Uber another silicon valley flop?
Is Uber scamming it’s investors and running a sweatshop?
Among the pantheon of corporations that have emerged out of Silicon Valley, Uber occupies a special place. The company is worth a hundred billion dollars. Hundreds of billions of dollars worth of trips and delivery orders have been booked using its app. It gets tens of billions of dollars in revenue each year. Uber is everywhere. And the narrative of Uber is also everywhere.
It says that Uber is “innovative,” that it can “disrupt” the taxi industry and make money doing it. And it says that it can offer “flexibility” and “opportunity” to its army of drivers. Everybody wins. There’s one problem: none of that is true. Let’s start with one basic fact. For a company so prominent, there’s some very strange: Uber has never— not once — turned a single profit. You might be confused. How can it be that such a large company, with such a popular service, has simply never made money? When you find out the answer, you discover something important. You discover that Uber is fundamental scam— a company that exists to scam its investors, its users, and, most importantly to scam its workers. Despite everything you might hear, Uber is not a technology company While the company may brag about its sophisticated algorithm, in reality Uber is just another taxi company. There is nothing fundamentally more efficient about Uber than there was with your local taxi service. The business is the same: there’s no real way to “innovate” someone driving someone or something from Point A to Point B. Using an app to match riders with drivers is so simple that local taxi companies do the same thing. In fact, Uber is less efficient than taxi companies. Most normal taxi companies don’t spend huge amounts on marketing, or lobbying, or corporate headquarters; they don’t pay their CEO 45 million dollars a year. Uber has higher costs than traditional taxi operators in every category except fuel. So why is Uber everywhere, while taxi companies go out of business? It all goes back to Uber’s master plan. First: with massive amounts of money from venture capitalists, Uber subsidized significantly cheaper rides than what taxi companies could offer, to attract customers away from them. Then, after years of undercutting competitors and driving them to bankruptcy — resulting in a wave of suicides by cab drivers — Uber established near-monopolies in local markets. Now, Uber is often the default way to get around if you don’t have a car. And once Uber has eradicated its competition, it can make itself profitable, at the expense of users and drivers — raising its fares to what taxis offered or higher, while pushing down drivers’ wages. The plan isn’t efficiency: it’s monopoly. And that’s not just me theorizing.A 73-page article in the Transportation Law Journal took a deep look at Uber’s business, and concluded one thing:
“Uber has NO ABILITY — now or in the foreseeable future — to earn sustainable profits in a competitive marketplace. Uber’s investors cannot earn returns on the money they have invested without achieving levels of market dominance that would allow them to exploit anti-competitive market power.”
So THAT is Uber’s grand plan. It is not increasing the productivity or efficiency of the industry that it’s in. It’s subsidizing its rides with venture capital cash until it can build a monopoly and do whatever it wants. So users who buy Uber’s narrative may be getting scammed. But no one is getting it worse than Uber’s workers. Uber relies on classifying drivers as “independent contractors.”
In the United States, that means an individual provides services to a company, but is independent of the company and its control. Uber says that because drivers can choose what work to accept and for how long, they’re fully independent. Now, most of Uber’s workers drive part-time. But they actually do relatively little driving. And 90 percent of them quit each year. The majority of Uber’s labor is done by a smaller group of workers, who drive full-time for the company. So who are these drivers? In cities like New York, the vast majority are immigrants, from places like India, Bangladesh, and Haiti. They desperately need cash to support their families and send remittances back home. These are people at the very margins of our society. And how does Uber treat them? Uber treats them like a pool of cheap labor, easy to exploit and then discard. Uber has always been clear about one thing. it does not care about its drivers.
At Uber’s greenlight centers, where drivers register with the company, they were not even allowed to enter the bathroom RESERVED for “employees.” In fact, when Uber was talking about how it would become profitable, it stated clearly that it wanted to get rid of its drivers and transition entirely to self-driving cars. But Uber’s technology was so bad that after burning billions of dollars, it had to give up. So for now, Uber is stuck with its drivers. And in order to appear like it’s coming closer to profitability, it’s been cutting their wages since 2015. Whenever Uber increases its cut from each trip or reduces the minimum rate for drivers, its margins improve by that much immediately. As a result, Uber drivers regularly earn less than minimum wage in the places in which they’re driving. After taking hidden costs like fuel into account, the average Uber driver earns a little over nine dollars an hour — about 50 percent less than what taxi drivers made before Uber. In fact, half of Uber drivers live at or below the federal poverty line. 20 percent of them have to use food stamps to survive. Unable to afford a home, some drivers even sleep in their cars. Drivers, with nothing to their name, get trapped in predatory car rental schemes promoted by Uber — they garnish your wages until you’ve paid it off with interest. One study from Georgetown found that a third of drivers reported falling into a “debt trap.” Some ended up earning less than five dollars an hour. And because its drivers are technically “independent contractors,” Uber can avoid pesky requirements like minimum wages, health insurance, or paid sick leave. Drivers can’t unionize to bargain for better conditions. Uber has ALL the power, and it makes sure it can stay that way.
When California tried to classify drivers as “employees,” Uber spent hundreds of millions of dollars on a campaign to overturn it with a ballot proposition written by Uber’s lawyers. And even though Uber talks about “flexibility,” that’s not what drivers actually experience. Drivers may not have physical bosses to order them around, but they’re ruled by something even worse — an algorithmic overseer that’s more intrusive than any flesh-and-blood boss could ever be. Uber’s only actual innovations are in surveilling and disciplining its workforce. They’re always watching: monitoring driving behavior, calculating fraud profiles, using invisible, secret functions to discipline drivers as well as customers. Fall below an arbitrary threshold for ratings? FIRED. Reject too many trips because you don’t want to lose any money? FIRED. Did a customer make a false report? FIRED. So that’s the “freedom” that Uber offers. It frees drivers to make below minimum wage, to sleep in their cars, to beg for five-star ratings and work themselves to the bone.
But at the end of the day, Uber, like other “gig” companies, IS an innovator. Not in technology, but in exploitation. It’s leading the war against labor in ways other companies never thought possible. It oversees a pool of atomized, ultra-exploited laborers, writes its own regulations, and has done it all without earning a single cent of profit. Imagine what sort of world they’ll need to start making one.
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