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Uber-surveils-One and the Tesla tease - what we learned from Uber's latest financial results

Last week Uber held its annual general meeting and announced its first quarter results. Here are six things that got our attention.

1. Uber-surveils-One

Uber One, the subscription loyalty programme which Uber claims is fashioned after Amazon Prime, notched up 60% growth in the year. There are now 19 million subscribing members accounting for 32% of all bookings. This programme will be more heavily pushed in Europe in 2024 and the UK subscription costs £5.99 per month. The catch for workers is that Uber is promising Uber One subscribers, the most frequent and highest spending customers on the platform, they will be served by "top rated" drivers. The news comes now despite denials from Uber that it profiles drivers or manages them based on performance. There is clearly a big problem with some workers assigned higher volumes and higher paying work while others see their work dissipate, without any proper transparency on the criteria for such automated work allocation decision making.

Performance rating for performance management like this clearly indicates an employment relationship where workers need and are entitled to the statutory protections so stubbornly denied by Uber. The UK Supreme Court ruling against Uber had this to say about ratings:

.....the ratings are used by Uber purely as an internal tool for managing performance and as a basis for making termination decisions where customer feedback shows that drivers are not meeting the performance levels set by Uber. This is a classic form of subordination that is characteristic of employment relationships.

In the US, Uber was sued because of the inherent risk of discrimination against minorities in Uber's use of consumer ratings systems as a means for HR performance management. Indeed, our casework over the years has shown a long record of arbitrary dismissals, many of them entirely automated robo-firings, based on unfair and inaccurate customer feedback. In such cases, drivers are unable to benefit even from a long history of good ratings or even a plausible human review of their case. The embedding of such systems in the Uber One programme without the appropriate safeguards will make this problem much worse.

This is a matter that unions in the UK and Europe need to get on top of quickly. As a priority, Worker Info Exchange will be helping drivers demand access to their Uber worker performance profile and full information from Uber on how it has been assessed. Opacity breeds contempt, and every time we challenge a gig economy platform over automated decision making and profiling - whether for facial recognition system failure or for robo-firings - we find something quite rotten under the floor boards.

2. The Tesla tease

Uber CEO, Dara Khosrowshahi was asked by investors about the threat posed by Tesla's robotaxi which is scheduled for an unveiling of sorts this August. It was a testy exchange with Dara first complimenting Tesla as a "great product" before pouring cold water over the quality of innovation and pointing instead to the promise of the "heuristic approach" taken by firms like Britain's Wayve.

Uber concedes that autonomous vehicle rides will be lower priced, presumably by removing the driver, and potentially safer, all of which he says will drive wider market adoption. Dara also acknowledges that a new regulatory framework is needed and that the technology is not yet mature. He predicts a long period of hybrid operations with human assisted autonomous driving. From a worker rights perspective, perhaps the only fate that might be worse than job replacement is job augmentation, where human input is devalued, commoditized and put in direct competition with machine production. Unions need to urgently organise to confront this emerging threat to workers and especially those denied rights in the gig economy.

Uber optimistically sees its role as the leading platform where Tesla and other autonomous vehicle fleet providers can "plug in" to access demand. Uber thinks its special sauce is the provisioning of pricing and allocation algorithms, payments systems and market reach. This seems to be incredibly wishful thinking at best. To realise the Uber dream, Tesla would have to be content to accept their fate to become a commodity supplier of rubber and metal to Uber's on demand platform. We've been here before and this fear for auto manufacturers is what drove Daimler and BMW to form FreeNow and for GM to form Cruise. Khosrowshahi may yet regret his 2020 decision to end Uber's investment in its own AV vehicle. Tesla is not about to hand its keys to Uber anytime soon.

Investors will demand that Uber soon come up with better answers to the AV question than Dara was able to give last week. Yes, the technology and regulatory frame remains off in the middle distance, but investors will want to know now that Uber's long term profitable growth story is secure. A tipping point will come suddenly and Elon Musk may attempt to far more aggressively bulldoze his way through regulatory hurdles than even Khosrowshhai and Kalanick tried to do in the past. Workers and licensing authorities need to be ready for that moment when it comes. For now, make no mistake, Uber is seriously rattled by Tesla's recent announcement of the coming robo-taxi.

3. Dynamic taking

The commissions Uber takes from drivers broke 30% for the first time for the first quarter of 2024. This is a global average including markets where Uber is investing in incentives to build market share. The effective "take rate" taken from drivers is likely much higher than the overall average of 30% in mature markets like London, New York, Paris, Amsterdam and Madrid. The take rate raid has been realised by the introduction of dyanmic pay, pricing and work allocation systems over the past two years. The technology replaced a transparent commission system with one that is hyper variable and opaque. The use of this technology enables algorithmic wage discrimination with Uber taking a far greater share of the fare than was ever possible before.

In the judgment in our case against Uber, the Amsterdam Court of Appeal ruled that Uber must provide full transparency stating that dynamic pricing:

"taken as a whole, affects the drivers to a considerable extent. This system is applied to every passenger they carry. These are therefore successive decisions, each with financial consequences that determine the income they can earn.”

4. In app advertising - the gravy Uber gets to keep

In app advertising is now a $900 million business for Uber with 2.5% of passengers bored enough to watch in app ads. In London, Transport for London prohibits drivers from displaying any advertising on their vehicles or within the cabin, except for the blizard of new signs now demanded for display by the regulator. Meanwhile, Uber gets to display all sorts of advertising to generate extra income from the journey, extra income that drivers never get to share nor the regulator ever wants to control.

5. Growth slowing down, competition revving up

7.1 million Uber workers undertake 28 million rides and deliveries every day for Uber with more than 1 million workers in each of the markets of the USA, India and Brazil.

Uber is growing gross bookings by around 20% per annum but this quarter the company fell short of Wall Street expectations by about $200 million and the share price was instantly punished by a 9% drop. The bookings shortfall was explained in part by heavy competition from Didi in Latin America as well as the timing of Easter, Carnival and Ramadan this year. But the explanation doesn't quite hold water and could signal the start of a slow down in growth at Uber. If Uber misses again in quarter 2, there will be even greater pressure on driver pay as Uber tries to fill the growth gap by taking even more from drivers and couriers.

The earnings miss was an embarrassing debut for Uber's new Chief Financial Officer, Prashant Mahendar-Raja who replaced Nelson Chai from January this year. Chai, a protege of Uber non executive board member John Thain, departed apparently on good terms according to an announcement last summer. But the Uber proxy statement to shareholders released earlier this month reveals that Chai was actually fired. This could signal internal difficulties and discord at Uber. It could also possibly be a sign that Khosrowshahi might be approaching the end of the road at Uber himself after a seven year run. He was brought in to be the adult in the room and to steady the ship after Travis Kalanick's wild excesses. But Khosrowhahi, fresh after unlocking his $136 million options bonus, may not be the best person to lead Uber out of its mounting problems including rising worker unrest, slowing growth, a failed diversification strategy, the threat of autonomous vehicles and weak prospects for sustained profitability. Uber Eats remains stubbornly unprofitable leaving Uber looking like a one trick pony however hard it tries to diversify.

As for Didi, after sorting out their problems at home, international expansion is ramping up once more with UK operations expected to get underway soon with new licenses granted recently in Salford and Rotherham.

6. Technological absorption of rights

When asked about the EU Platform Work Directive, Khosrowshahi was intensely relaxed about its impact, predicting that it would not effect the "vast majority" of Uber workers in Europe.

However, and this is a lesson for European unions, he did get himself all worked up about new regulations to protect couriers in Seattle and New York. He claimed the new protections in Seattle, which he admits has resulted in much better pay for Uber's workers, has led to a 45% drop in orders, an increase in courier wait time by 50% and 35% of couriers leaving the platform. Meanwhile protections in New York has led to a wait list of 20,000 people waiting to join Uber and 25% of active couriers leaving the platform.

On the driver side, platform fleet utilisation rates are as low as 53% in New York and the inefficiency is likely the same or worse for couriers. Having a large group of under utilised workers who remain unpaid for waiting time, is great for Uber's customer response rate but it is a driver of poverty for workers and congestion for cities. This is clearly the problem city authorities in New York and Seattle intend to correct.

But, without even a hint of irony, a churlish Dara Khosrowshahi reassured investors on the earnings call:

Now again, we have been able to absorb the financial hit of all these different regulations in our platform......Our technology continues to drive a more effective marketplace that allows us to absorb these regulations.

It goes to show, just because the technology exists to do the right thing, it doesn't mean that the right thing gets done. Worker union power and regulatory intervention is necessary to make sure it happens.


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