struggled to reconcile definition of gig workers and how to subsequently protect them encouraging an onset of new regulation to secure their rights. (Schneider, 2017)
The end of the road:
Uber has transformed the way we understand and use the internet as a marketplace to produce capital and increase convenience. This theme of Uberisation has I argue attached itself to the definitional aspects of what we expect and how we interact with the internet today. The theme of convenience and accessibility have been promoted through the use of Uber and have increased our expectations of internet use in both casual and business-related sectors of our lives.
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