This is the kindler, gentler Uber?
A newly-passed California law that strengthens employee benefits will force Uber and Lyft to reevaluate its corporate practices — with deep effects on the get-a-ride-services.
By Brad Berens
This week, the California legislature passed an important bill that could result in the reclassification of Uber and Lyft drivers as employees instead of contractors. The change might entitle drivers to minimum wage, benefits, collective bargaining, and a host of other knife-to-the-neck threats to the short-term survival of the ride-hailing companies that are, in the long term, dead already.
In a since-updated breaking news story, New York Times reporter Kate Conger shrewdly noted the most alarming, if unsurprising, part of Uber’s response:
Tony West, Uber’s chief legal officer, said in a news conference that the ride-hailing company would not treat its drivers, who are independent contractors, as employees under the California bill. He said that drivers were not a core part of Uber’s business and could maintain their independent status when the measure goes into effect as state law on Jan. 1.
Uber’s business, Mr. West said, is not providing rides but “serving as a technology platform for several different types of digital marketplaces.” He added that the company was “no stranger to legal battles.”*
Let’s be clear: of course drivers are a core part of Uber’s business.
Here’s a simple test: could Uber exist without drivers? Answer: no.
The fact that bad boy, brotastic, founder and now-banished-former-CEO Travis Kalanick used to refer to Uber’s drivers as “supply” (as documented in Mike Isaac’s absorbing new book Super Pumped: the battle for Uber) also shows that drivers are the heart of Uber’s business—a heart increasingly stressed to the point of death by Uber’s exploitative practices.
While the current CEO doesn’t wear a black top hat and strap unsuspecting blondes to train tracks, that doesn’t mean that Uber the company has done anything to change its fundamental, exploitative playbook that sucks drivers into thinking they are entrepreneurs, slowly decreases how much money they can make over time, pushes costs onto them, and then uses its algorithms to jerk them around in an endless Skinner-box of rewards and punishments.
Uber has been falsely saying that it isn’t just a newfangled taxi company since its inception, using the claim that it is a tech company (named “Uber Technologies, Inc.”) as a characteristic distraction from the obvious reality.**
This is what I think of as Uber’s chronic “jazz hands” strategy, which is akin to the president’s strategy of using a preposterous claim about buying Greenland or a Sharpie-doctored weather map to distract people from what his administration is actually doing on a policy basis.
Uber’s version of jazz hands is to distract people (particularly investors) from its lack of business fundamentals by moving into more unprofitable businesses like food delivery and freight.
Uber’s second-biggest jazz hands distraction is its pseudo war with Lyft, which, as I’ve argued earlier, sets up a fake zero-sum game in which one of the two companies will win and the other will lose, ignoring all the other contenders for rider’s attention, affection, and money.
Of course, Uber’s biggest jazz hands distraction is Travis Kalanick, who has to function as the fascinating, mustache-twirling villain of the story in order to make successor-CEO Dara Khosrowshahi look like an angelic Dudley Do-Right by comparison.
By all accounts, Khosrowshahi is a good guy who has done good work detoxifying Uber’s corporate culture and taking the company public (before the world realized the grim truth about its business model).
However, while the current CEO doesn’t wear a black top hat and strap unsuspecting blondes to train tracks, that doesn’t mean that Uber the company has done anything to change its fundamental, exploitative playbook that sucks drivers into thinking they’re entrepreneurs, slowly decreases how much money they can make over time, pushes costs (fuel, maintenance, insurance) onto them, and then uses its algorithms to jerk them around in an endless Skinner-box of rewards and punishments.
Tony West’s claim that drivers are not a core part of Uber’s business is evidence that not enough has changed at Uber under the new regime.
I’m nearly done with Isaac’s Super-Pumped, and it’s a fantastic read, clearly the most enjoyable recent book written about Uber. However, the most important recent book written about Uber is undoubtedly Alex Rosenblat’s Uberland: How Algorithms Are Rewriting the Rules of Work, which unflinchingly exposes how Uber takes ruthless advantage of its drivers.
Plain and simple: Uber and Lyft are going to fight California’s new law (and similar legislation coming in New York), not because California is mistaken about the nature of the work that Uber drivers do but because those laws will increase Uber and Lyft’s costs by a tremendous amount.
The companies will have to pass those increased costs along to riders who have been enjoying highly-subsidized, on-demand transportation. Once Uber and Lyft rides cost as much as taxis, riders will re-think their dependence on the ride-hailing services.
Reality can hurt.
* The updated version of the story without this passage is here; an archived version of the breaking news version that does contain this passage is here.
** We Work has tried to ape this strategy with laughable results.
Brad Berens is the Center’s Chief Strategy Officer. He is also principal at Big Digital Idea Consulting.
See all columns from the Center.
September 13, 2019