Uber Comes Under Fire Abroad

Vlad Savov sums up this week’s bad news for the ride-share company:

In Madrid, a judge has ruled that Uber should cease all activities in Spain because its drivers are unregistered and thus act as unfair competition to existing taxi services. … Authorities in Thailand have reached a similar conclusion, deeming Uber’s operation of unlicensed and uninsured taxi services to be unlawful, and have also asked the company to cease business — at least until it starts using properly accredited drivers rather than private cars.

India has already instituted a ban on Uber in Delhi following the rape of a female passenger, but now the country is broadening its prohibition and advising all its state governments to enforce it. It specifically bans the use of web-based taxi-hailing apps, meaning the ban will have an impact on others beyond Uber, but the focus on the California company is intensifying with the Delhi Police “also exploring the issue of possible legal liability of the taxi service Uber in the crime committed,” according to Home Minister Rajnath Singh.

To Jason Koebler, the incident in New Delhi demonstrates that Uber doesn’t care about riders’ safety:

Uber’s entry into in India show that the corporation’s sensibilities and values—that is, to crush existing taxi services and its tech savvy competitors like Lyft—haven’t changed a bit, even if some high-profile cases (like the​ time it called a several-hour abduction of a woman an “inefficient route”) in the US have forced the company to take a modicum of responsibility for its drivers. Now, we get at least a basic background check and nonsense like the “Safe Rides Fee” (which only exists in Canada and the​ US, according to the company).

But in developing countries, Uber is making the same mistakes with rider safety that it made in the United States. It’s treating these countries like the Wild West until it’s forced to change: “If [Uber] can bully its way in the US, and not care about law and regulations there, then it has absolutely nothing to worry about in India,” wrote o​ne internet commenter who claimed to have experience with the company there. “The law enforcement is weak, to say the least.”

But Danny Vinik blames the Indian authorities, not Uber:

Uber offers a new transportation option that offers users at least some ability to hold their drivers accountable for their actions. That doesn’t mean it’s a cure-all. In many cases, Uber’s ability to ensure the safety of its user will rely on the infrastructure already in place. Ultimately, improving that infrastructure is up to the local communities and officials, not Uber. That doesn’t mean Uber is blameless, but their cars offer one of the safest traveling experiences in India. At least the company has a background check system to speak of, and users have the ability to rate their drivers. With other transportation optionsrickshaws or local taxis, for instancethat isn’t necessarily the case. Uber’s not perfect, but it’s an improvement. This brutal incident doesn’t change that.

And as Amanda Taub points out, Indian cities are often unsafe for women to get around in, whatever mode of transportation they choose:

I saw this effect firsthand during trips to India in the past year. Everyone had different advice for me about how to stay safe, which meant that in the aggregate I was warned against using every possible form of transportation. (Only use radio taxis, they’re safer, never use local taxis. Don’t use radio taxis, you don’t know who they’ll send, better to rely on these local taxi drivers, we know them. Don’t take autos during the nighttime. Don’t take autos during the daytime. Come with us in the auto, it’s safer than going on your own. Don’t walk, take a bicycle rickshaw from the train station. Don’t take bicycle rickshaws. Don’t take the train.)

Given the choice between taking all of that advice and never leaving my apartment, versus selectively ignoring it and getting on with my day, I chose the latter. But finding safe and reliable transportation where and when I needed it was still always a challenge. That challenge is of course far more significant for Indian women, who have to face it every day, usually without the resources that I had at my disposal.

That was the problem that Uber needed to solve. But the facts surrounding this alleged assault suggest that they have failed to do so.

Mallika Dutt expects the Uber ban to make that problem worse, not better:

The quick decision to ban Uber is important in that it sends a message to all companies operating in this space that they need to follow regulations with seriousness. However, it is already unsafe for women to get around in Delhi. The metro has separate compartments for women—but what do they do when they step off the train? That’s partly why Uber and other private cab companies are in demand in the first place. Decreasing access to multiple modes of alternative transportation for women is a short-term and limited solution. Rather than further limiting the options available to women, how about increasing women’s safety not only by enforcing regulations and providing safer modes of operation, but by also increasing the number of men who hold themselves and others accountable for their behavior and actions?

The way Leonid Bershidsky sees it, the incident “highlights one of the web-based car service’s biggest problems: In some places, there is little to distinguish it from the anarchic system it seeks to replace”:

Those who live in the U.S. and other rich countries find it hard to understand the near-irrelevance of Uber’s ride-sharing model in Eastern Europe, Asia and Latin America. Many countries in these regions have time-honored unregulated gypsy cab traditions. In Argentina and Uruguay, people call or text for a trucho. In Russian cities, if you raise your arm by the roadside, a car — almost never a licensed taxi — typically pulls up within minutes, unless it’s the dead of night.

His bottom line:

In emerging economies with shaky taxi regulation, Uber can’t be disruptive if it is as lax as the incumbents. Its offering can only be of value if it tries to be more like a traditional Western taxi service, obeying strict rules and convincingly projecting an image of safety and reliability. That is something it isn’t equipped to do now.

Uber Creepy

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I’ve long been a fan of Uber. For someone who doesn’t know how to drive, it’s been a godsend. The cab industry deserves all the competition it can get. It empowers individual entrepreneurs and uses technology in ways that improve everyone’s lives. But it sure does appear that the company’s management is more than a little douchey. My suspicions began when, after I first approved a surge-pricing fare increase, suddenly every subsequent car request came with such a surcharge – even on a quiet Sunday morning. Last night, a driver canceled a trip two minutes after informing us that he was “arriving now”. I’ve had to get out of two Ubers in the past year because the driver was an asshole. And, of course, the rumors and stories of its unethical and puerile hounding of its competitors are legion.

And now its senior vice president, Emil Michael, was dumb enough to get all frank and intimate with Ben Smith at the Waverly Inn last Friday suggesting that the company hire opposition researchers to dig up dirt on journalists who criticize its business practices, specifically citing legendary PandoDaily journalist, Sarah Lacy, who had accused the company of “sexism and misogyny”:

At the dinner, Michael expressed outrage at Lacy’s column and said that women are far more likely to get assaulted by taxi drivers than Uber drivers. He said that he thought Lacy should be held “personally responsible” for any woman who followed her lead in deleting Uber and was then sexually assaulted. Then he returned to the opposition research plan. Uber’s dirt-diggers, Michael said, could expose Lacy. They could, in particular, prove a particular and very specific claim about her personal life.

Uber wouldn’t be the first tech company to investigate journalists who report on it, but the incident didn’t do much for Uber’s public image as a hyper-aggressive firm with loose ethics. Uber CEO Travis Kalanick took to Twitter soon after the story broke to apologize to Lacy, denounce Michael’s “lack of humanity”, and stress that the company has no plans to doxx journos it doesn’t like. Michael himself also apologized. These mea culpas – in fourteen separate tweets – don’t quite cut it for Alison Griswold, though:

Kalanick thinks Michael’s comments were “terrible.” He says those comments display a “lack of leadership, a lack of humanity, and a departure from our values and ideals.” He says Uber should be focused on building a positive narrative to “inspire” riders and drivers, to show the “positive principles that are the core of Uber’s culture.” He promises to do “everything in my power” to earn trust from Uber’s community. So as many Twitter users have already pointed out: Doesn’t that start with firing Michael?

Lacy herself is furious:

Uber’s dangerous escalation of behavior has just had its whistleblower moment, and tellingly, the whistleblower wasn’t a staffer with a conscience, it was an executive boasting about the proposed plan. It’s gone so far, that there are those in the company who don’t even realize this is something you try to cover up. It’s like a five-year-old pretending to be Frank Underwood. Only one with billions of dollars of assets at his disposal.

And lest you think this was just a rogue actor and not part of the company’s game plan, let me remind you Kalanick telegraphed exactly this sort of thing when he sat on stage at the Code Conference last spring and said he was hiring political operatives whose job would be to “throw mud.” I naively thought he just meant Taxi companies. Let me also remind you: This is a company you trust with your personal safety every single time you use it. Let me also remind you: The executive in question has not been fired.

Josh Marshall is mystified at how Uber’s executives can be so tone-deaf:

Separate from the details of this incident, it’s been quite a while since I’ve seen what is by any measure an amazingly successful startup manage to generate this much negative publicity based fairly narrowly on the behavior of its top executives. … But what is so odd is that Uber, at the end of the day, is in a business where the basic project is about reliability and safety. And yet the guys running the company seem kind of reckless and even a bit nuts. Unlike the men and women you’d hope would be driving your Uber ride (and, in my experience, they often are those people), the guys running Uber seem like the result of some genetic experiment marrying up the 17th century Caribbean pirate with the 21st century North American Bro.

To Alexander Howard, the incident raises serious privacy concerns, given that Uber collects enough data about users to infer, say, where they slept last night, or with whom:

With great data comes great power, and therefore responsibility. That means culture and ethics matter. The reason Michael was angry at Sarah Lacy appears to be because of her excoriating post about Uber’s culture.

Now, imagine if powerful members of Congress decide that they don’t like Uber’s labor practices, or surge pricing, or its approach to flaunting regulatory strictures, or the way it lobbies city governments not to be subject to reporting on compliance with accessibility laws. What then? Will the same executives who have shown a limited “God View” at launch parties choose not to use more powerful internal analytics to track who is going where and when? What policies and code would stop them from looking at the profiles of Senators and Representatives and drawing conclusions about where and when they go? Or for that matter, my profile, or yours?

I can’t imagine Uber regaining minimal trust without firing Michael. Tim Lee is not far off the same page:

There’s no evidence that Uber has ever misused its data in this way, and Uber says it has strict policies designed to safeguard customer privacy. But policies are only as trustworthy as the people enforcing them. When an Uber executive openly muses about intimidating reporters with sensitive personal information, that’s a sign that he might not be sufficiently committed to ethical behavior to be a senior executive at a powerful company like Uber. And the fact that Kalanick sat silently through Michael’s comments, and then chose not to fire him when the comments became public, suggests he might not take ethical considerations seriously enough, either.

It’s also worth talking about whether Uber’s customers should have legally enforceable rights protecting the privacy of their travel data.

In response to these concerns, Uber published a post on its company blog Tuesday night clarifying that it has “a strict policy prohibiting all employees at every level from accessing a rider or driver’s data”, with exceptions for “a limited set of legitimate business purposes” such as facilitating payments or detecting fraud. Meanwhile, Katie Benner reminds the Uberites that they won’t be the only game in town forever:

Remember, Uber is special because it was the right company at the right time. It’s the most elegant expression of how real life, mobile devices and payments are coming together to make our phones a remote control for the way we live.

Yet Uber’s underlying software is replicable. Uber refuses to make its drivers actual employees, and those drivers can always go to a competitor that offers a better deal. Consumers aren’t locked in either. So if a mass group of consumers (not just those that obsess over industry blogs like TechCrunch and Valleywag) now see Uber as a company that doesn’t respect their safety, their data or their drivers, they can drop Uber from their trusted group of apps. Other options are available.

And Neil Irwin declares that it’s time for the company to grow up:

The idea of a showing up to a meeting with a JPMorgan executive and hearing, “I notice you were late on your mortgage payment last month,” is just unfathomable, so great are the protections in the financial industry between access to consumer data and the executives and public relations people who tend to deal with reporters. The same could be said for any number of other industries where big companies have access to private data. Hotel chains? Retailers? This is just not the way things work.

And the reality for Uber is that, much as it may still see itself as a start-up, its scale and ambitions mean that it is rapidly becoming an important company, operating in 48 countries with thousands of drivers. … It’s great to have employees exhibit “fierceness” and “super-pumpedness,” two qualities on which Uber reportedly evaluates its workers. But the bigger you get, the more you also need qualities like discipline and wisdom.

Uber: Great For Riders, Not Drivers

Justin Wolfers calls attention to a survey of leading economists, all of whom agree that ride-share services are a boon to consumers:

When asked whether “letting car services such as Uber or Lyft compete with taxi firms on equal footing regarding genuine safety and insurance requirements, but without restrictions on prices or routes, raises consumer welfare,” the responses varied only in the intensity with which they agreed. Of the 40 economists who responded, 60 percent “strongly agree,” 40 percent “agree,” and none chose “uncertain,” “disagree” and “strongly disagree.” On this issue at least, it’s time to retire the caricature of the two-handed economist.

But as Dylan Matthews notes, not all of them are gung-ho:

Chicago’s Michael Greenstone noted that “part of the gain in consumer welfare … comes from undermining property rights of taxi medallion owners.”

Chicago’s Richard Thaler argued that Uber “needs to be careful about surge pricing in emergencies” as “people care about fairness as much as efficiency.” Larry Samuelson at Yale wrote that Uber and Lyft “will not be a Pareto improvement for consumers” — that is, they will not benefit or leave the same all consumers; some will be left worse off. Samuelson’s reply didn’t get into why he thinks this will be the case.

It’s also worth remembering that the phrasing of the question elides the issue of whether Uber and Lyft really are on “equal footing regarding genuine safety and insurance requirements” with taxi companies. Taxi firms would argue that car-sharing services are, in practice, subject to laxer requirements in those areas.

Katie Benner also observes that the sharing economy has a big downside in terms of wages and labor protections:

Startups that connect service workers and customers have raised lots of venture capital based on the idea that low prices will democratize and popularize services that were once reserved for the rich. The viability of these enterprises is tied to scale. Once they are popular and ubiquitous enough, the argument goes, they’ll transform massive swaths of the service economy including transportation, retail and the workforce itself.

To become ubiquitous, these companies need lots and lots of cheap contract laborers to serve customers who want them to be available at the push of a smartphone button. But there’s a big vulnerability in all of these business models: They wouldn’t work if they had to offer full-time jobs with substantial benefits, and the reliance on contract workers to sustain this burgeoning market has become controversial. Kevin Roose recently noted in New York magazine that an emerging “1099 economy” explains how it’s “possible for a cash-flush tech start-up to have homeless workers.”

Avi Asher-Schapiro explores this problem in more depth:

From the very beginning, Uber attracted drivers with a bait-and-switch. Take the company’s launch in LA: In May 2013, Uber charged customers a fare of $2.75 per mile (with an additional 60¢ per minute under eleven mph). Drivers got to keep 80 percent of the fare. Working full time, drivers could make a living wage: between 15 and $20 an hour.

Drivers rushed to sign up, and thousands leased and bought cars just to work for Uber — especially immigrants and low-income people desperate for a well-paying job in a terrible economy. But over the last year, the company has faced stiff competition from its arch-rival, Lyft. To raise demand and push Lyft out of the LA market, Uber has cut UberX fares nearly in half: to $1.10 per mile, plus 21¢ a minute.

Uber drivers have no say in the pricing, yet they must carry their own insurance and foot the bill for gas and repairs — a cost of 56¢ per mile, according to IRS estimates. With Uber’s new pricing model, drivers are forced to work under razor-thin margins.