Uber scrambles to address growing problems in void created by helpful regulators
by Mike Beggs
Clearly in damage control mode, in early July Uber Technologies introduced a “tipping” option to its app in 121 U.S. and Canadian cities, including such major markets as Los Angeles, San Francisco, New York, and Toronto.
This abrupt reversal of form was part of the “180 Days Of Change” program, Uber management’s multi-pronged effort to improve its driver experience and stem the company’s declining driver retention rate.
In an e-mail to all drivers, Uber management said tipping is a “way to say thanks” to them, while stressing to customers that this is, “optional, but always appreciated.” Passengers must download an updated version of the app, and will be asked if they want to include a tip when rating their driver at trip’s end Ð with choices for a $1, $2, or $5 gratuity.
Heretofore, Uber has refused to install a tipping option (unlike its competitors). But its brass finally relented last month, in the wake of a disastrous string of scandals Ð everything from allegations of a toxic, sexist corporate culture, to a law suit being filed against them for pirating away driverless car trade secrets from a rival company Ð culminating with the resignation of its abrasive CEO Travis Kalanick (the primary opponent of tipping).
This new policy produced mixed reactions out of the gate. While drivers voiced approval, some Millennials complained that the tipping button added expense and complexity to the cheap, convenient ride, which has been at the heart of Uber’s appeal since its beginnings.
To Mississauga plate owner Peter Pellier it seemed like a logical step for the embattled ridesharing giant.
“I think it’s a smart move. Why wouldn’t you build a tip into the app?” he asks.
“Don’t forget, they have to offset the 13 percent HST somehow. They’re not going to reduce the percentage they take from drivers.”
Now driving with Uber, longtime Toronto taxi driver Louis Seta suggests with these measures, “Uber is quickly catching up to reality.”
“In the taxi industry, tipping is a norm. Now they’re realizing there’s a demand for it, not only from the drivers but from the passengers,” he says. “Tipping is much better for the driver in the final cost/benefit analysis. There will be an incentive for them to continue to be better drivers.”
Toronto Taxi Alliance spokesman Sam Moini notes that, “any service industry does tipping.”
But he suggests a lot of these drivers, “are now realizing what the real expense of driving for Uber is”, factoring in such costs as depreciation on their private cars.
“They’re making $100 a day, but with a lot of expenses,” he relates. “They (may) buy a new car for $30,000, and put 100,000 kilometres on it -- so you depreciate it by $1,000 in its first year. I think that people are realizing it’s not all its cut out to be. It’s a tough business.”
Between tipping, and the 13 percent HST, Lucky 7 Taxi owner Lawrence Eisenberg wonders, “Why take Uber? They could end up being more expensive.”
In an opinion piece in The New York Times on July 17, Rebecca Smith, deputy director of the (Seattle-based) National Employment Law Project observed that installing a tipping option is, “a move that passes the responsibility for decent pay on to Uber riders, not Uber itself.”
With Uber’s plans for a driverless future, friction with drivers may be inevitable, but she suggested such small steps as allowing tipping are, “merely bandaging a much deeper problem of a culture that treats its drivers as disposable.”
Uber also recently rolled out a new “pay for wait” program, charging a fee if the driver is still waiting two minutes after arriving at a pickup location.
And in mid-July, Uber management announced it was giving a pay raise to all of its 16,000 employees worldwide, and guaranteeing pay equity across gender, and race.
Under Uber’s revamped Board of Directors, the heavy internal storms have seemingly subsided for the moment, within its Silicon Valley head office. However, the company continues to attract flak, with turmoil and legal challenges from across its global network.
On July 10 alone, headlines rang out about an Uber driver arrested for sexually assaulting a woman in New Delhi, a man assaulted and stabbed after getting into a private car he thought was an Uber in Bethesda, Maryland , and an Uber passenger being killed in an accident and his Uber driver being arrested in Singapore.
Perhaps even more glaring was the July 26 news that the company had fired an Uber X driver for receiving fellatio from a woman in the front seat of his car. (He was filmed by an “appalled” customer in the back seat.
Then, there was the USA Today article proclaiming that, “Some Uber Drivers Work Dangerously Long Shifts.” They reported that Uber drivers will work as much as 16 hours in a day, because of low pay or incentives, “and as a result the potential danger for passengers and drivers continues to grow.” One driver told the paper she stayed awake with the help of numerous energy drinks, but towards the end of her 16-hour shift she, “started making wrong turns”.
And from London, England comes the news of an activist tax lawyer’s crowd-funded VAT case, which, if successful, could force Uber to pay hundreds of millions of pounds in backdated VAT to the U.K. tax authorities.
Meanwhile, in Brooklyn, New York, Uber faces yet another law suit, for failing to provide sufficient wheelchair accessible service. The suit was laid by the Brooklyn Centre For Independence for the Disabled, along with other disability rights groups, alleging that Uber engages in, “pervasive and ongoing discrimination,” with only approximately 200 of its 58,000-plus vehicles offering wheelchair accessibility. They want Uber to install a policy ensuring people with disabilities have “full and equal access” to its vehicles.
What’s more, recent news reports indicate that Uber’s primary ridesharing rival, Lyft, continues to build its market share in leaps and bounds and has just started its own self-driving car division.
Given Uber’s checkered track record, when it comes to respecting regulations and employees, Moini states, “Based on what I’ve heard in the news, I feel their business is not a long-term business model.
“Their culture is flawed, within the executive, and driver positions -- because the (upper management) has set the precedent,” he alleges. “I feel they have to lead by example. Always, it’s the leaders of the organization who set the precedent.
“Any time somebody is out breaking the law, they’re not setting much of an example for (their employees), and that has been Uber’s standard business practice,” he continues. “Definitely, it’s going to be interesting to see how everything develops. Time will tell.”
Veteran Toronto cabby Gary Walsh predicts, “Uber is going to implode.”
“First of all, there’s too many drivers,” he says. And he suggests with the mounting number of sexual assault charges, Uber X drivers will sooner than later be mandated to install in-car security cameras, at an additional expense of upwards of $1,500. Similarly, given all of the question marks surrounding ridesharing insurance, he feels Uber X drivers should be forced to carry “full 360” commercial insurance (for which he pays $4,100 per year), “so if something happens, that covers everything.”
“If you get a guy driving for Uber part-time bringing in $300 a week, if all of a sudden he has to pay for the camera and commercial insurance (he might think twice about doing it),” he comments. “I also think the Uber drivers should be forced to produce a letter indicating they’ve informed their private insurer of their
Long-time independent Aldo Marchese suggests Uber could fold up, given its heavy losses over the past year, and departure of 25 of its top executives.
“You can’t be in the service industry like that, and be so rude and annoying to people,” he alleges. “Here we (taxi drivers) are trying to give the best possible service, but they can do whatever they want. They have the money.”
Miah , a Mississauga-based tech entrepreneur observes that, “Uber, as a company, could be in trouble, because of the Human Resources issues going on (allegations of sexual harassment, etc.), and they clearly have to do a better job of screening their employees.”
But he doubts it will crumble.
“Probably not. They have a huge market share now, and they’re valued at $70 billion,” he says. “It’s definitely a proven market. There’s clearly going to be customers for Uber.”
He thinks there must be ways for the traditional taxi industry to push back, and “implement technology, so that the industry isn’t going to suffer forever.”
For all of Uber’s bad press and legal hassles, Eisenberg feels Uber isn’t going anywhere.
“The City hasn’t thrown them out yet,” he muses. “It’s all money. And, Joe Public uses them. You’re dealing with a $70-billion dollar company, it will keep going. Money talks. The City still supports Uber. Isn’t that interesting? In three to five years, the taxi industry isn’t going to be worth anything.”
Hamilton owner/operator Hans Wienhold agrees, “I don’t think it’s going to make any difference.
“They’re already here. Hamilton has got the bylaw. It’s over,” he says. “And if they fall, somebody else will come in. I’m surprised Lyft is not operating in Canada yet. Lyft was smart, letting Uber do all the lobbying.”
Twenty-two years on the road, Toronto taxi driver Jaswinder Singh relates that while licensed cabbies are barely scraping by, “(Uber), they will survive. But it’s no good for their drivers, no good for us. They have unlimited drivers. The City doesn’t care. They are the Uber Corporation. They don’t care about us.”
Pellier suggests the politicians in cities like Toronto, and Mississauga haven’t even give a second thought to welcoming in this troubled Titan, and that there’s no chance of Uber disappearing from the map.
“Never happen now, not with the money rolling in to the City coffers,” he comments. “Uber is here to stay, notwithstanding the potential decision in the European Union, which requires Uber to act as a taxi industry. (But), they’re so entrenched, they will find a way to (get around that).
“Money changes everything, even when the behavior goes around the rules. They can afford the fanciest lawyers. How can you destroy this behemoth? They got rid of Kalanick, the guy who was generating the bad press.”
Wienhold cites the “total unfairness of this unequal application of the rules of the law, between licensed cabbies and Uber X drivers. But he says, in today’s world most people don’t understand, or don’t care.
“Give the public more choices. But, that’s not the only thing. What about insurance and the legal implications?” he asks.
“I see the quality of drivers in my city, now we are getting new drivers. They’re worse than ever. What do you expect when guys aren’t making any money. It’s more dangerous for the riding pubic.”
To this, Pellier wonders, “Do people really care about safety anymore? People only seem to care about the bottom line. And if a young women gets raped along the way, well that’s just the cost of doing business in the gig economy.”
“This is just one of those happenings you get. What do you expect if you don’t regulate the entry standards (and have unlimited entry for Uber)?
“That’s the way the world is going,” he adds. “It’s not all bad -- the new technology. But the way it is being treated in the transportation industry, it’s a pretty dark picture.”
And what’s more, if the Toronto and Mississauga governments’ forward march toward wholesale deregulation proves as disastrous as in other cities around the world, he suggests reregulation, as done in Dublin, will be no small undertaking.
“That (Dublin) was before Uber,” he adds. “There was no Uber to complicate matters.”