Uber ethics


The concept of Uber doesn’t require a lot of explanation: Uber directly connects taxi drivers and consumers without using a taxi company. Via web browser or smartphone app, customers can order a taxi using automated software and see how other users have rated the driver.

Uber-valuation

The online ride-sharing app has quickly become a globally operating, successful business and has turned the taxi market upside down with its disruptive concept. On September 30, five years after its initial launch, Uber announced that its services are available in 45 countries, over 200 cities and translated in 22 languages (Uber, 2014). Its global sales and number of taxi rides doubles each six months and according to The Wall Street Journal (2014), the company is valuated at US$18.2 billion.

Legislation

However, despite its rapid growth, more recently the company has collided with local legislation and established taxi companies everywhere. Practically in every country, the introduction of Uber has led to commotion. The firm has been criticised for what some have described as aggressive business practices in cities around the world and therefore in many cities, local cab firms and drivers have staged protests against the service. Barely two months ago, German cities Berlin and Hamburg decided to ban Uber’s app, saying “it needed to protect passengers, Uber’s drivers, and the city’s licensed taxi drivers” (Kell and Smith, 2014).

Controversy

Recently, Uber co-founder Travis Kalanic told the BBC he is not bullying local taxi firms and drivers. “If [consumers] can get a reliable ride that’s half the price of a black cab, shouldn’t they have the choice?” (BBC, 2014)
I personally think it’s unfair competition for Uber and similar ‘private taxi agency’ services to compete with existing licensed taxi companies.

What do you think? Is the introduction of Uber fair to local taxi drivers with licenses?


References

-BBC (2014) Uber boss Travis Kalanick: I’m no bully, http://www.bbc.com/news/technology-29475059, retrieved October 5, 2014.

-Uber (2014) Uber for business now available in 45 countries, http://blog.uber.com/globalbusiness, retrieved October 5, 2014.

-Rusli, E. M. & Macmillan, D. (2014) Uber Gets an Uber-Valuation, http://online.wsj.com/articles/uber-gets-uber-valuation-of-18-2-billion-1402073876, retrieved October 6, 2014.

-Kell, J. & Smith, G. (2014) Berlin bans Uber app, citing passenger safety concerns, http://fortune.com/2014/08/14/uber-berlin-band/, retrieved October 6, 2014.

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6 responses to “Uber ethics”

  1. thegroupofdeath2014 says :

    Hi, thanks for the cool topic.

    I have to admit that I am very big fan of Uber due to some very negative experiences in the past with Taxi drivers charging completely rediculous fees for transport.

    I agree that Uber currently faces big challenges from taxi firms and lobbyists, however in my opinion this just proves the viability of Uber’s business model and value proposition. The common element of all revolutionary companies was the resistance it faced from established market players. And now Uber is fighting against (in some cities) monopolies, who do not want to lose their market.

    Lower prices, availability and especially seller certainty (drivers’ profiles) make Uber a stand-out choice in the transportation market and I sincerelly hope that aided by consumers’ lobbying power, the company will be able to overcome all obstacles and establish itself as a global market player.

  2. 373012om says :

    I disagree, the service is very useful for consumer but not fair to local taxi drivers who have had to invest time and money for their job. I believe this is why governments legislation is protecting traditional taxi companies. This is still necessary because without this protective legislation the taxi drivers risk losing their income. The prevention of job loss due to the disruptive taxi service outweighs the need to adjust legislation for Uber.

    Uber tries to position itself as a victim in the but the company has also been a subject of controversy in attacking its direct competitor, Lyft. Uber instructed its own employees to anonymously order rides from Lyft and canceling them at the last minute (The Verge, 2014).

    source:

    Newton. C, (2014). This is Uber’s playbook for sabotaging Lyft. from: http://www.theverge.com/2014/8/26/6067663/this-is-ubers-playbook-for-sabotaging-lyft

  3. robbertbrouwers says :

    Good point for discussion!

    This problem is not just relevant for Uber; other companies who take this new business model to market are facing similar challenges, two other relatively high profile cases concern:

    – AirBnB and similar challenges in the hospitality industry
    – Lyft, A Uber competitor has faced similar regulatory challenges as Uber

    It’s a situation where a new business model clashes with regulations and the companies that are currently influenced by those regulations.

    If this new business model creates a better value proposition than the ‘old’ one, why not consider changing the regulation? In some cases, regulations can be outdated and aren’t taking into consideration (technological) innovations. By protecting companies with certain licenses etc, we are encouraging them to keep things as they are. I’ not aware of any taxi company that implemented an app to hail and pay for taxis until Uber entered the industry, which is kind of ridiculous in retrospective.

    If the specific market can be opened up to more competition and by doing so a better customer service is created, why not do this?

    In my opinion it’s good that new companies use disruptive business models to challenge industries.

    References:
    http://nymag.com/news/features/airbnb-in-new-york-debate-2014-9/
    http://www.shareable.net/blog/the-sharing-economy-just-got-real

  4. jmpteuwen says :

    I agree with the comment before, Uber is a stand-out choice in the transportation market. Besides the bans in Berlin and Hamburg, I think it is important to look at the way other countries and cities are responding to the rise of taxi services like Uber.

    For example, in Nice, France, there have been large riots as Uber grew in popularity. The Uber drivers were threatened, and their car tires were slashed. These riots caused the French government to introduce a new law regarding taxi services like Uber (but also SnapCar and other services). They have to wait 15 minutes before picking up customers. This is done to protect the traditional taxi drivers, but I think this is a very bad development.

    This new legislation makes it fairly impossible to offer the Uber service, which normally would pick you up within 7 minutes in Nice (on average). Are they expected to let a customer stand out in the rain for the remainder of these 15 minutes. I hope Uber will survive this setback, and that the traditional firms will adapt their market strategies instead of trying to destroy the new firms.

  5. 418490ca says :

    Hi, everybody. I find this topic very interesting too.

    Firstly, I agree partly with the writer of this blog on the fact that if taxis are required to pay for licenses, the same should apply to Uber cars to make it a level playing field for all.

    However, I still believe with what the other commentators said. I think governments should not forget who they are serving. The customers should be able to decide what they want: if they value the higher priced services of an Uber limousine to be sure that they can have a good experience, then I don’t see why they should wait 15 minutes to do so. I feel it is more like an artificial barrier from the part of the government to protect taxi driver, who can be sometimes quite impolite and rude with dirty taxis.

    Indeed, innovators can often run into regulatory barriers despite the customers’ welcoming attitude as they clearly threaten the Status Quo. Examples include not only Uber, but also Tesla or Airbnb. Tesla was criticized by the government when it wanted to circumvent dealers by selling directly to its customers, as they feel that dealers will not educate themselves properly given the small number of Tesla sales they would generate initially. Also, Airbnb was criticized as it clearly acts as a competitor to especially Bred and Breakfast places, without the strict regulation that applies to BnBs.

    Julie Meyer is a chief executive of Adriane Capital, a VC focused on technology sector and he recently said the following in a Financial Times article:

    ‘Governments don’t produce innovation, entrepreneurs do. Entrepreneurs change the barriers of how things happen. Then the authorities have to determine whether they have gone a little bit too far or whether it is acceptable.’
    In the same article it is also written that the entrepreneurs of disruptive technologies often need to go on building their companies and deal with legal issues later as they arise.

    I agree with the last sentence, as if we think back in history, first cars had to be invented (think of the first Ford cars), and only then were regulations made about driving (traffic lights, traffic signs, rules for giving priority etc), no? I think the same is happening now with these new inventions.

    Source:

    http://www.ft.com/intl/cms/s/2/1b9823b0-ea5d-11e3-8dde-00144feabdc0.html#axzz3EscwUNvu

  6. 417856yw says :

    Uber has a low inventory, high transaction, and high margin business model. It allows people to order a private car on an online platform. Unlike traditional taxi, Uber divided the customers into 2 layers. Users who need higher quality, Uber provided with fancy cars and limos with specific color black, and for the cheaper tier, they use basic sedans, such as Toyota or Honda. With the Uber app, people could rent the car through not only their calls but also internet. Passengers could contact drivers directly, and make their specific order.

    However, Uber seems to have many controversial ethical issues. It received some legal challenges nowadays, in some countries, Uber was banned for lacking taxi drivers’ license. In other situation, Uber drivers were allegedly threw rider on the street, or bash a passenger’s head with a hammer. Moreover, as the head of Uber company naming a discount policy, drivers are being paid less for their wages, that is, 80% of each ride, and thus they are not protected by the domestic labour law.

    I agree with the above comments and the last paragraph of the article. The problem of outlaw is worldwide, and it happens to every start-up company. The regulations are needed in time to catch up the changing of the world. Transparency and consistency in rules would benefit Uber service, license are needed to ensure the safety for passengers, drivers, and the company as well.

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