tag:theconversation.com,2011:/uk/topics/taxi-2686/articlesTaxi – The Conversation2022-08-01T13:54:01Ztag:theconversation.com,2011:article/1861472022-08-01T13:54:01Z2022-08-01T13:54:01ZRide-hailing in Lagos: algorithmic impacts and driver resistance<figure><img src="https://images.theconversation.com/files/474861/original/file-20220719-14-y0eref.jpg?ixlib=rb-1.1.0&rect=0%2C25%2C4249%2C2796&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A driver checking the Uber App.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/by-cyril-belaud-a-non-licensed-private-cab-driver-working-news-photo/508330288?adppopup=true">Simon Maina/AFP via Getty Images</a></span></figcaption></figure><p>In July 2014, the ride-hailing app Uber emerged in Lagos, offering the public improved mobility through technology. Uber, at the time, was valued at <a href="https://www.bizjournals.com/sanfrancisco/blog/techflash/2014/08/uber-doubles-reach-200-cities.html">US$18 billion</a> and had launched in 205 cities. Its competitor, Bolt, arrived in Nigeria in 2016. </p>
<p>These apps enable passengers to request a taxi service immediately. They can see information like the fare range, driver ratings, trip distance and driver’s arrival time. The driver sees the passenger’s location, fare range and passenger rating. The driver gets a short time in which to accept or reject a trip request.</p>
<p>Lagos was an obvious market for a transport solution. The city is Nigeria’s financial, economic and digital hub, with over <a href="https://www.statista.com/statistics/1218259/largest-cities-in-africa/">15.4 million</a> people and a public transport system under strain. From the rider’s point of view, Uber and Bolt offered the benefit of improved vehicles, cheaper fares, efficiency, traceability and safety.</p>
<p>The benefit for potential drivers was employment.</p>
<p>When Uber came to Nigeria, the unemployment rate was around <a href="https://databank.worldbank.org/source/world-development-indicators">4.6%</a>. By the time Bolt arrived in 2016, it had increased to 9.1%. Youth unemployment <a href="https://databank.worldbank.org/source/world-development-indicators">increased</a> from 8.1% to 12.4% in the same period, and there was a recession. It was easy for these platforms to tempt potential drivers and employees with popular phrases like “be your own boss”. These platforms advertised that drivers made between about US$286 and US$477 a week. The minimum wage was 18,000 Naira (US$43.34) a month at the time and even white-collar workers were <a href="https://www.vanguardngr.com/2015/10/nigerian-teacher-a-poorly-paid-professional-expected-to-deliver-gold/">poorly paid</a> and sometimes had to <a href="https://qz.com/africa/663626/nigeria-has-a-culture-of-not-paying-workers-and-its-not-about-to-change-anytime-soon/">wait</a> a long time to be paid. </p>
<p>In 2017, Uber claimed to have 276,000 riders and <a href="https://qz.com/africa/1090738/uber-is-marking-four-years-in-africa/">7,000</a> drivers in Nigeria. </p>
<p>Uber and Bolt seemed to perfect the platform idea. The systems created digital identities for drivers and managed them through algorithms. This was supposed to create transparency, accountability, autonomy, flexibility, safety and security. But it also created challenges for drivers.</p>
<p>I <a href="https://www.sciencegate.app/document/10.1215/00382876-9443378">researched</a> this for my PhD thesis, exploring the impact of algorithmic management on platform drivers in Lagos and how they resisted these hidden forms of control. </p>
<p>For the advantages of ride-hailing platforms to outweigh the challenges, algorithms must reflect the realities of drivers and nuances of the city where they are used. Traceability and safety on platforms must be improved, too, especially as the business model is adopted by more startups across the transport, delivery and domestic work industries. </p>
<h2>Impacts of algorithmic management in Lagos</h2>
<p>The design of the Uber and Bolt platforms demands top-notch service from drivers. This is done through performance evaluations (such as ratings, and acceptance and cancellation rates); transparency of payment (dashboard display of earnings); incentives (promotional trips); and sanctions (disciplining bad or unsafe behaviours by blocking or deactivating drivers). </p>
<p>To understand how this worked in practice in Lagos, I interviewed 25 drivers over six months, took 40 platform trips and carried out three focused group discussions with both platform drivers and traditional taxi drivers. I also used online worker groups on Facebook and interviewed passengers, policy representatives and venture capitalists. In total, about 70 people were directly involved in this study. </p>
<p>In this article, I summarise some of the challenges and strategies of resistance that my research revealed. </p>
<p>The first challenge the platforms present is that drivers can be <a href="https://dailypost.ng/2021/09/09/police-arrest-suspects-for-murder-of-uber-driver-in-lagos/">exposed to danger</a>. A ride-hailing driver has to register with a platform by providing personal information such as a valid driver’s licence, certifications such as proof of the vehicle passing inspection, address and guarantors to validate worker details. Passengers provide less personal information: contact numbers, bank card details (optional), email addresses and addresses which are not verified. Drivers are <a href="https://www.icirnigeria.org/uber-bolt-drivers-protest-killings-by-passengers/">vulnerable</a> to passengers. One driver said: </p>
<blockquote>
<p>A good number of drivers have been killed by riders because platforms do not profile them well. They do not often input their correct information in the app; they are collecting cars and killing people. </p>
</blockquote>
<p>Even if passengers are blocked from the app following drivers’ complaints, they can re-enter the platform ecosystem with different accounts. In contrast, drivers can be temporarily or permanently deactivated if a passenger complains – even falsely. Drivers are calling for better scrutiny of passengers because they do not feel safe on platforms.</p>
<figure class="align-right ">
<img alt="Cars in a traffic jam." src="https://images.theconversation.com/files/474194/original/file-20220714-32290-oveflf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/474194/original/file-20220714-32290-oveflf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=774&fit=crop&dpr=1 600w, https://images.theconversation.com/files/474194/original/file-20220714-32290-oveflf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=774&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/474194/original/file-20220714-32290-oveflf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=774&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/474194/original/file-20220714-32290-oveflf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=973&fit=crop&dpr=1 754w, https://images.theconversation.com/files/474194/original/file-20220714-32290-oveflf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=973&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/474194/original/file-20220714-32290-oveflf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=973&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Drivers complain they are sometimes misled into traffic jams.</span>
<span class="attribution"><span class="source">Daniel Arubayi</span></span>
</figcaption>
</figure>
<p>The second challenge is the inaccuracy of embedded digital maps. In a city like Lagos, a poorly built environment without a proper address system, the app can mislead drivers to traffic jams, bad roads or areas undergoing infrastructural construction. This can delay pick-up or arrival times, lead to conflict with passengers, affect the fare, increase cancellation rates, and reduce ratings. </p>
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Read more:
<a href="https://theconversation.com/lagoss-chequered-history-how-it-came-to-be-the-megacity-it-is-today-124306">Lagos's chequered history: how it came to be the megacity it is today</a>
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<p>Passengers complicate this issue by switching pickup locations or providing false locations. This affects drivers’ arrival times and hence their performance record. The algorithms don’t properly account for these realities of driving in Lagos. </p>
<h2>Escaping the app</h2>
<p>Drivers have found ways to resist the algorithms to make more income. For instance, drivers ask riders to cancel a trip so they (drivers) aren’t penalised by cancelling it themselves. They earn a cancellation fee and then take the passengers on the trip anyway – offline. </p>
<p>Drivers persuade passengers to do this by raising the possibility of traffic jams, dangerous or very distant locations and bad roads. They then suggest that the rider cancel the trip and go offline on a better route at a lower fare. </p>
<p>Sometimes, passengers initiate offline trips, especially if they go to multiple destinations or travel out of the city. It suits the drivers because they are not entirely subject to the algorithm in terms of payment, ratings and directions from embedded maps. </p>
<p>Social media and communication networks such as Facebook, WhatsApp and Telegram are central to drivers’ resistance strategies. These online environments serve as daily commentary on the job and a source of tricks for how to resist algorithms. Drivers can comment on whether a proposed offline fare is reasonable, for example, or share details of a passenger for safety. </p>
<p>One informant told me a story about a female passenger who refused to pay a driver:</p>
<blockquote>
<p>When this was posted in the WhatsApp group, about 27 drivers visited the lady, seized her iPhone, and collected the fare, including money for damages.</p>
</blockquote>
<h2>Build in local realities</h2>
<p>Platforms such as Uber and Bolt possess the power to fully digitise the <a href="https://theconversation.com/nigerias-okada-motorcycles-have-a-bad-image-but-banning-them-solves-nothing-154765">transport industry</a> in Lagos with their technology. </p>
<p>But platform algorithms in isolation cannot solve the challenges drivers experience, mainly when contexts are so different from the global north where the platforms were designed.</p><img src="https://counter.theconversation.com/content/186147/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daniel Arubayi currently works for Fairwork, based at Oxford Internet Institute, University of Oxford which researches similar issues. </span></em></p>Drivers claim that algorithms are skewed against them on ride-hailing platforms.Daniel Arubayi, Researcher, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1848952022-06-23T14:50:35Z2022-06-23T14:50:35ZWhy Uber drivers aren’t unionizing in Québec<figure><img src="https://images.theconversation.com/files/468243/original/file-20220610-28309-qtm2nc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Uber model hinders any possibility of drivers acting collectively and generates significant cognitive dissonance among them.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>As of mid-June, the Uber platform will extend its services to the entire province of Québec. On a global scale, Uber is in nearly <a href="https://s23.q4cdn.com/407969754/files/doc_downloads/2021/07/Uber-2021-ESG-Report.pdf">10,000 cities and 71 countries and has more than 3.5 million workers</a>.</p>
<p>This model, based on on-demand work and the algorithmic distribution of tasks, fundamentally transforms ways of thinking about, organizing and carrying out work, both on an individual and collective basis.</p>
<p>The expansion of Uber’s service across Québec provides an opportunity to examine the reality of the work being carried out by thousands of drivers and delivery personnel in the province. What is their work day like? How do they make social connections?</p>
<p>To try to answer these questions, I observed Facebook groups of drivers and interviewed about 50 Uber workers in Québec.</p>
<p>As a doctoral student in communications at Université du Québec à Montréal and a research student at the Université du Québec’s Institut national de la recherche scientifique, my research examines the profile and motivations of Uber drivers, their ideas about collective action and, more generally, the psychosocial issues involved in work that is mediated by algorithms.</p>
<h2>Many encounters, but solitary work</h2>
<p>Although Uber workers encounter many people on a daily basis (customers, restaurant owners, passengers), their activity is essentially solitary. Their work takes place without ever meeting another human from Uber. Their registration on the platform is done online and their daily tasks are distributed to them by an algorithm through the Uber app.</p>
<p>If a problem prompts a driver to contact the company’s technical service, the people they interact with are located in <a href="https://www.degruyter.com/document/doi/10.1525/9780520970632/html">out-of-country call centres</a>. What’s more, the answers they get are most often formatted by scripts, reinforcing the robotic nature of their relationship to work.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/467558/original/file-20220607-18-79q23t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="man wearing a mask driving a car with an Uber badge" src="https://images.theconversation.com/files/467558/original/file-20220607-18-79q23t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/467558/original/file-20220607-18-79q23t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/467558/original/file-20220607-18-79q23t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/467558/original/file-20220607-18-79q23t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/467558/original/file-20220607-18-79q23t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/467558/original/file-20220607-18-79q23t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/467558/original/file-20220607-18-79q23t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The organization of their work limits Uber drivers’ possibilities to socialize and hinders the possibility of forming a union.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>As for the few moments when workers might meet — in restaurants waiting for orders or in drop-off areas at airports — drivers’ interactions are limited to brief exchanges about the number of orders they got that day, as expressed by Katia, an Uber Eats delivery driver in Montréal:</p>
<blockquote>
<p>When I pass another delivery driver, I say “Hey Uber! Lots of business tonight,” or “Not much business tonight,” and that’s about it. After that, I probably won’t ever see them again, but if I do, I just say hello. I don’t even know their name.</p>
</blockquote>
<h2>A competitive atmosphere</h2>
<p>Uber drivers’ Facebook groups do provide a place to share information and vent about frustrating situations. However, these spaces play a very limited role in building a collective since they don’t make it possible for drivers to have extended conversations about work.</p>
<p>The architecture of the groups favours short-term interactions, with posts quickly fading into the thread. Constructive exchanges would require conversations over a long period of time in an atmosphere of listening and trust. However, the competition felt by drivers, combined with the brief and anonymous interaction mode of social networks, contributes to a hostile climate. As Diane, an Uber Eats delivery driver in Laval, says:</p>
<blockquote>
<p>I think that the negative comments are made to discourage others because it’s not a group where we encourage each other. It’s a group where we try to discourage others, because it’s competition. If I want to earn a living, I have to run more races than you.</p>
</blockquote>
<h2>Collective action is a threat</h2>
<p>Surprisingly, this absence of a collective identity is not perceived as a problem by most of the workers I interviewed. Despite difficult working conditions over which they have no control, workers do not tend toward gathering and mobilizing in an effort to establish a power relationship with Uber.</p>
<p>While Uber drivers in other jurisdictions <a href="https://globalnews.ca/news/8816204/uber-union-reach-settlement-ontario-unionization-case/">have tried to unionize</a>, the idea of collective action is perceived as a threat by most of the Québec workers. The competitive climate pushes drivers to develop a repertoire of tactics and tinkering to stand out, as Bertrand, an Uber driver in Québec City, said:</p>
<blockquote>
<p>We all go to the Facebook group for the same thing, to find others like us and see if they can give us tips and tricks to better understand how it works, to get information. But we quickly understand that, no, we are all in the same boat, we are all there for our own pocketbook.</p>
</blockquote>
<p>Among the tactics used to optimize their income, some drivers will, for example, call customers to find out their destination before picking them up. If drivers feel the trip is unprofitable, given the distance to the customer, they will cancel the trip. Others use two phones to maintain access to the map and show the location of the surcharge zones.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/467536/original/file-20220607-13238-andol3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Uber app on a Samsung phone showing several available cars" src="https://images.theconversation.com/files/467536/original/file-20220607-13238-andol3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/467536/original/file-20220607-13238-andol3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/467536/original/file-20220607-13238-andol3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/467536/original/file-20220607-13238-andol3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/467536/original/file-20220607-13238-andol3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/467536/original/file-20220607-13238-andol3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/467536/original/file-20220607-13238-andol3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In Québec, many Uber users appreciate the app’s ease of use and the convenience of the service.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<h2>No sense of belonging</h2>
<p>To many workers, a work collective that strives to harmonize practices and replace individual tactics with collective strategies, looks like a loss of competitive advantage.</p>
<p>Now that Uber drivers’ struggles against cab drivers is over — thanks to <a href="https://globalnews.ca/news/5096891/taxi-drivers-protest-montreal-quebec-city/">the adoption of Bill 17 in 2020</a> which deregulated Québec’s taxi industry — they no longer share a common enemy.</p>
<h2>Fraught consequences</h2>
<p>Each driver has to learn how the business works and cope with its challenges on their own, cobbling together their own tactics, conscious that not all drivers benefit from the same resources. Moreover, drivers are deprived of the opportunity to develop a collective reaction about their working conditions. </p>
<p>The absence of meaningful exchanges, opportunities to listen and the presence of other drivers hinders the development of any meaningful relationships and solidarity between drivers. Their activity is reduced to their relationship with technology.</p>
<p>In fact, without the power to act collectively in the face of rigid working conditions, the dysfunctions and health problems of workers are always treated <a href="https://www.researchgate.net/publication/278777956_Collective_work_and_rules_re-writing_process_a_way_of_workers%27_health">as isolated realities rather than as a consequence of the way their work is organized</a>. As Kader, an Uber driver in Montréal, puts it:</p>
<blockquote>
<p>I’ve never opened my heart on the Facebook group. All I have to do is make one comment and I feel attacked by the others. Often, drivers who speak honestly are verbally attacked. Drivers are suffering. We could discuss it. But the climate we need to do this does not exist in the group.</p>
</blockquote>
<p>The profiles of Uber drivers in Québec vary greatly. For example, the fact that it’s impossible to negotiate higher incomes does not have the same consequences for a Tesla engineer, who drives three hours a week to take their mind off things, as it does for an immigrant who works 60 hours a week to support their family.</p>
<h2>Low revenues and lack of transparency</h2>
<p>For some individuals being an Uber driver brings in extra income, but the model also takes advantage of the precariousness of a part of the population. Those who carry out the activity as their only source of income, often do so because they lack a better option. </p>
<p>Although the majority of the drivers I interviewed do not aspire to become employees and are reluctant to join a union, many deplore the low income and the platform’s lack of transparency over how the algorithm and the remuneration system work.</p>
<p>Faced with this situation, they see the government as the only stakeholder that could establish a power relationship with Uber and force the platform to offer better working conditions to its drivers.</p><img src="https://counter.theconversation.com/content/184895/count.gif" alt="La Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lucie Enel has received funding from the Social Sciences and Humanities Research Council of Canada, the Fonds de recherche du Québec - Société et culture, Centre interuniversitaire de recherche sur la science et la technologie, and the J.A. DeSève Foundation.</span></em></p>When it comes to dealing with Uber’s difficult working conditions, Uber drivers are on their own.Lucie Enel, Doctorante en communication, Université du Québec à Montréal (UQAM)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1583392021-05-06T14:00:55Z2021-05-06T14:00:55ZHow Uber drivers avoided — and contributed to — the fate of taxi drivers<figure><img src="https://images.theconversation.com/files/399220/original/file-20210506-15-1tloaa.jpg?ixlib=rb-1.1.0&rect=0%2C1699%2C5121%2C1715&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Why have Uber drivers been regarded more favourably than taxi drivers?</span> <span class="attribution"><span class="source">Lexi Anderson/Unsplash</span></span></figcaption></figure><p>Countries <a href="https://theconversation.com/british-uber-driver-win-is-promising-but-gig-workers-still-need-basic-rights-155626">around the world</a> are wrestling with whether to classify Uber drivers and other gig economy workers as <a href="https://theconversation.com/californias-gig-worker-battle-reveals-the-abuses-of-precarious-work-in-canada-too-149780">independent contractors or employees</a>. </p>
<p>But when Uber first came on the scene, the primary subject of debate was whether its drivers were, in fact, taxi drivers. Why was this <a href="https://www.cbc.ca/news/canada/toronto/uber-brokerage-licence-1.3416343">ride-sharing or ride-hailing</a> app run by a <a href="https://www.thestar.com/business/2015/05/04/uber-taxi-firms-need-to-co-exist-says-mayor-john-tory.html">tech firm also applying to be a taxi company</a>? Was Uber truly “<a href="https://theconversation.com/the-same-but-different-what-passengers-like-about-uber-101676">the same as a taxi, but different</a>?”</p>
<p>We’ve studied how Uber and taxi drivers have been affected by Uber’s categorization as a technology company. As organizational and management researchers at business schools from across Canada studying stigma, marginalization and inequality as well as entrepreneurship, innovation and technology, we became very interested in Uber’s entry into the taxi industry as we watched it unfold.</p>
<figure class="align-center ">
<img alt="The CN Tower in the side-view mirror of a car" src="https://images.theconversation.com/files/396922/original/file-20210424-15-u4fkwu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/396922/original/file-20210424-15-u4fkwu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/396922/original/file-20210424-15-u4fkwu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/396922/original/file-20210424-15-u4fkwu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/396922/original/file-20210424-15-u4fkwu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/396922/original/file-20210424-15-u4fkwu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/396922/original/file-20210424-15-u4fkwu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The CN Tower is seen in the side-view mirror of a car.</span>
<span class="attribution"><span class="source">(Daniel Novykov/Unsplash)</span></span>
</figcaption>
</figure>
<p>In Toronto, Uber <a href="https://www.cbc.ca/news/canada/ottawa/uber-legalization-city-council-vote-passes-1.3533537">was eventually legalized</a> in 2016 after “<a href="https://www.thestar.com/news/city_hall/2016/05/03/toronto-city-council-debates-uber-rules.html">months of protest and turmoil</a>” and <a href="https://www.cbc.ca/news/canada/ottawa/taxi-driver-protest-against-uber-ends-at-city-hall-1.3230160">years of debate</a> while it <a href="https://globalnews.ca/news/1678342/city-to-announce-developments-regarding-uber-service-in-toronto/">operated illegally</a>.</p>
<p>But when we began studying Uber’s entry into Toronto, we noticed something concerning. There was increasing praise in the media for Uber and Uber drivers, but criticism and <a href="https://www.sshrc-crsh.gc.ca/society-societe/storytellers-jai_une_histoire_a_raconter/gallery-galerie-eng.aspx">near-contempt for taxis and taxi drivers</a>.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/hp-k7r8qcrY?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Kam Phung summarizes the study in his Top 25 Finalists’ video in the Social Sciences and Humanities Research Council’s 2020 Storytellers challenge.</span></figcaption>
</figure>
<p>How were two groups of people doing the same work every day — driving other people to their desired destinations — being perceived so differently? As one Uber driver told us in an interview: “I don’t see the difference … there is no difference between each other.” But it seemed the media and Uber disagreed.</p>
<h2>Taxi driving as a stigmatized occupation</h2>
<p>Toronto is home to the largest taxi driver population in the country with more than 10,000 drivers, <a href="https://www.canada.ca/content/dam/ircc/migration/ircc/english/pdf/research-stats/taxi.pdf">over 80 per cent of them immigrants</a>. Unfortunately, <a href="https://doi.org/10.5465/ambpp.2014.182">taxi drivers</a> in Toronto have historically <a href="http://doi.org/10.1007/BF03403545">faced racism</a>, <a href="https://doi.org/10.1080/09502380903541605">classism</a> <a href="https://yorkspace.library.yorku.ca/xmlui/handle/10315/28278">and stigma</a>. More broadly, taxi driving has also been called “<a href="https://doi.org/10.5465/amr.1999.2202129">dirty work</a>.”</p>
<figure class="align-center ">
<img alt="A downtown Toronto intersection" src="https://images.theconversation.com/files/396920/original/file-20210424-23-xd022p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/396920/original/file-20210424-23-xd022p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/396920/original/file-20210424-23-xd022p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/396920/original/file-20210424-23-xd022p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/396920/original/file-20210424-23-xd022p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/396920/original/file-20210424-23-xd022p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/396920/original/file-20210424-23-xd022p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Intersection of Yonge St. and Queen St. W in downtown Toronto.</span>
<span class="attribution"><span class="source">(Kayla Speid/Unsplash)</span></span>
</figcaption>
</figure>
<p>The work of late Canadian-born sociologist <a href="https://www.britannica.com/biography/Erving-Goffman">Erving Goffman</a> and subsequent research have shown that <a href="https://doi.org/10.1287/orsc.1080.0368">stigma transfers</a> by association. This would suggest that Uber drivers would become stigmatized by virtue of entering the field of driving, just as taxi drivers are. But we didn’t see this happen for Uber drivers.</p>
<p>To make sense of this, we conducted an in-depth case study of Uber’s entry and expansion into Toronto from 2013 to 2016. We analyzed 976 media articles and conducted 55 interviews after walking the streets of Toronto and ordering Ubers to find real drivers.</p>
<p>We also conducted observations at protests, panel discussions and city hall meetings to better understand what was happening on the ground.</p>
<p>Based on this data, we wrote and published an open-access article in the <a href="https://doi.org/10.1111/joms.12574"><em>Journal of Management Studies</em></a>, where we argue that new entrants to a stigmatized occupation can actually deflect stigma. But how does this happen?</p>
<h2>Ambiguity and distinction</h2>
<p>Uber’s perceived categorical ambiguity — as seen in the surge of <a href="https://www.ctvnews.ca/business/uber-ride-share-taxi-or-tech-company-1.2044508">debates over how to label Uber and its drivers</a> — paved a path to differentiate Uber drivers from taxi drivers through two activities.</p>
<p>First, Uber spokespeople, public officials and media created a categorical distinction by <a href="https://www.cbc.ca/news/business/uber-taxi-app-takes-on-canadian-cab-companies-1.2662001">pointing to technology</a> to explain why “<a href="https://nationalpost.com/news/toronto/uber-is-not-a-taxi-company-judge-says-in-rejecting-city-of-toronto-complaint">Uber is not a taxi company</a>.”</p>
<p>Second, they highlighted differences between the perceived identities of Uber drivers and taxi drivers, often emphasizing that Uber drivers were driving short-term and part-time. Yet, this didn’t necessarily reflect reality. As one Uber driver told us in an interview:</p>
<blockquote>
<p>“I start at 7 a.m. and I finish at 7 p.m. Twelve hours. I try to work Monday to Friday because I have family and I have one daughter.… I want to enjoy the summer, but sometimes I work on Saturday at night.”</p>
</blockquote>
<h2>Worsening stigma for taxi drivers</h2>
<p>These categorical distinctions and perceived differences in identities helped Uber drivers deflect the stigma of taxi driving, despite many Uber drivers even acknowledging they did the same thing as their taxi counterparts.</p>
<p>Meanwhile, the stigma facing taxi drivers got worse. As distinctions and differences circulated in the media, they were accompanied by remarks anchored in prejudice tied to the social, moral and physical characteristics of taxi drivers. </p>
<p>These remarks <a href="https://www.theglobeandmail.com/globe-drive/adventure/red-line/how-uber-is-ending-the-dirty-dealings-behind-torontos-cab-business/article25515301/">degraded taxi drivers</a> to the <a href="https://www.thestar.com/news/gta/2016/02/04/fairness-for-cabbies-elusive-in-toronto.html">benefit of Uber drivers</a>, often emphasizing and juxtaposing the immigrant status, languages, hygiene and working conditions of taxi drivers compared to Uber drivers. Media coverage also often emphasized taxi industry features that were mandated and regulated by the city, and not taxi drivers themselves.</p>
<p>The media reported <a href="https://thewalrus.ca/uber-v-taxi/">on the convenience of the new Uber app</a> and its automatic credit card payment process, even though Uber was operating illegally — and as several taxi companies launched their own apps to “<a href="https://www.newswire.ca/news-releases/beck-taxi-launches-mobile-app-with-paypal-and-credit-card-in-app-payment-517735101.html">help riders commute hassle-free</a>.”</p>
<figure class="align-center ">
<img alt="A taxi is stopped on a downtown street" src="https://images.theconversation.com/files/396927/original/file-20210425-23-mp7x8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/396927/original/file-20210425-23-mp7x8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/396927/original/file-20210425-23-mp7x8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/396927/original/file-20210425-23-mp7x8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/396927/original/file-20210425-23-mp7x8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/396927/original/file-20210425-23-mp7x8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/396927/original/file-20210425-23-mp7x8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Taxi stopped at Adelaide Street West in downtown Toronto.</span>
<span class="attribution"><span class="source">(Brad Killen/Unsplash)</span></span>
</figcaption>
</figure>
<p>By the time Uber was legalized as a “<a href="https://www.toronto.ca/services-payments/permits-licences-bylaws/private-transportation-companies-uberfacedrive-drivers/private-transportation-companies/">private transportation company</a>” and the distinctions between Uber drivers and taxi drivers <a href="https://www.toronto.ca/legdocs/municode/toronto-code-546.pdf">were formalized</a>, it wasn’t just that taxi drivers faced <a href="https://www.toronto.ca/wp-content/uploads/2019/06/97f5-Final-Economic-Impact-Study-Report.pdf">economic hardships</a>. They also argued there was a “<a href="https://toronto.ctvnews.ca/taxi-drivers-uber-executives-hold-heated-debate-over-industry-regulations-1.2565551">two-tier system</a>,” and Uber drivers and taxi drivers became polarized in the media.</p>
<p>One taxi driver told us:</p>
<blockquote>
<p>“It’s really severely marginalizing my existence.… I feel like I’m coming to the bitter end. I feel like that guy in the orange jumpsuit who is on his knees and a guy from ISIS is standing over me, except the guy in the black suit there is an Uber guy with a machete in his hand.” </p>
</blockquote>
<figure class="align-center ">
<img alt="A taxi driver gets out of his car, which has a Stop Uber sign in its window." src="https://images.theconversation.com/files/399221/original/file-20210506-23-1x8f9j3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/399221/original/file-20210506-23-1x8f9j3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=419&fit=crop&dpr=1 600w, https://images.theconversation.com/files/399221/original/file-20210506-23-1x8f9j3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=419&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/399221/original/file-20210506-23-1x8f9j3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=419&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/399221/original/file-20210506-23-1x8f9j3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=527&fit=crop&dpr=1 754w, https://images.theconversation.com/files/399221/original/file-20210506-23-1x8f9j3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=527&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/399221/original/file-20210506-23-1x8f9j3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=527&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A taxi driver protests Uber in Toronto in June 2015.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Nathan Denette</span></span>
</figcaption>
</figure>
<p>Uber’s entry into Toronto divided an occupation and exacerbated the social and economic hardships of taxi drivers. And it all started with how Uber and Uber drivers were categorized.</p>
<p>It’s encouraging that Uber drivers didn’t face the same stigma as taxi drivers. However, it’s disheartening that it avoided that fate at the cost of taxi drivers.</p><img src="https://counter.theconversation.com/content/158339/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kam Phung receives funding from the Social Sciences and Humanities Research Council of Canada. </span></em></p><p class="fine-print"><em><span>Madeline Toubiana received funding from Social Science and Humanity Research Council of Canada</span></em></p><p class="fine-print"><em><span>Trish Ruebottom receives funding from the Social Sciences and Humanities Research Council of Canada.. </span></em></p><p class="fine-print"><em><span>Luciana Turchick Hakak and Sean Buchanan do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Taxi drivers and Uber drivers perform the same work, but Uber’s categorization as a tech company has contributed to the historical stigma against taxi drivers.Kam Phung, PhD Candidate in Organization Studies, York University, CanadaLuciana Turchick Hakak, Assistant Professor, Organizational Behaviour, University of The Fraser ValleyMadeline Toubiana, Assistant Professor, Strategy, Entrepreneurship and Management, University of AlbertaSean Buchanan, Assistant Professor of Business Administration, University of ManitobaTrish Ruebottom, Associate Professor of HR and Management, McMaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/845512017-09-25T14:26:13Z2017-09-25T14:26:13ZLondon Uber ban: regulators are finally catching up with technology<figure><img src="https://images.theconversation.com/files/187394/original/file-20170925-17414-1tsg6td.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">dennizn / Shutterstock.com</span></span></figcaption></figure><p>In what could be a major blow to the <a href="http://www.bbc.co.uk/news/business-38930048">gig economy</a>, Transport for London (TfL) has <a href="https://tfl.gov.uk/info-for/media/press-releases/2017/september/licensing-decision-on-uber-london-limited">refused to renew Uber’s licence</a> to operate in the UK capital – its <a href="https://www.ft.com/content/9e315c30-a137-11e7-9e4f-7f5e6a7c98a2">largest European</a> market – on the grounds that its approach and conduct “demonstrate a lack of corporate responsibility” on issues which “have potential public safety and security implications”. </p>
<p>In its announcement, TfL cited concerns over passenger safety, arising from Uber’s failure to monitor the criminal and medical records of its drivers and to conduct related checks. The transport body was also critical of Uber’s use of <a href="https://www.nytimes.com/2017/03/03/technology/uber-greyball-program-evade-authorities.html">“greyball” software</a>, which prevents officials from monitoring Uber’s app, and from undertaking normal regulatory and law enforcement duties.</p>
<p>Yet despite these issues, TfL’s announcement provoked an enormous public backlash; <a href="https://www.standard.co.uk/news/london/uber-petition-calling-on-london-ban-to-be-reversed-backed-by-record-breaking-500k-supporters-in-a3641866.html">more than 500,000 people</a> had signed a petition protesting the decision within 24 hours, making it Change.org’s fastest growing petition in the UK this year. <a href="https://www.change.org/p/save-your-uber-in-london-saveyouruber">The petition</a> – established by Uber – called on London Mayor Sadiq Khan to reverse the ban, accusing London of being “closed to innovative companies” that offer choice to consumers and employment opportunities to tens of thousands of Londoners. </p>
<h2>The march of progress</h2>
<p>The stance of Uber and its supporters reflects a view routinely presented in the media, politics and, indeed, <a href="http://repository.law.umich.edu/cgi/viewcontent.cgi?article=1927&context=articles">in large parts of the social sciences</a>. From this view, technology is seen as a kind of elemental force; one beyond the control of law and policy, and beholden only to the whims of those who develop and sell it. To resist technology is to stand in the way of history and progress. </p>
<p>A variation on this argument holds that while some in society – mostly those with vested interests – might be in a position to frustrate technological advances, the public interest lies in preventing them from doing so. Likewise, <a href="https://www.standard.co.uk/news/transport/londoners-call-for-boycott-of-black-cabs-after-uber-decision-a3641196.html">many saw the Uber ban</a> as an attempt to protect the interests of black cab drivers at the public’s expense, following <a href="http://www.independent.co.uk/news/uk/home-news/tfl-transport-for-london-ban-uber-london-sadiq-khan-black-cab-a7961176.html">a long-running campaign</a> against the firm by the Licensed Taxi Drivers’ Association. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/187382/original/file-20170925-17379-dgp1jt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/187382/original/file-20170925-17379-dgp1jt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/187382/original/file-20170925-17379-dgp1jt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/187382/original/file-20170925-17379-dgp1jt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/187382/original/file-20170925-17379-dgp1jt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/187382/original/file-20170925-17379-dgp1jt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/187382/original/file-20170925-17379-dgp1jt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Stopping traffic: black cab drivers protest against Uber in 2016.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-uk-10-february-2016-thousands-469981658?src=_3W6zpw_UnRLIQ7iITCniw-1-1">Dinendra Haria / Shutterstock.com</a></span>
</figcaption>
</figure>
<p>The argument goes that capitalism proceeds through waves of “creative destruction”, which should be ushered forward as quickly as possible, not unduly stifled by regulation and red tape. Those who oppose this inexorable march are often denounced as <a href="http://www.bbc.co.uk/news/magazine-17770171">“Luddites”</a> – a term which today describes a person with irrational or small-minded opposition to technological change, <a href="http://kk.org/thetechnium/the-unabomber-w/">sometimes with violent consequences</a>. </p>
<h2>The Luddites’ legacy</h2>
<p>Historically, the Luddites were a group of 19th century English textile workers and weavers who destroyed weaving machinery to protest against their adoption by English mills. Conventionally described as “machine breakers”, they were in fact <a href="https://www.cam.ac.uk/research/news/rage-against-the-machine">resisting attempts</a> by employers to avoid minimum wage laws and customary rules of industrial trades that were centuries old. The court system refused to enforce these laws to protect the trades, on the grounds that to do so would be inconvenient for factory owners. </p>
<p>The Luddites failed to halt the rise of the factory – indeed, some were <a href="http://www.nationalarchives.gov.uk/education/politics/g3/">sentenced to death or transportation</a> for their actions – but their example of resistance to abuse of power left a legacy. Within a few decades, collective bargaining over wages and conditions was being established in the same industrial districts that had witnessed the Luddite risings. In due course, this new mode of regulation led to the development of social legislation and the modern welfare state. </p>
<p>The story of the Luddites suggests an alternative view of technology; one which recognises that technological change occurs in phases. We are currently going through a stage of rapid development, in which it seems that technology is outstripping the capacity of lawmakers and regulators to respond. We often hear that regulators “can’t keep up” <a href="https://www.technologyreview.com/s/526401/laws-and-ethics-cant-keep-pace-with-technology/">with the pace of change in industry</a>. </p>
<p>This refrain is generally at its loudest just before a social or financial crisis occurs, often driven by the adoption of new technology, which brings regulators back into the frame and triggers new laws and modes of governance. The process runs in a cycle, with the law responding to technological and organisational change after a lag, then setting the framework for a further round of innovation. This cyclical process is borne out in the study of systems theory and evolutionary economics, but we are seeing now that these insights are in some ways transferable to the <a href="https://www.jstor.org/stable/27760013?seq=1#page_scan_tab_contents">study of technological change</a>.</p>
<h2>Another cycle</h2>
<p>TfL’s response is a sign that the next phase in this socio-technical cycle is beginning. Technology, such as the Uber app platform, is creating modes of delivery for goods and services which are often on the borderline of legality. Technology companies have been exploiting this uncertainty to entrench their position and defend it forcefully. Now, it seems as though regulators are finally catching up.</p>
<p>Uber will challenge TFL’s decision, as it did when a 2016 employment tribunal ruled that drivers were, in fact, employed by Uber, and therefore entitled to <a href="http://www.bbc.co.uk/news/business-37629628">certain benefits</a>. While these cases <a href="https://www.theguardian.com/technology/2017/apr/19/uber-appeal-uk-employment-ruling-drivers-working-rights">are being appealed</a>, Uber will probably continue to operate much as before. </p>
<p>Uber hopes that laws and regulations will eventually normalise in its favour; in other words, if it throws enough lawyers and lobbyists at the problem, then regulators and policy makers might well cave. But <em>this</em> time, TFL hasn’t. This may be a one-off. But perhaps change is afoot – Uber <a href="http://www.bbc.co.uk/news/business-41384499">has been quick to own up to its shortcomings</a>, and admit that change is necessary – even as it remains committed to defending its business operation in the capital.</p><img src="https://counter.theconversation.com/content/84551/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon Deakin receives funding from the Economic and Social Research Council and the Engineering and Physical Sciences Research Council.</span></em></p><p class="fine-print"><em><span>Christopher Markou receives funding from The Social Sciences and Humanities Resesarch Council of Canada (SSHRC). He is on the legal expert committee of Responsible Robotics, an NGO that promotes the responsibile development of robotics in society.</span></em></p>A rebellion against the technology which triggered the industrial revolution changed the way we understand technology.Simon Deakin, Professor of Law, University of CambridgeChristopher Markou, PhD Candidate, Faculty of Law, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/846212017-09-25T14:16:59Z2017-09-25T14:16:59ZUber in London: firm must value its drivers as well as its customers<p>Uber has been met with a mix of excitement, anger, protest, legal action and dispute when introduced in most countries. With operations in over 250 cities, the ride-hailing app has disrupted transportation and models of work. It has also been disrupted by the termination of all or part of its services in some countries including France, Italy, Spain, Germany, Denmark and China.</p>
<p>London is the latest location where Uber is <a href="http://www.bbc.co.uk/news/business-41384499">facing serious challenges</a>. Transport for London, the city’s transport authority, has denied it a new licence to operate, which would effectively <a href="https://theconversation.com/how-uber-can-save-its-place-in-londons-taxi-market-84616">shut down the company’s operations in London</a>. Uber has initiated an <a href="https://www.change.org/p/save-your-uber-in-london-saveyouruber">online petition</a> to reverse the TFL decision. However, there are deeper issues that need to be considered. </p>
<p>Uber’s problems are a classic example of a digital business that has evolved without fully taking into account its impact on society. It’s a digital platform that plays an ambiguous role as intermediary between drivers and customers – repeatedly emphasising that it is <a href="https://www.judiciary.gov.uk/wp-content/uploads/2016/10/aslam-and-farrar-v-uber-reasons-20161028.pdf">not an employer</a>. In fact, drivers are considered a customer for Uber – they pay 20-25% of their earnings to the company. Yet the values embedded within Uber’s business model and app design have proven to be problematic.</p>
<p>In my ethnographic <a href="http://bit.ly/2xqflm9">research</a> about Uber in London, I conducted interviews with drivers over the course of 850 minutes of Uber rides, covering 318 miles, and speaking to 33 drivers, mostly in the London area. I also spoke to a range of customers and other types of taxi drivers, and examined different legal documents, news items and public interviews. Drivers were people in need of money who used Uber as source of employment. For most, Uber work was their only job despite the uncertainty involved.</p>
<h2>The life of an Uber driver</h2>
<p>I found that most drivers perceived themselves as lacking in skills; Uber driving was a way out from this difficulty and a way to earn money while in London. Drivers consistently compare themselves to other taxi drivers and feel largely inferior in status, earnings and work conditions. They work 10-14 hours per day and went for long periods without breaks. Many spend the whole day behind the wheel, anxious they will lose a job if they stop for food or drink. </p>
<p>Drivers expressed resentment at their low pay and need to work such long hours to cover operating costs (renting or leasing a car, petrol, weekly car wash, smart phone rental, insurance), as well as to make a living. Comparing themselves to their peers, and in particular London’s black cab drivers, they found that cabbies work less, earn more and live a much better life. They also had high regard for black taxi drivers for their knowledge and felt very lacking in skills in comparison. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/187390/original/file-20170925-17379-1xckh5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/187390/original/file-20170925-17379-1xckh5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/187390/original/file-20170925-17379-1xckh5c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/187390/original/file-20170925-17379-1xckh5c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/187390/original/file-20170925-17379-1xckh5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/187390/original/file-20170925-17379-1xckh5c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/187390/original/file-20170925-17379-1xckh5c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Uber drivers feel inferior to their black cab counterparts.</span>
<span class="attribution"><span class="source">Monkey Business Images / shutterstock.com</span></span>
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<p>Many felt conflicted about the app’s surge pricing feature, which charges customers more during peak times. It made them feel like they were exploiting people and expressed discomfort at this. But they rationalised it by differentiating between themselves and the app, whose conditions they work under. They gave me tips on how to avoid surge prices and trick the apps’ algorithm to go back to standard price. </p>
<p>I observed that the Uber drivers were skilful and entrepreneurial. They constantly use new strategies to survive and make a living. For example, they would try to gain better visibility of their competition by using the customer version of the app at the same time as the driver version. They try to predict where Uber taxis will be likely needed with the least competition from other Uber taxis. They would also try to get the best possible deal for renting or leasing a car. They try to find other modes of employment for other taxi companies to have a more secure base for their life. </p>
<p>However, the inferiority and resentment that drivers have, as a result of their low pay, long hours and the hostile environment, makes technological adaptations necessary. Arguably, this will also be needed if Uber is to keep drivers to a level that meets the demand from customers. </p>
<h2>Embedded values</h2>
<p>Like any other technology, the Uber app, <a href="http://bit.ly/2fkkrpv">comes with embedded values</a>. Research <a href="http://bit.ly/2ynfLqc">shows</a> that a gap of values could occur when those embedded in the technology differ from the values embedded in the organisation or society. The solution could be either to change the technology to suit the needs of society, a change in societal views to suit the technology or for some form of mutual adaptation to take place where both technology and society change to accommodate each other.</p>
<p>The values embedded in Uber are focused on disruption and blind competition. The app appeals to customers through low prices and convenience. But it comes at serious cost to drivers who work under an extreme “work more, earn more” model where they must grab work at every opportunity and constantly face unknown competition.</p>
<p>The app does not limit working hours for drivers per day, enforce a day (or two) off per week or limit the number of consecutive hours a driver can work. The app is also designed to be a race between drivers to be in the right place at the right time and accept the job before anyone else. It is designed so drivers cannot see each other in the area – and so they operate under unknown competition and high uncertainty. </p>
<p>The dilemma for a digital platform like Uber is to continue to appeal to customers, while providing better conditions for drivers. If changes are required to renew its London license, now could be the time to incorporate values that honour both sides of its customer base. The technology of the Uber app has enabled it to be incredibly effective in winning market share, but it needs better values built into it to protect both drivers and customers.</p><img src="https://counter.theconversation.com/content/84621/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amany Elbanna does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Why Uber needs to address the values that are embedded in its technological success.Amany Elbanna, Reader in Information Systems, Royal Holloway University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/846162017-09-25T12:06:35Z2017-09-25T12:06:35ZHow Uber can save its place in London’s taxi market<figure><img src="https://images.theconversation.com/files/187393/original/file-20170925-17386-194oq0u.jpg?ixlib=rb-1.1.0&rect=94%2C101%2C4398%2C2660&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-uk-march-23rd-2017-photograph-611488535?src=t4mGRrxSCPhHTOG5yQsL_Q-1-1">Ink Drop/Shutterstock</a></span></figcaption></figure><p>Dara Khosrowshahi will have to do more than <a href="https://twitter.com/dkhos/status/911321639953956864">post a humble tweet</a> if he is to rescue Uber in London. The CEO of the ride-sharing company will need new reserves of humility, allied with positive action, if his firm is to be given a third chance to make it work in the UK capital. </p>
<p>Uber was first warned early in the year when it was <a href="http://www.dailymail.co.uk/travel/travel_news/article-4549706/Uber-s-licence-renewed-London-four-months.html">given a short-term license extension</a> rather than the full five years. The idea was that it would put its house in order. <a href="https://tfl.gov.uk/">Transport for London (TfL)</a>, the body which issues taxi licences, was unhappy with the level of cooperation with authorities over driver checks and alleged sex attacks on passengers. So called <a href="http://www.independent.co.uk/life-style/gadgets-and-tech/news/greyball-uber-london-ban-creepy-feature-what-is-it-a7961641.html">“greyball” software</a> designed to mislead authorities by preventing them from making checks on drivers also raised concerns. </p>
<p>Uber appears to be struggling to understand that higher standards of behaviour are expected from large businesses compared to start-ups. Once upon a time, Uber may have passed below the radar. But with 40,000 drivers and 3.5m customers, they are a significant business, and attract significant attention.</p>
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<h2>Control issues</h2>
<p>It does appear that the door has been left open for Uber if it can address its behaviour, and that of its drivers. The company is lodging an appeal, which will give it a further 21 days in which it can continue to operate. The question is whether Uber is capable of bringing control and discipline to the way it operates. Does it have the structure, processes and procedures necessary to fully comply with TfL’s regulations?</p>
<p>The impression is left that Uber has simply not matured to the degree needed for such a large business. The extent of allegations and bad publicity <a href="https://www.theguardian.com/technology/2017/jun/18/uber-travis-kalanick-scandal-pr-disaster-timeline">is burying the business</a> in London, its largest European market. Uber’s <a href="http://www.oregonlive.com/commuting/index.ssf/2017/03/ubers_greyball_scheme_to_thwar.html">reported obstruction of regulation</a> is catching up with it. Its customers have tried to make their voice heard, but <a href="https://www.change.org/p/save-your-uber-in-london-saveyouruber">online petitions</a> are unlikely to cut much ice with TfL, whose first responsibility is for passenger safety. Uber needs to address its own behaviour first. And this is no time for an adversarial approach.</p>
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<a href="https://images.theconversation.com/files/187383/original/file-20170925-17437-1eikd5u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/187383/original/file-20170925-17437-1eikd5u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/187383/original/file-20170925-17437-1eikd5u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=280&fit=crop&dpr=1 600w, https://images.theconversation.com/files/187383/original/file-20170925-17437-1eikd5u.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=280&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/187383/original/file-20170925-17437-1eikd5u.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=280&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/187383/original/file-20170925-17437-1eikd5u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=351&fit=crop&dpr=1 754w, https://images.theconversation.com/files/187383/original/file-20170925-17437-1eikd5u.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=351&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/187383/original/file-20170925-17437-1eikd5u.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=351&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Fighting talk.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/well-dressed-sales-person-standing-red-718297849?src=IEnFSxF43bHsaY81rA_GsQ-1-65">ra2studio/Shutterstock</a></span>
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<p>A gentle, placatory strategy is much more likely to be successful than taking on TfL. It will mean Uber going against type. The Licensed Taxi Drivers’ Association <a href="http://www.information-age.com/uber-loses-london-license-123468693/">suspects Uber</a> will seek to take on TfL through the courts, a move which would win no friends at TfL. Wars with regulators rarely end well.</p>
<h2>Disaster area</h2>
<p>It might seem that all is lost already if you believe some commentators. They suggest that London mayor Sadiq Khan has <a href="http://www.dailymail.co.uk/news/article-4916000/Uber-claims-Sadiq-Khan-Tfl-refused-meet-them.html">pushed this decision through</a> to appease black cab drivers for political motives. </p>
<p>In truth, the possible loss of votes from 3.5m Uber customers and 40,000 drivers in the next mayoral election makes that rationale look flawed when you compare those numbers to the 20,000 London black cab drivers who are celebrating the decision. This action is probably Khan’s least favoured path and final resort. And it’s fair to point out that theoretically, he has no part to play in the decision, even if he clearly supports it.</p>
<p>From Uber’s point of view, it is no over-reaction to call this a disaster. Significant investor-funded incentives will have been poured into the London market to attract drivers and customers in developing the business. Uber has around one third of the London taxicab market but many of its self-employed drivers work for other taxicab businesses too. Some competitors also have their own apps. </p>
<p>This means switching costs are low for drivers and customers who switch to competitors such as <a href="https://www.addisonlee.com/">Addison Lee</a> and <a href="https://gett.com/uk/">Gett</a>. In the space of a few days most customers will have happily used or considered other taxicab firms. From Oct 21 when the appeals process extension is due to end, Uber’s business will seep away and it will be difficult to get back. That makes Khosrowshahi’s task all the more problematic: how to develop an amicable and practical response while the clock is ticking, and when the company’s instincts may be to lash out.</p>
<h2>Domino effect</h2>
<p>To make matters worse, Uber operates in 40 towns and UK cities which may have experienced similar behaviour and who may now feel empowered to follow London’s example. Intense scrutiny will fall on the company from civic authorities, politicians, the media and the public. This is the cost of scale. And scale achieved too quickly makes the scrutiny hard to manage.</p>
<p>So, what can Khosrowshahi do? Litigation – should Uber lose the appeal which has 21 days to be heard – would be a high-risk option. If they lost the case then the London market might never be open to them again. It would also be a lengthy process and by the end of it there might be no market left for them at all.</p>
<p>The CEO needs to use the personal touch. He should visit Khan, cap in hand, to plead for a further three months to demonstrate that behaviour will change. He should then make sure it does. This would include transparency and full cooperation with TfL and the police over alleged driver attacks, demonstrating that all drivers have been subjected to required checks, and that “greyball” software is not being used. </p>
<p>This goes against Uber’s usual secretive and antagonistic culture. The tone of Uber’s approach in its young life has owed much to the <a href="https://theconversation.com/uber-gets-a-backseat-driver-as-kalanick-exits-top-job-79854">spiky urgency of founder and former CEO</a> Travis Kalanick’s personality. The tough task will be to convince the London mayor, and authorities elsewhere, that the culture has changed while Kalanick and his supporters remain on the board peering over Khosrowshahi’s shoulder while he is trying to negotiate a fix. How London plays out will be a litmus test for Khosrowshahi’s proclaimed wish to step away from Uber’s toxic reputation.</p><img src="https://counter.theconversation.com/content/84616/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Colley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>How the ride-sharing company responds to a licence refusal in the UK capital will show if its culture has genuinely changed.John Colley, Professor of Practice, Associate Dean, Warwick Business School, University of WarwickLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/830722017-09-13T08:44:36Z2017-09-13T08:44:36ZWhat the violent ‘Uber wars’ tell us about Zuma’s South Africa<p>Defying accusations of <a href="https://www.dailymaverick.co.za/opinionista/2017-02-08-south-africa-a-country-torn-apart-by-nepotism-corruption-and-state-capture/#.WY8uancjFE4">cronyism, nepotism and facilitating state capture</a>, South Africa’s president, Jacob Zuma, recently <a href="http://www.news24.com/SouthAfrica/News/breaking-zuma-survives-vote-of-no-confidence-20170808">survived his eighth parliamentary vote of no confidence</a> – and immediately afterwards, the rand took a further dive, dropping to a one-month low. Clearly the country’s troubled leadership and struggling economy are as entwined as ever.</p>
<p>Zuma’s African National Congress (ANC) continues to pay lip service to radical economic transformation, but little has been done to bolster the economy or equitably distribute national resources, radically or otherwise. Instead, under Zuma’s leadership, the <a href="http://www.huffingtonpost.co.za/2017/02/26/treasury-pushes-to-bring-down-the-public-sector-wage-bill_a_21720852/">public sector wage bill</a> has skyrocketed, the economy is <a href="http://www.africanews.com/2017/09/11/south-africa-likely-to-miss-2017-growth-target-finance-minister/">stagnant</a>, and unemployment has <a href="https://tradingeconomics.com/south-africa/unemployment-rate">risen to 28%</a>.</p>
<p>All the while, state institutions are being repurposed to consolidate power for Zuma and his ANC party loyalists. Many in South Africa now see the ANC leadership as part of a corrupt <a href="http://pari.org.za/wp-content/uploads/2017/05/Betrayal-of-the-Promise-25052017.pdf">power elite</a>, and are losing confidence in the structures of government. </p>
<p>But how is corruption at the highest levels of government and economic inequality affecting the lives of ordinary South Africans? For some of South Africa’s working class and even the upwardly mobile, everyday economic struggles have become a matter of life or death. This tension is evident in the growing violence between metered taxi drivers and Uber drivers.</p>
<h2>Under pressure</h2>
<p>South Africa’s taxi industry has seen extreme violence before. The “Uber wars” of 2017 recall for many the “taxi wars” that began in the late apartheid era, where turf wars were fought between taxi associations and individual minibus taxi drivers. During that period, <a href="http://www.csvr.org.za/docs/taxiviolence/fromlowintensity.pdf">hundreds of people were killed</a> as rival cartels went to war to defend their market share.</p>
<p>A paucity of reliable and inexpensive public transport means that <a href="https://www.academia.edu/28863234/A_Trickle-up_Economy_Mutuality_Freedom_and_Violence_in_Cape_Towns_Taxi_Associations">around 65%</a> of South Africa’s low-income commuters depend on shared taxi minibuses, and until recently, most in the middle-class tended to drive their own cars, <a href="https://www.voanews.com/a/drunken-drivers-neednt-worry-south-africa/3305432.html">sober or otherwise</a>. But when Uber arrived in South Africa in 2013, things changed dramatically. </p>
<p>Today, metered taxi drivers are arguing that Uber drivers are stealing their business. But many of Uber’s new clientele claim they have long avoided metered taxis on the grounds that they are expensive and unsafe. During our research in South Africa, members of the police told us that middle-class people began using it in such large numbers that the number of drunk-driving charges plunged (as did the revenue traffic police extracted from them). </p>
<p>As the demand for Uber has grown, more and more drivers are registering. Along with South African drivers are many Zimbabweans fleeing the collapse of their country’s economy. They’re often not eligible for other forms of employment, but many meet Uber’s background checks, car and driving checks, and so can earn a living as drivers in South Africa’s urban centres. This has only turned Uber into a flashpoint for existing tensions over employment and wages.</p>
<h2>Your driver is approaching</h2>
<p>Two <a href="https://www.theguardian.com/world/2017/sep/08/violence-erupts-taxi-uber-drivers-johannesburg">Uber vehicles were torched</a> last week outside an upmarket shopping mall in Johannesburg. A metered taxi was attacked the next morning. In July 2017, the current turf war claimed its first life when Lindelani Mashau, an Uber driver, was set alight by <a href="http://citizen.co.za/news/south-africa/1575536/uber-driver-burnt-in-car-last-month-succumbs-to-injuries/">unknown individuals</a>, allegedly a group of metered taxi drivers. He died in hospital from his injuries several days later. Both Mashau’s death and the recent torchings are an escalation of metered taxi drivers’ increasingly desperate attempts to protect their livelihoods against what they see as a serious threat.</p>
<p>The violence has reached such a level that Uber itself <a href="https://www.washingtonpost.com/world/africa/uber-says-south-africa-must-do-more-to-stop-taxi-violence/2017/09/12/fa37fdce-97a3-11e7-af6a-6555caaeb8dc_story.html?utm_term=.bae4536df40e">issued a statement</a> calling on South African authorities to step up their response and help protect its drivers, many of whom are afraid to do their jobs – particularly around the train stations in Johannesburg and Pretoria, where most of the attacks have occurred. </p>
<p>During a recent trip to the two cities, we repeatedly struggled to order an Uber either to or from the Gautrain, the train linking the two cities. Some drivers sent texts asking us to meet blocks away. Others gave up and cancelled the ride after circling our waiting spot, too hesitant to pick us up. Another urged us to “Hurry! Get in quickly!” as he sped away from men who eyed the car suspiciously.</p>
<p>On another ride, men yelling “Uber!” surrounded our driver’s car as he scrambled to leave. He told us that he’d recently been chased at high speed by two taxis while his passenger cowered with fear in the back seat.</p>
<p>During our next trip, a female driver asked one of us to sit in the front passenger seat, to “act chatty”, and to give her a hug upon exiting the ride. We hugged her in full view of watching taxi drivers and the ride was undisturbed. But most drivers don’t have the option of feigning family relationships.</p>
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<p>The violence in South Africa’s urban capitals – including the killing and intimidation of Uber drivers – reflects some of the major tensions threatening to tear apart South Africa’s social fabric. In particular, they stem from a fundamental economic problem: while South Africa needs to develop a <a href="https://issafrica.org/iss-today/employment-must-be-central-to-south-africas-economy">more flexible labour market</a>, many South Africans are loath to share work opportunities when so many are <a href="https://www.wits.ac.za/news/latest-news/in-their-own-words/2017/2017-02/social-grants-matter-they-support-33-of-south-africans.html">unemployed</a>.</p>
<p>Many of the South Africans we spoke with were convinced none of these challenges will be solved until Zuma steps down in 2019, at the end of his second term. But it is unclear if <a href="https://theconversation.com/jacob-zumas-brazen-venality-may-be-exhausting-even-his-anc-allies-75629">whoever succeeds him</a> will be able to address the severity of South Africa’s economic woes.</p><img src="https://counter.theconversation.com/content/83072/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rosita Armytage is a Research Fellow on the 'Islands of Integrity: Understanding the politics of corruption reduction' project funded by the British Academy's Sustainable Development Programme at the University of Birmingham. More information on the project is available here: <a href="http://www.dlprog.org/research/islands-of-integrity-understanding-the-politics-of-corruption-reduction.php">http://www.dlprog.org/research/islands-of-integrity-understanding-the-politics-of-corruption-reduction.php</a></span></em></p><p class="fine-print"><em><span>Markus Bell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Economic inequality and distrust in government is causing outbreaks of violence on South Africa’s streets.Rosita Armytage, Research Fellow, Governance & Society, University of BirminghamMarkus Bell, Social Anthropologist and Lecturer, University of SheffieldLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/797542017-06-23T04:40:54Z2017-06-23T04:40:54ZWill Australians ever give up Uber?<figure><img src="https://images.theconversation.com/files/174889/original/file-20170621-4662-6r8etb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An unfriendly workplace, lawsuits and resignations -- what will it take for Australians to give up Uber?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/chiangmai-thailand-september-1-2015photo-of-312342911?src=H53sAYlcCGu4Y0aLmX6Qdw-2-27">www.shutterstock.com</a></span></figcaption></figure><p>From the start, the ride-sharing service Uber offered app-based convenience and positioned itself as a saviour to beleaguered taxi customers. But the company, led by one-time chief executive Travis Kalanick, has now found that the line between confidence and disastrous overconfidence can be thin.</p>
<p>After headline after headline about alleged <a href="https://theconversation.com/ubers-dismissive-treatment-of-employees-sexism-claims-is-all-too-typical-73418">workplace sexism</a>, <a href="https://arstechnica.com/tech-policy/2017/06/waymo-tells-judge-ubers-ex-ceo-knew-about-google-files/">intellectual property lawsuits</a>, and other revelations of bad corporate behaviour, Kalanick has now <a href="https://www.nytimes.com/2017/06/21/technology/uber-ceo-travis-kalanick.html">resigned</a> under pressure from shareholders. He will remain on Uber’s board of directors, <a href="https://www.nytimes.com/2017/06/21/technology/uber-ceo-travis-kalanick.html">according to the New York Times</a>.</p>
<p>The company now finds itself without a large swathe of its executive leadership, and <a href="https://www.recode.net/2017/6/21/15850702/uber-board-bill-gurley-travis-kalanick-leaving">board members</a> are also said to be jumping ship. Will Australians follow suit and quit the app?</p>
<h2>Few alternatives and barriers to entry</h2>
<p>Even if Australians did want to avoid Uber, they have few options for similar app-based transportation.</p>
<p>Locally owned competitor GoCatch launched its taxi hailing service in 2011, before <a href="http://www.gocatch.com/about-gocatch">expanding into</a> ride-sharing in 2016. It could theoretically have benefited from local knowledge and first-mover market advantage. But it seems to have fallen into Uber’s shadow while dealing with management turmoil, including the departure of <a href="http://www.afr.com/technology/gocatch-resignations-raise-questions-as-company-faces-danger-of-being-ubered-20170402-gvbrah">its chief executive David Holmes and prominent board members</a>. </p>
<p>The taxi industry’s <a href="http://www.smh.com.au/national/all-hail-ihail-will-this-taxi-app-be-the-uber-killer-australian-cabs-are-driving-for-20160322-gno7jc.html">recently launched app iHail</a> allows consumers to hail the nearest possible cab, although the jury is still out on whether this collaboration will generate more name recognition than GoCatch with its five-year head start.</p>
<p>Bigger-name competitors such as Lyft haven’t yet entered Australia, despite <a href="https://www.bloomberg.com/news/articles/2017-04-27/lyft-bookings-and-ridership-soar-while-losses-shrink">making gains</a> in the United States on the back of Uber’s PR crises.</p>
<p>The truth is that Uber remains a globally recognised brand. The <a href="http://oz.stern.nyu.edu/io/network.html">network effects of Uber’s installed base</a> is a major advantage, both in attracting a critical mass of drivers and customers into what is still a new industry. </p>
<p>It also has a large and growing market share, not to mention a <a href="https://www.bloomberg.com/news/articles/2017-04-14/embattled-uber-reports-strong-sales-growth-as-losses-continue">reported net revenue of US$6.5 billion in 2016</a>. On the other hand, its adjusted net losses were US$2.8 billion in the same period, so it remains to be seen whether Uber is in a position to fight the costly PR battle ahead.</p>
<h2>Australian consumer pragmatism</h2>
<p>It is unlikely that Australian consumers will immediately ditch Uber for its bad reputation alone. We have a long history of putting convenience over principle. </p>
<p>The 7-Eleven franchise network, for example, has been <a href="https://www.fairwork.gov.au/about-us/news-and-media-releases/2016-media-releases/april-2016/20160409-7-eleven-presser">caught underpaying</a> workers, and has been repaying claims to the tune of <a href="http://www.wagerepaymentprogram.com.au">almost A$115 million</a>, yet consumers keep shopping there. </p>
<p>Others are still working with products from building materials company James Hardie, now known as Amaca Pty Ltd, even as its deadly <a href="https://www.asbestossafety.gov.au/article/new-statistics-show-mesothelioma-rates-still-rising">asbestos issues</a> stay <a href="http://www.adelaidenow.com.au/news/law-order/sa-court-gives-record-1m-compensation-to-asbestos-victim-whose-cancer-is-the-result-of-james-hardies-thirst-for-profit/news-story/0b34273e5762d0f09f5bc52607b684c2">in the news</a>. The company is <a href="http://www.ir.jameshardie.com.au/jh/home.jsp">trading well</a>.</p>
<p>Based on <a href="http://journals.sagepub.com/doi/abs/10.1177/0007650306297946">Petya Puncheva’s stakeholder decision making process</a> that suggests customers evaluate their decision to consume or not based on a sense of pragmatism, among other factors, Australians are unlikely to stop using Uber – especially now the company is taking proactive action to clean up its act.</p>
<p>To consumers, Uber’s app feels safe due to its rating system, which provides a version of quality assurance. Journeys can be mapped on the app, there are high levels of satisfaction, the costs are pre-estimated, and no cash is needed. </p>
<h2>Drivers may be Uber’s weak link</h2>
<p>Uber is an app-based brokering businesses, matching driver availability with consumer needs. But to do this it needs to keep drivers happy. This may be the weakest link in its value chain. </p>
<p>Owner-drivers must jump through several <a href="https://www.uber.com/en-AU/drive/requirements/">costly hoops</a> such as new registrations, insurance and various criminal checks to become accredited for Uber. Once qualified, they may discover that Uber’s consumer <a href="https://medium.com/@felixsalmon/how-well-uberx-pays-part-2-cbc948eaeeaf">pricing model</a> seems pegged to the marginal cost of running an automobile, with some incentives via <a href="https://theconversation.com/how-does-ubers-surge-pricing-work-and-how-ethical-is-it-35574">dynamic pricing</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/175312/original/file-20170623-30721-1bqgxbf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/175312/original/file-20170623-30721-1bqgxbf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=699&fit=crop&dpr=1 600w, https://images.theconversation.com/files/175312/original/file-20170623-30721-1bqgxbf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=699&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/175312/original/file-20170623-30721-1bqgxbf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=699&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/175312/original/file-20170623-30721-1bqgxbf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=878&fit=crop&dpr=1 754w, https://images.theconversation.com/files/175312/original/file-20170623-30721-1bqgxbf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=878&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/175312/original/file-20170623-30721-1bqgxbf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=878&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Will Sydneysiders give up Uber?</span>
<span class="attribution"><span class="source">The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Although often considered part of the “sharing economy”, there’s not a lot of profit sharing with drivers. Uber has been <a href="https://www.ft.com/content/71dded36-de93-11e6-86ac-f253db7791c6?mhq5j=e3">fined</a> in the US for exaggerating driver wages, although it recently agreed to permit drivers there <a href="http://www.bbc.com/news/technology-40349835">to accept tips</a>. </p>
<p>Just as many taxi drivers apparently <a href="http://www.abc.net.au/radionational/programs/backgroundbriefing/2013-06-23/4765892">struggle to make a living</a>, so do Uber drivers, based <a href="https://theconversation.com/the-way-they-manipulate-people-is-really-saddening-study-shows-the-trade-offs-in-gig-work-79042">on reports</a> and <a href="https://www.finder.com.au/uber-driver-income-calculator">estimates of their earnings</a>. The customer’s interest has driven market penetration, but this often conflicts with the interests of drivers. </p>
<h2>Can Uber make a U-turn?</h2>
<p>Uber’s rise proves new technology can rapidly change markets, so it is unlikely that Uber itself will last forever. </p>
<p><a href="http://fortune.com/2016/04/27/uber-arianna-huffington-board/">Arianna Huffington’s role</a> on Uber’s board may portend a change in organisational culture — perhaps similar to how COO Sheryl Sandberg was <a href="http://www.economist.com/node/18988706">treated by the press as a friendly solution</a> to Mark Zuckerberg’s visionary yet rough edges at Facebook. Still, <a href="https://theconversation.com/fixing-a-toxic-culture-like-ubers-requires-more-than-just-a-new-ceo-79102">studies show</a> that major institutional changes are necessary to prevent similar meltdowns in the future.</p>
<p>For now, Uber has considerable Australian market share, as well as a reputation for convenience and cost-effectiveness. Now that it’s making changes at the corporate leadership level, as long as Uber remains financially viable for drivers, it’s far from doomed in the short term.</p><img src="https://counter.theconversation.com/content/79754/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australians have a history of putting pragmatism over principle.Rohan Miller, Senior Lecturer, Marketing and Digital Business, University of SydneyDavid Oliver, Senior Lecturer in Management, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/798542017-06-21T13:51:33Z2017-06-21T13:51:33ZUber gets a backseat driver as Kalanick exits top job<figure><img src="https://images.theconversation.com/files/174915/original/file-20170621-30205-kmt8d5.jpg?ixlib=rb-1.1.0&rect=103%2C54%2C1678%2C1106&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/tedconference/24817759800/in/photolist-qR3mvv-qRJcj4-qRTnW2-pV7jJT-qRNVAG-Df96a6-DeNFsq-Dfxskh-JzGJzv-HDAP2S-DP4vmm-DD3HpF-EdRLwh-Hw8GyC-DisoXs-Df96Lr-JwKqmu-Df9aG2-Ja62KJ-DP4tQW-DeNLab-JsWTPn-CUkN7G-Ead2es-Dj9kMG-E7Wyve-DisouJ-Hw8GNL-JsbvbD-Q7THhm-HDw25t-HDw2Pp-HDw3xi-JsTJ9X-HDw4bc-JzGLCP-JzGL9x-HDw3Ti-JzGK8K-Jtjepn-HDWMJv-JraqUs-HDWLL8-JwHcXq-Ja656f-JsTWyM-HDDDYA-HDDPaG-JwKrbL-qRTny8">TED Conference/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>As the ride-hailing company Uber lurched from one clumsy mess to the next, it had appeared that CEO Travis Kalanick would somehow ride out the storm. <a href="https://www.theguardian.com/technology/2017/jun/20/uber-ceo-travis-kalanick-resigns">His recent resignation</a> is an admission that the company needs to explore new avenues.</p>
<p>I <a href="https://theconversation.com/why-leadership-looks-weak-and-wobbly-at-uber-snap-and-twitter-79276?sr=1">wrote recently</a> about tech CEOs who had protected themselves from the usual pressure from shareholders, and were able to freely dictate strategy and culture. I’m happy to say that Kalanick’s departure from the top job (he will stay on the board) signals that there is indeed a line to cross where even disenfranchised investors can assert their power. It is not hard to see why: Uber is facing up to some tough decisions.</p>
<p>Aside from the <a href="http://mashable.com/2017/06/13/uber-leaked-audio-sexist-joke/">rows around a damaging corporate culture</a>, news that rival Lyft has <a href="http://www.ozy.com/presidential-daily-brief/pdb-79204/passing-lane-79219">increased its share</a> of the US ride hailing market from 17% to 23% is rapidly destroying investor assumptions about this industry. Uber investors have stumped up US$12 billion in the belief that this is a winner-takes-all market. That now looks not to be the case.</p>
<p>This is great news for the customer as low fares are likely to persist. Uber investors had been funding incentives to both customers and drivers in the hope that both would stay put once the incentives stopped. Evidence is beginning to suggest otherwise. Uber’s 2016 losses, largely driven by the funding of incentives globally and from the development of driverless car technology, <a href="http://money.cnn.com/2017/04/14/technology/uber-financials/index.html">were US$2.8 billion</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/174917/original/file-20170621-25561-1a7b1pk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/174917/original/file-20170621-25561-1a7b1pk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/174917/original/file-20170621-25561-1a7b1pk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/174917/original/file-20170621-25561-1a7b1pk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/174917/original/file-20170621-25561-1a7b1pk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/174917/original/file-20170621-25561-1a7b1pk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/174917/original/file-20170621-25561-1a7b1pk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/174917/original/file-20170621-25561-1a7b1pk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Losing its grip?</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/maryland-usa-july-12-2016-luxury-452502628?src=l4Qh7PUceRtXnlrdf922Fw-1-13">Jeramey Lende/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Flawed model</h2>
<p>So where did that winner-takes-all belief come from? Well, investors had looked at Amazon, Facebook and Google. The first mover in those cases developed a large customer base attracted by an increasing number of suppliers. In turn, suppliers found access to large numbers of customers and had no motivation to go elsewhere. The software simply does the matching. </p>
<p>An Uber customer wants a quick pick-up and cheap fares while the drivers want to be busy generating higher wages. So, in theory, an app which offered both at a high level, and was first to market, should attract most of the drivers and customers. </p>
<p>However, the app is readily <a href="http://www.telegraph.co.uk/technology/technology-topics/11471327/Londons-Addison-Lee-prepares-for-Uber-challenge.html">copied</a>. Many taxi firms now have their own app with similar attributes. Customers may now have several ride hailing apps on their phones which they can check for the cheapest and most rapid arrival. </p>
<p>Additionally, drivers are self-employed and can switch their allegiances rapidly. This is not a recipe for world domination.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/174919/original/file-20170621-4662-1shi74w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/174919/original/file-20170621-4662-1shi74w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/174919/original/file-20170621-4662-1shi74w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/174919/original/file-20170621-4662-1shi74w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/174919/original/file-20170621-4662-1shi74w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/174919/original/file-20170621-4662-1shi74w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/174919/original/file-20170621-4662-1shi74w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/174919/original/file-20170621-4662-1shi74w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Land grab. Lyft builds share.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/las-vegas-nv-august-262016-vignette-474258028?src=uW2nJCGyKVrV5Ae2sonzOQ-1-5">BestStockFoto/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Rivals everywhere</h2>
<p>Existing firms leap at the opportunity to expand. Lyft has proved that to be so by gaining US market share just as Uber’s reputation was soured by allegations of a sexist and macho culture. A <a href="http://uk.businessinsider.com/google-waymo-v-uber-case-explained-2017-5">major lawsuit from Google</a> has only added to the sense of a company struggling to maintain its grip. </p>
<p>Uber can learn from Lyft, which has succeeded with a clear market focus, unhindered by unrelated diversification. Lyft has focused on ride hailing in the US alone. Uber has expanded globally and invested heavily in driverless car technology. Uber spent $2 billion in a Chinese market <a href="http://www.wsj.com/articles/china-s-didi-chuxing-to-acquire-rival-uber-s-chinese">it has now exited</a> under pressure from the local competitor Didi Chuxing.</p>
<p>In the Indian market, which is <a href="https://www.olacabs.com/mobile">led by Ola</a>, Uber was slow to adapt to <a href="http://www.cnbc.com/2016/12/07/can-uber-win-in-india-after-china-loss.html">very different market conditions</a> and lost time and position. Even in the UK, Uber has faced competitive and political pressure from <a href="http://www.standard.co.uk/lifestyle/esmagazine/fare-fight-its-uber-v-hailo-v-addison-lee-in-the-londons-taxi-wars-9064289.html">established taxi operators</a>. Focus means being able to channel resources, knowhow and competitive strategy into one area. Uber has left itself open to attack on too many fronts. </p>
<h2>Unfair fight</h2>
<p>That brings us to Kalanick’s odd move into driverless car technology, taking on the might (and vast resources) of Google. Many of the <a href="http://uk.businessinsider.com/the-companies-most-likely-to-get-driverless-cars-on-the-road-first-2017-4">world’s major car companies</a>, with their own attendant resources and technology partners, are also investing heavily. Was Uber really going to win a fight against Ford, Mercedes, GM, and Tesla?</p>
<p>It is likely they are all further ahead than Uber. Indeed it is difficult to see what technology Uber has to offer in this particular market. Surely this is a prime opportunity for a deal where Uber supplies the demand while the more advanced partner supplies the technology and cars. </p>
<p>Kalanick’s ambition has been fundamental to the rise of Uber. With his departure from the CEO role, perhaps that ambition will give way to strategic sense. Kalanick was able to cling on for so long partly thanks to investors’ desire to unearth the next tech giant, which made them indulgent of the founder’s control. The hope must be that the Uber experience encourages investors to tighten the reins on tech executives. The job for the next CEO will be to convince investors and customers that it is worth sticking around to see how this all ends.</p><img src="https://counter.theconversation.com/content/79854/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Colley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The CEO gets out as investor power triumphs.John Colley, Professor of Practice, Associate Dean, Warwick Business School, University of WarwickLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/742622017-03-13T15:41:52Z2017-03-13T15:41:52ZTwo very different responses to Uber - Kenya and South Africa<figure><img src="https://images.theconversation.com/files/160480/original/image-20170313-19242-1xhlug3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Uber has caused waves across the globe and is facing some challenges.
</span> <span class="attribution"><span class="source">REUTERS/Toby Melville</span></span></figcaption></figure><p>Entry of the mobile technology ride-sharing service, <a href="https://www.lifewire.com/how-does-uber-work-3862752">Uber</a>, into passenger transport markets across the world has brought <a href="http://www.competition.org.za/review/2015/11/22/uber-a-game-changer-in-passenger-transport-in-south-africa">disruptive</a> competition with substantial benefits to consumers. Africa is no exception. </p>
<p>Uber is currently the <a href="http://www.htxt.co.za/2016/08/25/uber-most-used-taxi-app/">dominant</a> ride-sharing app used in Africa. It has rapidly grown its <a href="http://venturesafrica.com/uber-signs-its-first-sou-in-africa-with-ghana/">African</a> footprint and now has operations in eight countries; Egypt, Ghana, Kenya, Morocco, Nigeria, South Africa, Uganda and Tanzania. </p>
<p>Disruptive competition through technology can bring substantial benefits to consumers, but it also raises competition and <a href="https://theconversation.com/how-uber-opens-cities-only-to-close-them-59067">socio-economic issues</a>. These result mainly from the displacement of traditional service providers. These issues cannot be ignored in a developing country. Regulation needs to at least ensure that conditions for competition are consistent and not only free but fair across competing services where possible.</p>
<p>There are also concerns that Uber, with its first mover advantage within the ride-sharing market, is growing into a monopoly despite the <a href="http://www.competition.org.za/review/2015/11/22/uber-a-game-changer-in-passenger-transport-in-south-africa">benefits</a> to consumers. </p>
<p>These concerns have been raised by incumbent taxi operators in Kenya and South Africa. As is the case across the globe traditional metered taxis are <a href="http://www.competition.org.za/review/2015/11/22/uber-a-game-changer-in-passenger-transport-in-south-africa">seeing red</a>. In South Africa, traditional metered taxi operators have protested and also tried, so far unsuccessfully, to get the competition authority to <a href="http://www.ujuh.co.za/uber-escapes-competition-robe-in-south-africa-as-metred-taxis-despair/">prosecute</a> Uber for what they see as anti-competitive behaviour. In Kenya, there have <a href="http://www.nation.co.ke/news/Six-man-gang-behind-Uber-taxi-attacks-arrested/1056-3134898-r3m5cfz/index.html">been attacks</a> on Uber drivers by business rivals.</p>
<p>But there are also signs of a rising challenge to Uber by new rivals. The Kenyan and South African experiences are worth noting. The different trajectories developing in these two markets make for an interesting comparison.</p>
<h2>Uber firmly in the driving seat in South Africa</h2>
<p>In South Africa new entrants into the ride-sharing app market have made little progress in attracting substantial demand. These include:</p>
<ul>
<li><p><a href="https://taxify.eu/en-za/cities-2/johannesburg/">Taxify</a> which entered the market in 2015. It struggled and had to <a href="https://mybroadband.co.za/news/motoring/162994-taxify-relaunched-in-south-africa-to-take-on-uber-and-metered-taxis.html">re-launch </a>its brand with a new business model in 2016 to access a wider market, in which it now holds around a 10% share. Its strategy is based on 15% lower prices and higher proportional pay out to drivers. </p></li>
<li><p><a href="https://www.moneyweb.co.za/news/companies-and-deals/transaction-capital-plans-dominate-sas-metred-taxi-industry/">Zebra Cabs</a>, an incumbent metered taxi company, adopted the electronic taxi hailing technology to launch the Zebra Cabs app in 2016, a direct rival to Uber.</p></li>
<li><p><a href="http://www.702.co.za/articles/237998/uber-has-new-south-african-rival">Jozibear</a> entered the market late in 2016 and currently operates in Johannesburg, Cape Town and Durban. </p></li>
</ul>
<p>But Uber has built a strong brand among local customers since entry in 2013, in a market with important first mover advantages. </p>
<p>Even though competitors may offer better quality or cheaper services, customers will be attracted to Uber’s because it has established a stronger brand and larger driver network. To compete, entrants have to develop rival platforms which are frictionless and able to attract both drivers and passengers. </p>
<p><a href="https://mybroadband.co.za/news/motoring/162994-taxify-relaunched-in-south-africa-to-take-on-uber-and-metered-taxis.html">Changes in regulation</a> to encompass ride-sharing have formalised aspects of the industry in South Africa. These include licensing and permit conditions. But these changes have not necessarily led to a stronger competitive position for rivals, including metered taxis. </p>
<h2>Why Little Cab in Kenya may be different</h2>
<p>The picture is very different in Kenya. There Safaricom, the largest telecommunications operator, <a href="http://pulse.ng/tech/little-cab-safaricom-launches-its-weapon-of-choice-on-the-on-demand-taxi-market-in-kenya-id5232889.html">launched</a> an app-based ride-sharing service called <a href="http://www.reuters.com/article/us-kenya-safaricom-idUSKCN0ZL1I8">Little Cab</a> in July 2016 in partnership with Craft Silicon, a local software firm. </p>
<p>Little Cab introduced free Wi-Fi to passengers in addition to the option to process payments using <a href="http://www.cnbcafrica.com/news/east-africa/2017/01/04/mpesa-economic-impact-on-kenya/">M-Pesa</a>, the mobile-phone based financial service. M-Pesa is the most widely used mobile money service developed by Safaricom with <a href="http://www.ca.go.ke/index.php/statistics">66% market share</a> in Kenya. </p>
<p>Little Cab promises to be an effective competitor to Uber in Kenya’s ride sharing economy particularly due to its link to the mobile money platform. </p>
<p>It’s still not clear whether Uber can integrate the M-Pesa payment solution to its service in Kenya. A failure to address this challenge may limit the company’s ability to retain its position in the market. This is partly because most Kenyan’s don’t have credit cards, a fact that led Uber to introduce <a href="http://allafrica.com/stories/201604150744.html">cash payments</a> three months after entering the Kenyan market in January 2015. This adjustment has been pivotal to its growth in the country. </p>
<p>Little Cab appears to be performing well given its plans to <a href="https://qz.com/846609/safaricoms-little-cab-a-rival-uber-in-kenya-is-launching-in-nigeria-and-uganda/">expand</a> into Uganda and Nigeria in 2017, its first operations outside Kenya. These are not entirely new markets for Safaricom given that its largest regional operations are based in Nigeria under Craft Silicon.</p>
<p>Similarly, Safaricom has operations in <a href="https://qz.com/846609/safaricoms-little-cab-a-rival-uber-in-kenya-is-launching-in-nigeria-and-uganda/">Uganda</a>, and plans to use its existing knowledge of these markets to gain entry and compete with other ride-sharing services.</p>
<h2>Too early to call?</h2>
<p>There’s a fascinating competitive clash emerging in Kenya which may play itself out throughout the east African region. M-Pesa’s attractiveness to both markets (ride-sharing and mobile money users) gives Safaricom and Little Cabs a competitive advantage. </p>
<p>Safaricom is able to leverage its large mobile money subscriber base and technology to compete with Uber in a market where mobile money payments are ubiquitous. On the other hand, the rival has first mover advantages in terms of branding and convenience in the ride-sharing sharing economy. </p>
<p>However, Safaricom appears to have overcome the seemingly insurmountable first mover position enjoyed by Uber, and brand-related entry barriers by simply leveraging its own strengths in Kenya. </p>
<p>Who will win the market in the region is now anyone’s guess. </p>
<p>Uber’s position in South Africa looks more assured. But it does face challenges. Ongoing protests, the <a href="https://www.businesslive.co.za/bd/national/2017-03-10-metered-taxi-drivers-bring-airport-traffic-to-a-halt-in-uber-protest/">most recent</a> of which led to gridlock near the country’s largest international airport, could lead to continued scrutiny of its operations. </p>
<p>And the company has had to adjust its model to suit local conditions. Uber grew rapidly when it first launched using its standard transacting mechanisms due in part to the fact that
in 2015 <a href="http://data.worldbank.org/products/data-books/little-data-book-on-financial-inclusion">54.9%</a> of South Africans had credit cards. But it has had to reconsider its banking card only payment mechanism and now allows cash payments.</p><img src="https://counter.theconversation.com/content/74262/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thando Vilakazi is affiliated with the Centre for Competition, Regulation and Economic Development at University of Johannesburg. </span></em></p><p class="fine-print"><em><span>Shingie Chisoro received funding from the government for PhD studies. She is affiliated with the Centre for Competition, Regulation and Economic Development at the University of Johannesburg</span></em></p>Global ride sharing app Uber, is experiencing different development trajectories in its two major African markets, Kenya and South Africa.Thando Vilakazi, Senior Researcher, Centre for Competition, Regulation and Economic Development, University of JohannesburgShingie Chisoro, Economist/Researcher, University of JohannesburgLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/722312017-02-13T15:32:42Z2017-02-13T15:32:42ZRural pubs really do make countryside communities happier – but they are closing at an alarming rate<figure><img src="https://images.theconversation.com/files/156614/original/image-20170213-15796-x322kf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">End of an era?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/success?src=vyV0GtBvL2vjwNO-2v518g-1-2">Shutterstock</a></span></figcaption></figure><p>The village pub is a key – even clichéd – feature of rural England. They evoke images of pork scratchings and perilously low beams, frothy pints of warm ale and the summertime knock of willow on leather. They are often described as “friendly” and “homey” and many believe that they foster social relationships among residents, strengthening the level of cohesion in villages and positively contributing to communal well-being. But very few studies have tried to verify scientifically whether this is the case. </p>
<p><a href="http://www.emeraldinsight.com/doi/full/10.1108/IJCHM-12-2015-0717">In one of my recent studies</a>, funded by the British Academy and published in the International Journal of Contemporary Hospitality Management, I examined communities and parishes with no more than 3,000 individuals, situated at least five miles (or 10 minutes’ drive) from towns or larger parishes of 5,000 inhabitants or more. </p>
<p>Together with <a href="http://business.leeds.ac.uk/about-us/our-people/staff-directory/profile/matthew-mount/">Dr Matthew Mount of Leeds University</a>, we collected information from several sources, including <a href="http://www.acre.org.uk">Actions with Communities in Rural England (ACRE)</a> and the <a href="https://www.ons.gov.uk">Office for National Statistics (ONS)</a>, to create an index measuring levels of community cohesion and well-being within communities across the English countryside. </p>
<p>We then focused on 284 parishes – and investigated the impact pubs had on community cohesion. Overall, we found that pubs had a positive, statistically significant impact on social engagement and involvement among residents living in the English countryside. We also found that this positive effect increased threefold between 2000 and 2010 (the period we examined) – possibly because pubs have become increasingly important as other essential services such as post offices and village shops have closed. </p>
<h2>Stronger communities</h2>
<p>Our analysis also highlighted that parishes with a pub had more community events – such as sports matches, charity events, and social clubs – than those without or those with just sports or village halls. Simply speaking, opportunities for communal initiatives would be vastly reduced, if not nonexistent, in these parishes without the presence of pubs. But the presence of more than one pub provided no additional benefit. In other words, two pubs don’t lead to a stronger sense of community than one – and may even increase the likelihood of other problems, such as noise. </p>
<p>Our study reaffirms the significant role played by local pubs. But this comes as pub numbers are in rapid decline. Figures released by the <a href="http://www.beerandpub.com/statistics">British Beer and Pubs Association in 2016</a> show there are approximately 50,800 pubs open in Britain today – compared with nearly 68,000 in 1982. That’s a decline of 25% while the British population has increased by 14% over the same period. And when judged against the findings of our study, that has to be bad for community cohesion.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/156615/original/image-20170213-15774-keq9hm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/156615/original/image-20170213-15774-keq9hm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=454&fit=crop&dpr=1 600w, https://images.theconversation.com/files/156615/original/image-20170213-15774-keq9hm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=454&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/156615/original/image-20170213-15774-keq9hm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=454&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/156615/original/image-20170213-15774-keq9hm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=570&fit=crop&dpr=1 754w, https://images.theconversation.com/files/156615/original/image-20170213-15774-keq9hm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=570&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/156615/original/image-20170213-15774-keq9hm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=570&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Last orders …</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/beer-mug-potato-wedges-on-rustic-182602034">Shutterstock</a></span>
</figcaption>
</figure>
<p>A number of factors are responsible for this decline, including a general reduction in <a href="http://www.morningadvertiser.co.uk/Operators/Other-operators/Pub-visits-fall-but-customer-spend-per-visit-on-the-rise">customers’ visits to pubs</a> and more competitive <a href="http://www.ias.org.uk/uploads/pdf/Factsheets/Alcohol%20pricing%20factsheet%20April%202014.pdf">alcohol prices in off-licence retailers</a>. In rural areas, this decline has been exacerbated by smaller village populations and <a href="http://www.acre.org.uk/rural-issues/transport">fewer public transport options</a>. Some pubs will have closed because they were poorly run, but can we preserve healthy pubs from unnecessary closures? </p>
<h2>A dwindling party</h2>
<p>One way to help save these vital rural institutions would be to better identify and define “community pubs”. This would help to legislate in favour of those pubs that really are an asset for their community, and to design policies to support these businesses, such as ad-hoc rate relief schemes. </p>
<p>Since 2012, <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/14880/Community_Right_to_Bid_-_Non-statutory_advice_note_for_local_authorities.pdf">Asset of Community Value (ACV) / Community Right to Buy</a> legislation has given community groups six months to draw up and submit a case to retain a pub. However, if there is no such ACV or preservation order in place, it is still too easy for developers to buy up and convert long-established pub premises. Tougher legislation would help avoid unnecessary closures, and provide a platform for improving planning regulations. </p>
<p>The lack of infrastructure represents another major problem for rural pubs. Public transport is inadequate – especially in the evening – in many rural areas, which hinders the chances of any business relying on the sale of alcohol. </p>
<p>Incentivising local taxi schemes could enhance the attractiveness of pubs and many other businesses geographically spread and not well served by transport routes. The provision of additional financial support by local authorities for new taxi companies would help to keep tariffs down and encourage rural residents to use them more frequently. This would benefit all businesses, including pubs, operating in the local supply chain.</p>
<p>But while the government should support rural pubs, residents must also play their part. It really is a case of use them, or lose them – and once a pub is gone, it may well be gone forever.</p><img src="https://counter.theconversation.com/content/72231/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>In the past, Ignazio Cabras receives funding from the British Academy to research rural pubs in Britain </span></em></p>New study: it’s a case of use them, or lose them.Ignazio Cabras, Professor of Entrepreneurship and Regional Economic Development, Northumbria University, NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/684622017-01-06T01:15:31Z2017-01-06T01:15:31ZHow ride-hailing apps like Uber continue cab industry’s history of racial discrimination<p>From hailing taxis that won’t stop for them to being forced to ride at the back of buses, African-Americans have long endured discrimination within the transportation industry. </p>
<p>Many have hoped the emergence of a technology-driven “new economy,” providing greater information and transparency and buoyed by an avowed idealism, would help us break from our history of systemic discrimination against minorities. </p>
<p>Unfortunately, our research shows that the new economy has brought along some old baggage, suggesting that it takes more than just new technologies to transform attitudes and behavior.</p>
<p>Our new paper, “<a href="http://www.nber.org/papers/w22776">Racial and Gender Discrimination in Transportation Network Companies</a>,” found patterns of discrimination in how some drivers using ride-hailing platforms, such as Uber and Lyft, treat African-American passengers and women. Our results are based on extensive field studies in Seattle and Boston, both considered liberal-minded cities, and provide stark evidence of discrimination.</p>
<h2>Taxis and discrimination</h2>
<p><a href="http://www.bbc.com/news/world-australia-34674173">Discrimination</a> by <a href="http://nypost.com/2015/05/28/puerto-rico-mayor-booted-from-nyc-cab/">taxi drivers</a> has long been a <a href="http://www.theatlantic.com/politics/archive/2015/10/why-i-still-get-shunned-by-taxi-drivers/411583/">social problem</a>. As a result, most cities explicitly require drivers to pick up any passenger while on duty, something <a href="http://nypost.com/2015/06/09/city-puts-biased-taxi-drivers-on-notice/">they’re reminded of</a>, but such provisions are difficult to enforce. Our work confirmed that traditional taxis in downtown Seattle were more likely to pass black passengers without stopping than to drive by white passengers.</p>
<p>Advances in technology are drastically changing the cab-hailing experience, however, allowing those in need of a lift to order a car with a few taps on a smartphone. The question we wanted to answer with our research is whether this fast-growing market is treating customers of all races and genders equally. </p>
<p>Plainly put, is the traditional taxi driver’s decision, made in public view, not to stop for an African-American passenger being eliminated? Or is it just being replaced by a driver’s swipe on a screen, made in private but with the same effect?</p>
<p>The relationship between these services and discrimination is a complex one. A <a href="http://botecanalysis.com/wp-content/uploads/2015/07/LATS-Final-Report.pdf">study funded by Uber</a> found that its UberX service provided lower fares and shorter wait times than traditional taxis in areas of Los Angeles with below-average incomes. <a href="http://www.sciencedirect.com/science/article/pii/S0966692316301430">Similar research found</a> that expected wait times for the service were shorter in Seattle-area neighborhoods with lower incomes, even after adjusting for several variables. On the other hand, ride-hailing apps are unavailable to customers without a credit card, <a href="http://www.cnbc.com/2015/05/05/credit-invisible-26-million-have-no-credit-score.html">who are more likely to be</a> lower-income and a member of a minority group.</p>
<p>But this looks at the problem only from a systemic point of view, while the actual decision to pick up a passenger is made by individual drivers. Although drivers are required to maintain high levels of overall performance, there is no mechanism that might detect whether they’re discriminating. </p>
<p>For our study, we used a simple but powerful method to measure this: random field tests. We dispatched research assistants – white and black, male and female – into the field, at varying times of the day and in varying parts of Seattle and Boston, and asked them to order, wait and ride in vehicles hailed by a platform like Uber, which we term “transportation network companies,” or TNCs. </p>
<p>Such random field tests are conceptually simple, but they’re considered the “gold standard” in the research field – and we conducted nearly 1,500 rides in the two cities.</p>
<p>At all times, the research assistants carefully monitored and recorded predetermined performance metrics for every ride they took with screenshots of their smartphones: before requesting a trip (with expected wait time), just after the trip is accepted (with a new wait time), again if a driver canceled, when the driver arrives and when the vehicle stops at the destination. Using the data gathered, we evaluated wait times, travel times, cancellation rates, costs and ratings awarded. </p>
<p>OK, what did we find?</p>
<h2>The good news</h2>
<p>First of all, there is some good news. </p>
<p>For one, black passengers in our study received the same level of “star ratings” from drivers that picked them up as white ones, meaning that their future trip requests will not be handicapped by poor reviews. </p>
<p>Second, as we noted earlier, <a href="http://faculty.washington.edu/dwhm/2016/10/24/does-uber-equitably-serve-different-types-of-neighborhoods/">other recent research has shown</a> that (at least in Seattle) predicted waiting times for an Uber are actually shorter in lower-income neighborhoods than in wealthier areas, suggesting that drivers are not avoiding low-income areas altogether. </p>
<h2>The bad news</h2>
<p>Unfortunately, there is some bad news, too. In short, we found significant discrimination in both cities. </p>
<p>In Seattle, the data showed African-American passengers had to wait consistently longer to get picked up by an Uber – as much as 35 percent more than white passengers. The data also showed that black passengers waiting slightly longer than white passengers to have Lyft requests accepted, although this did not translate into a significantly longer wait to be picked up.</p>
<p>In Boston, a separate experiment that captured a wider variety of performance metrics found more frequent cancellations when a passenger used stereotypically African-American-sounding names such as Jamal or Aisha. Across all trips, the cancellation rate for black-sounding names was more than double that for stereotypically white-sounding names such as Jerry or Allison. </p>
<p>The effect was even stronger in low-density (more suburban) areas, where male passengers were more than three times as likely to have their trips canceled when they used an African-American-sounding name as when they used a white-sounding name. We also found evidence that in at least some cases, drivers took female passengers for longer – and potentially more expensive – rides. </p>
<p>We emphasize that we are not saying TNCs are better or worse than traditional taxis. In fact, our data do not allow us to make that comparison. Anecdotally, many travelers report that they can now get a ride whereas in the past they could not. But what our data do show is that differences in quality of service seem to persist. </p>
<h2>Is there a solution?</h2>
<p>We believe that many of the problems we have identified can be mitigated simply by changing some of the practices and policies at ride-sharing companies. Uber <a href="https://news.ycombinator.com/item?id=12354407">has already begun adopting</a> one change – flat fares based on origin and destination – that could reduce the incentive for drivers to take passengers on longer routes. </p>
<p>Transportation network companies may also want to increase the direct penalties for drivers who cancel trips, including cases where they don’t officially cancel but simply never pick up the passenger – another behavior we observed. Implementing periodic or ongoing audits to detect potentially discriminatory behavior may help as well.</p>
<p>And more data are needed. We are sure that much more could be learned from data that are locked away inside the companies. But the companies – understandably – are reluctant to share it except when compelled to do so by regulators. </p>
<h2>End of discrimination?</h2>
<p>Could these and other changes eliminate racial and gender discrimination within the emerging ride-hailing industry? </p>
<p>Unfortunately, complete elimination is unlikely. And care should be taken to ensure that well-intentioned measures don’t simply shift the locus of discrimination. For example, making it harder for drivers to cancel might have the unintended consequence of causing drivers to give certain types of riders lower star ratings or avoid certain neighborhoods altogether, which could actually worsen the impact of discrimination.</p>
<p>We are confident that Uber, Lyft and other TNCs have the technological know-how to continue revolutionizing urban transportation. They also now have the evidence that they can and should make changes to their policies and practices to ensure that everyone shares in the benefits of our new economy.</p><img src="https://counter.theconversation.com/content/68462/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Don MacKenzie received funding for the work discussed here from the University of Washington's Royalty Research Fund. He has received other funding from the National Science Foundation, Toyota Motor North America, Seattle Department of Transportation, Washington State Department of Transportation, and the US Department of Transportation via the Pacific Northwest Transportation Consortium. He has received in-kind contributions from Lyft and BMW (passenger credits for research participants) in support of an unrelated project.</span></em></p><p class="fine-print"><em><span>Christopher R. Knittel, Stephen Zoepf, and Yanbo Ge do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Cab drivers have long discriminated against African-Americans and other minority groups. New research suggests ride-hailing apps haven’t solved the problem.Yanbo Ge, Ph.D. in Civil & Environmental Engineering, University of WashingtonChristopher R. Knittel, Professor of Applied Economics and Director of the Center for Energy and Environmental Policy Research, MIT Sloan School of ManagementDon MacKenzie, Assistant Professor of Civil and Environmental Engineering, University of WashingtonStephen Zoepf, Executive Director of the Center for Automotive Research, Stanford UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/673592016-10-31T17:12:09Z2016-10-31T17:12:09ZUber in Pakistan: a lesson in the flaws of the sharing economy<figure><img src="https://images.theconversation.com/files/143886/original/image-20161031-15783-z7q6hf.jpg?ixlib=rb-1.1.0&rect=157%2C139%2C2842%2C1827&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-91817369/stock-photo-lahore-pakistan-dec-30-a-large-number-of-vehicles-stuck-in-traffic-jam-at-minar-e-pakistan-road-in-lahore-on-friday-december-30-2011.html?src=Onzyseau9IGPzDUr_u_w0g-1-0">Asianet-Pakistan/Shutterstock</a></span></figcaption></figure><p>The arrival of ride-sharing app Uber can reveal much about a country’s pressure points and preoccupations. Since <a href="http://www.eturbonews.com/68915/pakistan-travelers-and-tourists-uber-taxi-soon-launch">launching in Pakistan</a> earlier this year, the high costs of car ownership and low cost of wages have thrown up unexpected problems for the company, offering captivating insights into the prevailing political economy and the role of capital owners in a sharing economy. It is not solo drivers, but those with wealth to hand who have seen Uber as an investment opportunity, and in doing so they have created a distorted incentive system which damages service quality.</p>
<p>When Uber entered the market in March 2016, Pakistan’s two biggest cities seemed especially positioned for good business. Lahore and Karachi share a tattered public transport network (<a href="http://blogs.tribune.com.pk/story/16022/lahore-metro-bus-system-a-major-step-in-pakistans-public-transport/">slightly less so in Lahore thanks to the Metro</a>), weak rule of law, and high costs of vehicle ownership. These all imply strong demand for a safe, reliable, and affordable cab service. </p>
<p>There was the promise of empowerment for many women – predominantly those working long hours outside the home – who tended to avoid public transport over security concerns. Conscious of their needs, Uber organised <a href="https://www.rt.com/news/334643-uber-pakistan-sex-drivers/">seminars on sexual harassment</a> for drivers, instructing them never to contact women passengers after the ride or to comment on their attire and lifestyle. The efforts haven’t stopped <a href="https://www.techjuice.pk/uber-driver-reportedly-harassed-and-threatened-a-female-passenger-in-karachi/">reports of sexual harassment</a>, among other examples of <a href="https://en.dailypakistan.com.pk/technology/corruption-drives-into-uber-in-pakistan/">service quality issues</a>. Some of those issues are driven by a trend for drivers to take maximum – and unhelpful – advantage of the inducements offered by Uber as it attempts to gain a foothold.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/143889/original/image-20161031-15799-121r9qi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/143889/original/image-20161031-15799-121r9qi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/143889/original/image-20161031-15799-121r9qi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/143889/original/image-20161031-15799-121r9qi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/143889/original/image-20161031-15799-121r9qi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/143889/original/image-20161031-15799-121r9qi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/143889/original/image-20161031-15799-121r9qi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/143889/original/image-20161031-15799-121r9qi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Ride-sharing takes on a different form in Karachi.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-434619652/stock-photo-chiang-maithailand-june-62016-a-woman-hand-holding-uber-app-showing-on-apple-iphone-6-plus-in-the-caruber-is-smartphone-app-based-transportation-network.html?src=XXDdrh5x1oJ7iHOhIQim7A-1-51">Prathan Chorruangsak/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Blind spot</h2>
<p>In order to offer drivers some protection against a lack of rides, Uber would pay <a href="https://en.dailypakistan.com.pk/technology/corruption-drives-into-uber-in-pakistan/">270 Pakistani rupees an hour</a>, about £2.10, as compensation. Car rental companies and dealerships were quick to respond. They identified blind spots on Uber’s map and placed all their available cars there so they could earn money while parked up. Others, enticed by good demand, rented cars and hired drivers to pick up passengers. <a href="http://www.dnd.com.pk/uber-pakistan-hosted-a-media-meetup-for-their-partner-drivers-in-lahore/111100">Fleet ownership is endorsed by Uber</a> but fleet driver compensation appears to be left to the discretion of the car’s owner. </p>
<p>This represented a shift from the standard model of the service that customers are used to in the west, where the owner of the car and the driver are the same person. This is so in markets with relatively high rates of car ownership where financing is easily available from banks <a href="https://newsroom.uber.com/uber-vehicle-financing-bringing-entrepreneurship-to-the-indian-grassroots/">or from Uber itself</a>. In other markets <a href="http://www.smh.com.au/business/innovation/uber-cars-used-all-day-and-night-as-drivers-take-turns-using-cars-20160419-goa0ip.html">fleet owners tend to charge drivers a monthly rental</a> but let them retain, at least most of, their earnings. In Pakistan, a large number of the drivers were employees of the owner, and not owners themselves, working for fixed salaries rather than a percentage of earnings. This appeared to be the cause of a distorted incentive system. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/143933/original/image-20161031-15783-1y0d8wd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/143933/original/image-20161031-15783-1y0d8wd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/143933/original/image-20161031-15783-1y0d8wd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=336&fit=crop&dpr=1 600w, https://images.theconversation.com/files/143933/original/image-20161031-15783-1y0d8wd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=336&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/143933/original/image-20161031-15783-1y0d8wd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=336&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/143933/original/image-20161031-15783-1y0d8wd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=422&fit=crop&dpr=1 754w, https://images.theconversation.com/files/143933/original/image-20161031-15783-1y0d8wd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=422&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/143933/original/image-20161031-15783-1y0d8wd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=422&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Pakistan trials a new model.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/wasifmalik/11553732764/in/photolist-iAXUe3-qvNfWK-2rWnMt-e7Qdpb-iB3agb-pRf8M1-iKjRVh-iB3SJb-qvNcQp-iB3mBV-qvFSKJ-qvQDHH-iB1yWG-mB7CsS-pRf5Bo-qNaRZq-qvFR1S-iB2HKk-pRvv7K-qvRXyP-pRt1U6-iB1RhX-iAY21F-iB2s5G-qKXbsu-iB2MxD-qKZFP1-fu9m4P-qvFLTd-iB2LLw-qNf99p-iB3nh2-pRf73E-qvEYfb-mB76W2-qNaW9s-qN5YRR-iB27w2-qvFTGo-pRf6Cb-qNaXC9-iAZF1g-iAYD3Z-iB1KT1-iB1TEw-iAZVKg-mB7uSx-qNf52B-fu9ty8-fuoZT7">Wasif Malik/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Because the drivers were on a fixed salary, they earned the same regardless of whether they provided a service or not. Many drivers frequently cancelled rides and harassed customers; often making them cancel rides. This same trend has been <a href="https://www.techinasia.com/count-uber-home-midnight-india-heres">the case in India as well</a>. At least in the immediate term, their own monthly compensation would remain unaffected.</p>
<h2>Capital drive</h2>
<p>Whether these issues are ultimately found to be teething problems or structural constraints, they underlie the rentier-sharing economy nexus which favours the rentiers <a href="http://www.economist.com/blogs/buttonwood/2014/05/savers-and-monetary-policy">who live off accumulated wealth, savings or inheritances</a>. The sharing economy allows those who own cars and homes to generate an income by using technology to offer them to strangers. The nexus works because when rentiers share they accumulate. Then they share more. </p>
<p>A key issue here is access to finance. Another is the often hazy distinction between the rentier and the real economy, since they often create jobs too. The third is the matter of concentrated ownership in the sharing economy.</p>
<p>The mainstay of the rentier is unequal access to finance. The <a href="http://www.bbc.co.uk/history/historic_figures/keynes_john_maynard.shtml">economist John Maynard Keynes</a> referred to this when he noted that the “<a href="http://krugman.blogs.nytimes.com/2014/01/22/the-euthanasia-of-the-rentier/?_r=0">euthanasia of the rentier</a>” would occur when capital was abundant. The scarcity of capital in Pakistan, where lending rates and documentation requirements constrain car ownership, comes across as a key reason behind the distorted incentives underlying <a href="http://tribune.com.pk/story/1181584/driving-service-isnt-enough/">Uber’s poor service quality</a>. </p>
<p>It is likely that such issues have compelled the service to <a href="http://www.dnd.com.pk/uber-new-fare-price/116168">drastically reduce fares in order to attract more customers</a>. And so, instead of being an opportunity for car owners to earn an income on a self-employed basis or as an “<a href="http://www.arbeitenundleben.de/downloads/Entreployee1.pdf">entreployee</a>” Uber became an investment opportunity for those looking to deploy accumulated wealth.</p>
<p>The corollary here is that <a href="https://www.techinasia.com/pakistan-uber-growth">Uber did create jobs</a>. Isn’t that the most important outcome? Here, there are two points worth considering. One is that accumulation patterns would have been different had financial access been more inclusive. And two is the tendency of rentier capitalism to create the social class that SOAS economist <a href="http://www.guystanding.com/files/documents/Le_Monde_article_published_July_2016.pdf">Guy Standing describes as “the precariat”</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/143894/original/image-20161031-15793-f08wk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/143894/original/image-20161031-15793-f08wk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/143894/original/image-20161031-15793-f08wk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/143894/original/image-20161031-15793-f08wk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/143894/original/image-20161031-15793-f08wk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/143894/original/image-20161031-15793-f08wk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/143894/original/image-20161031-15793-f08wk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/143894/original/image-20161031-15793-f08wk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Heart of the matter.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/ifl/5375652550/in/photolist-9c2CdE-46GLu-9bYxtv-c7GfhA-4Qj1gA-dQBos6-dQBWk8-dQGYQQ-dQGYGf-dQHwBs-dQHwK3-EtBZom-oUFSCS-pz7fDn-8P7TDF-csJv9y-v2eJS-8fnBnY-7yEz4c-86uMgz-aSisFx-4oVuHB-aSisRg-oXbnQ2-oEFP4s-oWUS3x">Peretz Partensky/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>This is the group whose earning patterns are characterised by unstable contracts such as zero-hours contracts, and by the absence of non-wage benefits. Uber drivers in the richest countries also generally fall into this category but, as owners rather than employees, they are relatively better off than those in countries like Pakistan and India. The comparison is an example of the mechanisms that drive higher inequality in poor countries.</p>
<p>The third trend is growing concentration of ownership in the sharing economy. Airbnb data for New York indicates the much of the company’s revenue comes from people with <a href="https://www.jacobinmag.com/2014/01/sharing-and-caring/">multiple listings</a>. This weakens the notion that there is a culture of “sharing” rather than one of rentierism which drives such business. At the core of this is the price of property, which limits ownership. Uber seems to be following the same trend in Pakistan where diminutive purchasing power makes car ownership an elusive dream for most.</p><img src="https://counter.theconversation.com/content/67359/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Juvaria Jafri does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The ride-sharing app means different things in different countries. In Karachi and Lahore, it has highlighted economic inequalities.Juvaria Jafri, Doctoral researcher in International Political Economy, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/645632016-09-04T17:46:06Z2016-09-04T17:46:06ZLicensing metered taxis does more harm than good – South Africa should stop it<figure><img src="https://images.theconversation.com/files/135783/original/image-20160829-17887-th1r5k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Meter taxi companies want to level the playing fields between themselves and Uber.</span> <span class="attribution"><span class="source">Kai Pfaffenbach/Reuters</span></span></figcaption></figure><p>Using a metered taxi is a nuisance in most countries: just try to find a cab on a rainy afternoon in downtown Manhattan or London. New e-hailing services like Uber have vowed to revolutionise the transportation industry. But they have also left city officials scratching their heads about regulations, and traditional metered taxi drivers from <a href="http://www.bbc.com/news/world-asia-35868396">Jakarta</a> to <a href="http://www.telegraph.co.uk/technology/picture-galleries/11902080/Anti-Uber-protests-around-the-world-in-pictures.html?frame=3458895">Toronto</a> and <a href="http://qz.com/608977/nairobi-taxi-drivers-are-trying-to-shut-down-uber-with-protests-and-intimidation/">Nairobi</a> to <a href="http://gazettereview.com/2015/12/morocco-taxi-drivers-protest-against-uber/">Casablanca</a> fuming.</p>
<p>In South Africa, using a metered taxi can be a nightmare. There have been many reports of reckless drivers, defunct meters or drivers who take circuitous routes to push up the price. There are <a href="https://www.enca.com/south-africa/brother-assaulted-teen-blasts-meter-taxi-service">personal security risks</a>, too. </p>
<p>The situation is exacerbated by unlicensed and unregistered metered taxis. Such drivers are often highly organised and, as everywhere around the world, <a href="https://www.bloomberg.com/view/articles/2014-04-16/uber-tries-to-rise-above-the-brussels-taxi-cartel">act as cartels</a> to prevent competition from branded metered taxis.</p>
<p>Both unregistered and registered metered taxis haven’t welcomed the advent of e-hailing services like Uber. Instead, some have resorted to <a href="http://www.news24.com/SouthAfrica/News/meter-taxi-drivers-take-on-uber-drivers-at-ct-airport-20160603">scare tactics</a> and even <a href="http://www.fin24.com/Tech/Multimedia/more-pics-emerge-of-violent-uber-attack-20160523-2">violence</a> directed at their new competitors.</p>
<p>This escalation of violence has pushed South African policymakers to search for new and better ways to <a href="http://www.sanews.gov.za/south-africa/national-land-transport-amendment-bill-sent-parliament">regulate the metered taxi industry</a>. The law is likely to <a href="http://www.businesstimesafrica.net/index.php/travel/963-south-africa-uber-welcomes-tough-sa-transport-law.html">soon treat</a> e-hailing companies as metered taxi companies. The bill, however, fails to account for the crucial differences between e-hailing and traditional metered taxi services. It is likely to cause more harm than good. </p>
<p>Regulatory environments differ around the world. We’d argue that in South Africa regulators should stop trying to apply yesteryear’s rules to new industries and services. They should tackle industry-specific challenges instead. </p>
<p>And we’d ask why taxi operators – whether meter cabs or e-riding services – should be licensed at all.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/135918/original/image-20160830-28233-okti1s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/135918/original/image-20160830-28233-okti1s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/135918/original/image-20160830-28233-okti1s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/135918/original/image-20160830-28233-okti1s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/135918/original/image-20160830-28233-okti1s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/135918/original/image-20160830-28233-okti1s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/135918/original/image-20160830-28233-okti1s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/135918/original/image-20160830-28233-okti1s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">There’s a revolution in the transport industry – can regulators keep up?</span>
<span class="attribution"><span class="source">Eric Thayer/Reuters</span></span>
</figcaption>
</figure>
<h2>Innovation in the local transport sector</h2>
<p>E-hailing services match consumers with independent service-providers using a smartphone app. A similar approach has been successfully applied to <a href="http://www.economist.com/blogs/gulliver/2011/10/airbnb">renting holiday apartments</a> or <a href="https://www.theguardian.com/environment/bike-blog/2014/sep/18/would-you-share-your-bike-with-a-stranger-spinlister-hopes-so">hiring a bike</a>.</p>
<p>Uber is currently the only major e-hailing service operating in South Africa. It has drivers in Cape Town, Durban, Port Elizabeth, Johannesburg and Pretoria. Drivers usually work on their own as independent contractors but are subject to city-specific requirements designed by Uber. They must pass a background check; their car needs to be in good order and it cannot be too old.</p>
<p>Uber and its smaller competitors are becoming more popular around the world. But meter taxi drivers are not among their fans. Part of the answer is the tight regulation. </p>
<p>In South Africa, city authorities screen meter taxi drivers and test cars; they set fixed rates per kilometre charged by the taxis. These regulations usually don’t apply to e-hailing companies, allowing them to operate at lower market prices.</p>
<p>Most importantly, meter taxi companies must buy licenses that allow them to provide their service. Meter taxi drivers have <a href="http://www.cato.org/publications/policy-analysis/ridesharing-safe">rightfully complained</a> that there is no level playing field between themselves and Uber. And the licensing system seems to be the main <a href="http://www.iol.co.za/news/south-africa/western-cape/well-burn-uber-down-say-metered-taxi-drivers-2046122">battleground</a> between meter taxi and Uber drivers.</p>
<h2>Licenses control quantity, not quality</h2>
<p>South African cities are interpreting the <a href="http://www.transport.gov.za/Portals/0/PublicTransport/nptr/docs/NLTA_Act_2009_june2016.pdf">National Land Transportation Act</a> differently to deal with licensing Uber drivers. </p>
<p>In Johannesburg, Uber drivers operate using <a href="http://mg.co.za/article/2015-02-12-no-fare-cry-uber-taxi-competitors">charter service licenses</a>. Cape Town created a new category of licences <a href="http://www.tct.gov.za/en/news/general/city-welcomes-granting-of-operating-licences-to-Uber-drivers/page-1/">for e-hailing services</a>. Meter taxi drivers are insisting that Uber drivers should become subject to standardised licensing rules rather than getting what some perceive as special treatment.</p>
<p>But why should any kinds of taxi operators be licensed at all?</p>
<p>It’s been claimed that licensing meter taxi drivers <a href="http://object.cato.org/sites/cato.org/files/pubs/pdf/pa767.pdf">protect customers</a>. Above all, licences restrict the supply of metered taxis. New taxi operators must buy a licence from current licence-holders or wait for new licences to be issued.</p>
<p>Restricting supply artificially ultimately implies higher prices. If demand for taxi services is constant, lower supply implies higher fares. In the case of transport services it also means <a href="http://bit.ly/2byz5oO">longer waiting times</a>. Another unintended consequence is the emergence of <a href="http://cfo.dc.gov/sites/default/files/dc/sites/ocfo/publication/attachments/ocfo_taxicab_briefing_note.pdf">illegal taxis</a>.</p>
<p>Licences act as a barrier to entry, too. They <a href="http://bruegel.org/2016/02/uber-and-the-economic-impact-of-sharing-economy-platforms/">shield</a> metered taxis from new entrants and reduce competition to those already in the market. This has two implications. First, without competition there is no <a href="http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WP2(2014)6&docLanguage=En">pressure to innovate</a>. Secondly, market participants are incentivised to defend their market position <a href="http://www.heritage.org/research/reports/2015/12/taxicab-medallion-systems-time-for-a-change">through lobbying</a>. </p>
<p>In a 1984 <a href="https://www.ftc.gov/sites/default/files/documents/reports/economic-analysis-taxicab-regulation/233832.pdf">report</a> the US Federal Trade Commission wrote that entry restrictions in the taxi markets enable:</p>
<blockquote>
<p>… taxi firms in a number of cities to exercise market power … Restrictions on the number of taxis also limit the employment opportunities of less skilled workers.</p>
</blockquote>
<h2>Assure quality differently</h2>
<p>There are good aspects to licensing, too: like restricting the supply to commercial drivers and only licensing cars which fulfil certain quality standards.</p>
<p>Economists refer to taxis as <a href="http://restud.oxfordjournals.org/content/80/3/876">credence goods</a>. Customers are usually unable to assess the quality of the taxi and the driver’s skills before the ride. To prevent cheating or unjust behaviour, some quality control is needed. Cities could, for example, state formal requirements and issue operational allowances to all those who formally meet these requirements. </p>
<p>This is exactly how we regulate many transportation markets, long-distance buses and airlines among them, and other credence goods markets like restaurants and pharmaceutical drugs. There’s no reason the same approach can’t be applied to taxi drivers.</p>
<p>There is also no reason to treat all companies of one industry in equal measure. The rules and regulations for restaurants differ from the rules and regulation for food trucks and other mobile food vendors, for example. </p>
<p>E-hailing companies are not metered taxi companies. Regulators must resist the urge to regulate them in equal measure just because both offer a similar service. Their business model is different and the challenges both types of companies pose for regulators are different, too.</p>
<h2>Customers come first</h2>
<p>The other thing regulators must remember is that they ought to work with customers in mind. Customers demand change in a defunct industry and it’s to their demands – not those of the monopolists – that regulators must respond.</p>
<p>At the same time, regulators must not be blinded by Uber’s grandiose promises. They need to tackle the specific challenges Uber’s business model poses. How can drivers be protected from exploitative contracts with car owners? How can regulation encourage competition in the e-hailing sector? </p>
<p>And, most importantly, how can authorities ensure that drivers and car owners pay income tax? </p>
<p>The proposed regulatory framework, which would treat Uber as an ordinary metered taxi company, would not provide satisfactory answers to any of these problems.</p><img src="https://counter.theconversation.com/content/64563/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>E-hailing services have vowed to revolutionise the transportation industry. But they’ve also left city officials scratching their heads about regulations and traditional metered taxi drivers fuming.Co-Pierre Georg, Senior Lecturer, African Institute for Financial Markets and Risk Management, University of Cape TownMichael E. Rose, PhD Candidate in Economics, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/643542016-08-24T06:54:48Z2016-08-24T06:54:48ZTaxi driver compensation for Uber is unfair and poorly implemented<p>In all states that have legalised the ride-sharing app Uber, the response has been to offer compensation to taxi drivers. This is a typical move by governments that are liberalising long-standing, regulated monopolies. But the amount of compensation is far from fair and the process has been poorly implemented.</p>
<p><a href="http://www.premier.vic.gov.au/victoria-leads-the-way-with-safer-simpler-more-flexible-trips/">Victoria</a> is the latest of the <a href="http://www.abc.net.au/news/2016-08-11/where-is-uber-legal-in-australia/7719822">states and territories</a> in allowing Uber to operate and its compensation package is the most generous. </p>
<p>There’s a A$2 levy on each ride (that will vary according to the operator), proposed to provide compensation in the order of $378 million. There is also a $75 million allocation from the levy for a fund for those hit hardest by the reforms.</p>
<p>By contrast, NSW <a href="http://www.transport.nsw.gov.au/media-releases/new-transport-economy-consumer-choice-competition-and-downward-pressure-fares">announced a $1 levy per taxi</a> or Uber ride. Some of the funding goes to taxi operators suffering severe financial hardship as a result of the regulatory changes. The total package for NSW is $250 million.</p>
<p>Taxi industry reform had to happen. But it has been driven by populist policy with state governments bowing to pressure from Uber’s disruptive approach. While states are providing compensation packages for taxi licence owners, the amounts pale in comparison to the investment value that has been lost.</p>
<p>In Sydney, <a href="http://www.rms.nsw.gov.au/about/corporate-publications/statistics/public-passenger-vehicles/taxi-transfers-average-prices.html">average licence values peaked at about $425,000 in 2011</a>, and have been in decline since. Licence owners can expect to receive $20,000 in compensation per licence, with multiple licence owners receiving a maximum of $40,000.</p>
<p>In Melbourne, recent <a href="http://taxi.vic.gov.au/owners-and-operators/taxi-owners-and-operators/licence-transfer-and-assignment/metropolitan-taxi-licence-transfer-prices">market values were in the order of $150,000</a>, <a href="http://www.theage.com.au/victoria/taxi-glut-fears-as-hundreds-swoop-on-cheap-new-melbourne-licences-20140815-104hb1.html">down from around $500,000 in 2010-11</a>. Victoria’s buy-back scheme will provide for a maximum of two licences with $100k offered for the first licence and $50,000 for the second licence.</p>
<p>Taxi licence owners have been mostly kept in the dark about taxi industry reform in Victoria. As late as August 19, <a href="http://www.news.com.au/national/breaking-news/vic-on-brink-of-uber-legalisation/news-story/ffe4e3f4e6331c0c4bfb7a1880eece7b">taxi operators in Melbourne had no idea</a> what would be in the reform package announced yesterday. </p>
<p>And Victoria’s comparatively generous package might make Sydney and <a href="http://www.brisbanetimes.com.au/queensland/uber-legal-in-queensland-in-september-with-100m-compensation-for-taxi-industry-20160811-gqq5yi.html">Brisbane</a> operators wonder why the differences in the compensation packages should be so dramatic.</p>
<p>Uber users may not be happy about the additional levies to fund compensation for the taxi industry, either. </p>
<p>But the bigger issue is that investor and voter confidence in state governments’ power to regulate effectively has been diminished for three main reasons.</p>
<p>First, Uber <a href="http://www.news.com.au/finance/business/travel/uberx-versus-taxis-why-the-time-for-taxis-is-over/news-story/cb1e2d9dc77aa29dd88646cbae1d5d4e">effectively broke the law</a> and used its capital to force the end of the old monopoly, <a href="http://www.smh.com.au/digital-life/smartphone-apps/uber-pledges-to-pay-1700-ridesharing-driver-fines-in-victoria-20140522-zrlnh.html">allegedly paying drivers’ fines</a> while <a href="http://www.couriermail.com.au/news/queensland/uber-uses-horse-and-carriage-to-deliver-hardcopy-emails-of-support/news-story/f3f8575d8528bae6912a2285782c13b7">lobbying governments in unique ways</a>.</p>
<p>Rather than encourage a proper transition strategy, even the <a href="http://www.smh.com.au/federal-politics/political-news/uber-has-revolutionised-transport-in-australia-but-will-taxpayers-get-anything-in-return-20150924-gju1kb.html">Prime Minister applauded Uber</a> for its “agile” business model. Uber made the policy, not the elected representatives.</p>
<p>Second, taxi operators have been bound by the rules of the regulated monopoly. They played by the rules established under the rule of law. </p>
<p>Uber didn’t, and, backed by popular sentiment, has cleverly manipulated the taxi industry. State governments continued to regulate taxis but were <a href="http://www.abc.net.au/news/2016-06-07/uber-court-decision-prompts-legislation-change-in-victoria/7484318">powerless to enforce their own laws</a> where Uber was concerned.</p>
<p>Third, state governments have been slow to act and adequately transition the formerly regulated monopolies. Reform of the taxi industry was decades overdue. This has effectively destroyed the value created under the rules of the regulated monopoly. While consumers may be unconcerned, the taxi industry did not create itself – it was created as a regulated monopoly by state governments.</p>
<p>If we consider that <a href="http://taxi.vic.gov.au/about-us/overview/industry-statistics#taxilicences">Melbourne</a> and <a href="http://www.smh.com.au/nsw/uberx-legalised-in-nsw-compensation-for-taxi-plate-owners-20151217-glpt6r.html">Sydney</a> alone are serviced by more than 8,000 taxi licences, once valued at up to $500,000 each, then significant investment value has been destroyed. Not by competition, but by a company that broke the law, by consumers who readily supported cheaper prices, and then by state governments that restructured the market by implementing rapid, populist policies.</p>
<p>Had state governments transitioned the taxi industry appropriately, then licence owners could have had adequate time to prepare. It is not their fault that state governments were slow to act.</p>
<p>Uber has won, and there will be much rejoicing by consumers. But the way the transition has occurred verges on the unethical, and licence owners are footing the bill.</p>
<p>This is inherently unfair. In a regulated monopoly, the regulated players have little impact on the rules.</p>
<p>The damage done by populist policy and poor regulatory oversight in the taxi industry is a far cry from the slow, unnatural death of the Australian automotive manufacturing industry. In fact, automotive manufacturers are still <a href="http://www.smh.com.au/nsw/sydney-traffic/sydney-families-spend-22000-a-year-on-transport-report-20160821-gqxjpb.html">protected by tariffs</a> even though the industry is set to end very soon. It is obvious that the investors in the taxi industry lack the political clout of the automotive industry multinationals.</p>
<p>It is clear that multinationals can manipulate state governments by adopting Uber’s approach. All you need is plenty of money, a plan to introduce cheaper prices for consumers, and the boldness to flaunt the law. As we have seen, state governments will then roll over.</p>
<p>Let’s now hope that your retirement savings are not next in the way of unscheduled reform.</p><img src="https://counter.theconversation.com/content/64354/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael de Percy does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The way governments have handled the compensation process for taxi drivers, as ride-sharing app Uber is legalised, is uneven.Michael de Percy, Senior Lecturer in Political Science, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/642452016-08-23T13:08:28Z2016-08-23T13:08:28ZDriverless Uber cars are coming to disrupt the sharing economy – but capitalism carries on as usual<p>Uber’s <a href="http://www.bloomberg.com/news/features/2016-08-18/uber-s-first-self-driving-fleet-arrives-in-pittsburgh-this-month-is06r7on">announcement</a> that it will introduce driverless cars in Pittsburgh, US, throws into question the fate of not just the <a href="https://theconversation.com/uk/topics/sharing-economy-7841">“sharing economy”</a>, which Uber helped to make mainstream, but the future of employment in a wider sense too. One thing is for sure, however: though Uber may be changing, the way that it has shifted the way we work is here to stay.</p>
<p>Uber has become virtually synonymous with the idea of new business models. It is so well-known that it has actually given us a new word – “uberisation” – to describe work that is managed via online platforms in the so-called sharing economy. The company is in many ways an emblem of the nimble inventiveness with which capitalism, helped along by technology, manages to survive economic crises, find creative new solutions to old problems <a href="http://monthlyreview.org/2015/01/01/icapitalism-and-the-cybertariat/">and continuously reinvent itself</a>. Using driverless cars is yet another example of this.</p>
<p>Founded in 2009, a year after Airbnb and Taskrabbit, Uber was among the first service companies to spot a way to avoid having to invest a considerable amount in depreciating assets such as fleets of cars, specialist tools or expensive real estate. The solution? To externalise the risk and use other people’s assets. </p>
<p>In the original Uber model, the cost of purchasing and maintaining cars fell on the owner-drivers, not the company. Its attitude to workers was similar. Why invest in your own workforce, with all the liabilities that go along with being an employer, when you could use the services of people who pay for their own training, holidays and pensions and take responsibility for their own downtime? </p>
<p>Online platforms claim that they are not employers – they are just a high-tech interlocutor of supply and demand for services. They make their profits by taking a cut on all transactions. And, with minimal investment, they can expand rapidly into new markets.</p>
<h2>Taking advantage</h2>
<p>One of the reasons Uber attracted so much more public attention than other platforms that provide work on demand (such as Taskrabbit, Handy, Upwork or PeoplePerHour) is that it entered a field – taxi services – where workers were already organised. Taxi drivers in many cities have a long history of forming associations to agree rules and negotiate with public authorities over things like standard fares, the location of ranks <a href="http://www.whosdrivingyou.org/history-repeating-itself">and the conditions for obtaining licenses</a>. This contrasts with people providing services like window cleaning, gardening, childcare or assembling flat-pack furniture, which other platforms provide. </p>
<p>London black cab drivers typically spend around four years learning “the knowledge”, which requires them to know all possible routes through the city and is a <a href="http://www.theknowledgetaxi.co.uk/">condition for a license</a>. So it is not surprising that the entry of Uber into their market provoked storms of protest. The arrival of GPS rendered much of that hard-won knowledge obsolete and threw open the previously well-guarded field of taxi driving to anybody with a car and a smartphone who wanted to make some extra income. And lower prices made private rides affordable to people who, in the past, had seen taking a taxi as an occasional luxury. </p>
<p>But these advantages could not last for ever. Competitors entered the scene. Public authorities <a href="http://www.sfexaminer.com/state-approves-sweeping-new-regulations-uber-lyft-delays-rules-leased-vehicles/">woke up</a> to the need to regulate these new taxi services – what if there was a fatal accident? What if a driver, or a passenger, was assaulted? Who was responsible for insurance? </p>
<p>And drivers started to feel more like exploited workers than carefree entrepreneurs. If Uber was setting the rates and dictating how they should work, then shouldn’t it start taking on the responsibilities of an employer? Uber <a href="http://www.bloomberg.com/news/articles/2015-06-24/uber-case-spotlights-a-challenge-when-is-a-worker-an-employee-">has faced court challenges</a> over this in the both the US and <a href="https://www.theguardian.com/technology/2016/jul/19/uber-drivers-court-tribunal-self-employed-uk-employment-law">the UK</a> over this issue. Some of its US drivers have even set up their <a href="http://www.ibtimes.co.uk/angry-uber-lyft-drivers-launch-own-rival-taxi-app-called-swift-1545756">own co-operative</a> with drivers from Lyft, a similar service, as an alternative.</p>
<h2>Keep calm and carry on</h2>
<p>Meanwhile Uber has become a huge corporation with a global spread and <a href="http://uk.businessinsider.com/report-uber-15-billion-revenue-in-2015-2016-1">revenues of US$1.5 billion in 2015</a>. Its latest attempt to reinvent itself, interestingly, adopts one of the classic industrial strategies from the past for boosting profits – automation. Sidelining its past game plan of making its workers do all the investing, Uber is putting its own money into a new technology: driverless cars. </p>
<p>If the gamble pays off, then this is likely to have several impacts. It will continue to undermine the position of traditional taxi companies by offering a cheaper service (and potentially Uber’s own owner-drivers). But it will also drive out competitors. New entrants to the driverless taxi market will have to invest in fleets of these vehicles. This could enable it to consolidate the near-monopoly it already has in some cities, making the name Uber as synonymous with taxi services as Hoover is with vacuum cleaners and Kleenex with tissues. </p>
<p>If <a href="http://socialistregister.com/index.php/srv/article/view/5712#.V7svL6KrJQU">history can teach us anything</a>, this will not lead to mass unemployment. It might put existing Uber drivers out of work, but this kind of restructuring tends to create new jobs, even as it destroys others. Driverless cars may do to professional drivers what washing machines did to laundry workers. But capitalism, disruptive as ever, carries on as usual.</p>
<p>So if this is the future of Uber, what about the future of uberisation? The evidence is that it is part of a huge trend that is growing inexorably. Across the economy, “work on demand” is becoming a new norm for jobs as varied as supply teachers, agency nurses, supermarket checkout operators and call centre workers. A <a href="http://www.feps-europe.eu/assets/a82bcd12-fb97-43a6-9346-24242695a183/crowd-working-surveypdf.pdf">recent survey</a> of 2,238 people that we carried out at Hertfordshire Business School suggested that 3% of the adult population in Britain works for online platforms “at least weekly” with many more (11%) doing so more occasionally. An estimated <a href="http://www.bbc.co.uk/news/business-35761924">2.5% of employees</a> are on zero hours contracts and <a href="https://www.ons.gov.uk/releases/uklabourmarketstatisticsmay2016">6% are on temporary contracts</a>. The <a href="https://www.ons.gov.uk/releases/uklabourmarketstatisticsmay2016">latest UK government figures</a> show that more than a million people have second jobs and nearly 5m are self employed. </p>
<p>Uber may be changing. But unless there are radical changes in labour and social protection regulation, it looks as if uberisation is here to stay.</p><img src="https://counter.theconversation.com/content/64245/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ursula Huws currently directs research projects which receive funding from The COST Association, the Foundation for European Progressive Studies and UNI-Europa. She is a trustee of the Citizen's Income Trust.</span></em></p>Uber’s introduction of driverless cars is a big change for the company but the changes it has brought to the world of work are here to stay.Ursula Huws, Professor of Labour and Globalisation, University of HertfordshireLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/590672016-07-05T01:02:02Z2016-07-05T01:02:02ZHow Uber opens cities only to close them<figure><img src="https://images.theconversation.com/files/121651/original/image-20160509-23374-1cdlleg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Uber may open cities from taxi oligopolies, but ultimately it closes them off to the possibility of more meaningful alternatives.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/41802269@N03/16562371385/in/photolist-reytZk-8bjpqw-3Jaze-pRn3sS-e8dar4-fZwzGt-dLk348-9EeChH-7sZ7Pw-7LUxsM-FC8g7n-hmt4uE-7sZ7YQ-8KmALu-qKUoKw-9z4Kzr-bK99dM-fEVHjz-dQPMVf-8KmATo-8K4MfZ-9z7LLf-9K277T-8KmAQ1-ejRHZH-6ABpgr-qvKug6-qgQJ8v-aFnNv6-6L7p5R-8K55KH-avqz66-qvC9eA-qvKw6P-qN39Tv-9RTW34-qvLGFn-qN32Dv-pRchu7-8KmzHy-qKUraS-qN38nV-qN35An-qN7X3Y-qvKqYz-qvD6hU-qN33Mc-nmYi8e-qvLxoe-qKUfw7">Scott L/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Most of us know the story of what <a href="http://www.salon.com/2016/01/06/uber_fail_why_the_start_up_giant_stumbled_in_europe_and_how_it_could_happen_in_the_u_s/">Salon’s Elias Isquith</a> calls “Wall Street’s favourite disrupter”. Uber, the ride-hailing service run primarily through smartphones, is a global economic success story. </p>
<p>In 2008, it was but an idea held by <a href="https://www.uber.com/our-story/">Travis Kalanick and Garrett Camp</a>. Today it is a profit-making “<a href="http://www.marketwatch.com/story/uber-airbnb-and-other-unicorns-have-valuations-cut-at-t-rowe-price-2016-04-15">unicorn</a>”. It was <a href="http://www.nytimes.com/2015/12/04/business/dealbook/uber-nears-investment-at-a-62-5-billion-valuation.html">recently valued</a> at US$62.5 billion.</p>
<p>How Uber came to be worth such significant sums is a question <a href="http://www.bloomberg.com/news/videos/b/48bcbc81-c457-4c71-809c-823da150b5a3">often posed</a>. Integral to its success was its speedy efforts at connecting riders with drivers through smartphones. This saw Uber become an <a href="http://fortune.com/2014/06/25/uber-the-great-disruptor-of-pizza-delivery/">on-demand</a> <a href="http://www.mirror.co.uk/tech/netflix-uber-spotify-disruptor-businesses-7354782">disruptor business</a>. In the process, it has <a href="https://www.uber.com/">alluringly branded itself</a> as a service “for the good of all” that puts “people first”.</p>
<p>Uber seemingly takes from over-priced taxis, facilitates livelihoods for its drivers, gives to the needy rider and sticks it to urban regulators – or so the story goes.</p>
<p>Much closer to the truth may be that when Uber isn’t wrapping itself in cloaks of communal good, it is busy trying to institute a monopoly on ride-hailing. It actively encloses what could be a more open city in which riders and drivers work to benefit city residents.</p>
<h2>Now you’re open, now you’re closed</h2>
<p>Uber “opens” cities to “close” them. We think this way because Uber is just another intermediary capitalist (like eBay, Airbnb and PayPal) that profits from the needs of typically urban people connected to the internet. </p>
<p>Uber is therefore <a href="https://ricochet.media/en/852/uber-is-capitalism-at-its-worst">an extension of capitalism</a> and, because of that, can be understood as a business trying to maximise its market share.</p>
<p>Uber “opens to close” a city in three steps:</p>
<ul>
<li><p>to disrupt the existing taxi monopoly (a closed system) through marketing and <a href="http://www.brisbanetimes.com.au/queensland/uber-fined-17-million-by-queensland-20150624-ghwugz.html">paying fines incurred by its drivers</a>;</p></li>
<li><p>to entice riders to download its app, drivers to “share” their car, and urban regulators to acquiesce to the popularity of the Uber service; and</p></li>
<li><p>to exclude ride-hailing alternatives through its maximised market share.</p></li>
</ul>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/123733/original/image-20160524-20557-1g5cqex.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/123733/original/image-20160524-20557-1g5cqex.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/123733/original/image-20160524-20557-1g5cqex.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=492&fit=crop&dpr=1 600w, https://images.theconversation.com/files/123733/original/image-20160524-20557-1g5cqex.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=492&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/123733/original/image-20160524-20557-1g5cqex.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=492&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/123733/original/image-20160524-20557-1g5cqex.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=619&fit=crop&dpr=1 754w, https://images.theconversation.com/files/123733/original/image-20160524-20557-1g5cqex.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=619&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/123733/original/image-20160524-20557-1g5cqex.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=619&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Uber ‘opens to close’ a city in three steps.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/29233640@N07/2856362888">Robert Couse-Baker/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>The marketing Uber uses to disrupt the grip one or more taxi companies have on a city is to present a rich rhetoric of being the “alternative”, somehow “grassroots” and, most importantly, a “communal” choice for drivers and riders. It casts itself as a Robin Hood in the struggle against unjust, or simply outdated, urban regulators.</p>
<p>This branding, Uber’s cheaper price and its convenient app make it an alluring option for ride-hailers. So long, cabbie dynasty, this city’s now open.</p>
<p>But because Uber grows within the shell of the taxi industry all it really does is open a city to enclose it for its own benefit. It does this through consistent marketing to riders, but also by enticing drivers to partner with Uber with <a href="http://www.news.com.au/finance/business/travel/a-new-report-explores-the-benefits-of-uber/news-story/5e41687c9bc2614f07015f85eb784f7f">promises of higher pay</a> and a <a href="https://partners.uber.com/join/">be-your-own-boss mentality</a>. </p>
<p>Uber also crows about creating <a href="http://www.theaustralian.com.au/business/business-spectator/uber-sharpens-job-creation-pitch-/news-story/eafd7dc21fcd669d93e4a5a2ba7900a2">tens of thousands of jobs</a> and getting <a href="http://www.reuters.com/article/us-uber-women-drivers-idUSKBN0M60RH20150310">one million women into work</a>. This helps to get regulators onside.</p>
<p>A city is “closed” when Uber’s enclosure is complete: when it has successfully disrupted taxis, changed ride-hailing regulation and has a city’s residents on board (so to speak).</p>
<p>We say closed because an “Uber city” is a city captured by intermediary (middleman) capitalism. Defeated taxis are creating their own apps, and <a href="https://www.lyft.com/">alternatives</a> <a href="http://shareyourride.net/">abound</a>. But Uber’s market dominance makes it very difficult for more meaningful alternatives to emerge.</p>
<p>Market dominance means the exclusion of competitors and the control of the means of production so that profits keep rolling in. “Capture your market” is a mantra for a reason. And that reason is because it works – it’s Capitalism 101.</p>
<h2>An open-city alternative</h2>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/121654/original/image-20160509-23374-18olmbw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/121654/original/image-20160509-23374-18olmbw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121654/original/image-20160509-23374-18olmbw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121654/original/image-20160509-23374-18olmbw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121654/original/image-20160509-23374-18olmbw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121654/original/image-20160509-23374-18olmbw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121654/original/image-20160509-23374-18olmbw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The need to get around a city safely and conveniently shouldn’t be viewed as an opportunity for businesses like Uber to cash in.</span>
<span class="attribution"><span class="source">STML/flickr</span></span>
</figcaption>
</figure>
<p>A truly open city would be one where residents are invited, supported and backed by their city government to create their own ride-hailing apps. Riders still get picked up for a fair price, drivers still get paid more, but profit goes into a public trust to ensure the apps provide good service but also to fund resident-specific projects, like <a href="http://www.citylab.com/commute/2016/01/germany-launches-its-national-bike-autobahn-cycle-network/422451/">bike roads</a> fully separated from cars. </p>
<p>Not only will this keep jobs and money inside the city, but it also puts a vital transportation resource into the hands of city residents and not a foreign business.</p>
<p>The need to get around a city safely, conveniently and with as little carbon emissions as possible shouldn’t be viewed as an opportunity for businesses like Uber to cash in. It should rather be treated as a common pool resource. </p>
<p>Since the majority of people in cities still depend on cars and roads to get around, chasing the wrong incentives can lead to chronic traffic jams and a host of other problems.</p>
<p>City residents don’t want traffic jams; moving around is a vital part of their daily lives. Uber doesn’t necessarily mind traffic jams because of surge pricing and a rolling meter – it still makes money. Ironically, despite this conflict of interests, Uber is the US$62 billion Wall Street poster child and the open-city alternative is excluded.</p>
<p>Uber may open cities from taxi rackets, but it closes them off to the possibility of more radical and meaningful alternatives.</p><img src="https://counter.theconversation.com/content/59067/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Uber actively encloses what could be a more open city in which riders and drivers work to benefit city residents.Jean-Paul Gagnon, Assistant Professor in Politics, University of CanberraDavid Carter, Associate Dean of Research and Associate Professor of Law, University of CanberraFanny Thornton, Assistant Professor of Law, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/591822016-05-19T09:27:59Z2016-05-19T09:27:59ZUber should take its lead from Thomas Cook’s battle with Victorian Britain<figure><img src="https://images.theconversation.com/files/122879/original/image-20160517-9458-w46wey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">TAXI!</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/modenadude/6016469846/in/photolist-aaDYSJ-5WdmYC-8ZNJKg-x4Kr9p-cr9A9w-DpKj8-bnZH5u-fGaaxi-pqiva6-A1ehG-y4Cui-v3LVV-HzkUE-eg1Nan-nQ9UvW-wwUCKy-5aPeLs-6kJgJh-5KvrVE-5Qp1cG-5aJY6e-69EotB-6kEaZz-6kJhZm-58P6Nq-6kJiSm-5QjJW6-p21hav-iB6m3z-nrSJG2-s1iFMv-4Hwo86-3hQgQZ-nrSHDF-qRTCB-4HABEj-4HAvp5-6CqpvL-9jX7Wz-9LjNJr-5ioh5U-6kEaq6-6kJkMJ-6kEbT8-6kJhc9-dEaEdp-8g6JNE-92QUf5-67Z4oF-DRbEK">Asim Bharwani/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>App-based ride company Uber has been battling the “establishment” around the world, from traditional <a href="https://www.theguardian.com/technology/2016/feb/10/black-cab-drivers-uber-protest-london-traffic-standstill">black taxi drivers in London</a> to <a href="http://www.abc.net.au/news/2015-12-18/vic-government-wont-rush-decision-on-whether-to-regulate-uber/7040208">regulators in Australia</a>. But Uber is far from the first upstart travel company to rock the status quo. More than 150 years ago, in Victorian Britain, the Thomas Cook travel agency faced vilification before <a href="http://amj.aom.org/content/early/2016/04/18/amj.2015.0365.abstract">skilfully winning over its critics</a>.</p>
<p>So how did the original travel disruptor pull it off? The circumstances behind the rise of both companies are vastly different, but there are lessons in the way a former cabinet maker and temperance preacher <a href="https://www.thomascook.com/thomas-cook-history/">navigated his company</a> from outcast to mainstream in about 15 years, not only by dulling criticism, but by actually winning the public over to his side.</p>
<p>Having started from modest beginnings <a href="http://www.thomascookgroup.com/history/">in the mid-nineteenth century</a>, Thomas Cook’s travel agency brought continental European travel to the middle classes through what we now call package holidays. This enraged the elite, who indulged in “Grand Tours” of European capitals that often lasted months, and who called themselves “travellers” rather than mere “tourists”.</p>
<p>Leading newspapers condemned Thomas Cook as an <a href="http://search.proquest.com/docview/6581157?accountid=9851">“unscrupulous man”</a> and branded his customers <a href="http://find.galegroup.com/bncn/infomark.do?docType=LTO&docLevel=FASCIMILE&prodId=BNCN&tabID=T012&type=multipage&version=1.0&retrieveFormat=MULTIPAGE_DOCUMENT&userGroupName=cambuni&docPage=article&docId=BA3202999866&contentSet=LTO&source=gale">“barbarian hordes”</a>. They were cheered on by an upper crust who worried about pristine attractions being overrun by people who were, according to Blackwood’s Magazine, <a href="http://search.proquest.com/docview/6581157?accountid=9851">“low-bred, vulgar and ridiculous”</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/122888/original/image-20160517-9471-1sc0tpf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/122888/original/image-20160517-9471-1sc0tpf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/122888/original/image-20160517-9471-1sc0tpf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122888/original/image-20160517-9471-1sc0tpf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122888/original/image-20160517-9471-1sc0tpf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122888/original/image-20160517-9471-1sc0tpf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122888/original/image-20160517-9471-1sc0tpf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122888/original/image-20160517-9471-1sc0tpf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Anyone for Egypt?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/yosoynuts/4323163118/in/photolist-7Ywfrc-7Pwt89-3k2FfW-9RAYbU-7Psxfn-49ndVm-mkBe8-6FNaQ1-8RydRw-8hkDKx-7zUnBX-7PwxbL-7Psvde-7Smwuf-7Pswek-7sgwuo-7PsvG6-7PsuCt-8kCL2k-98JrkT-6pEP3g-9eFWA5-rTXBH-9eFWC7-6pPiB9-6TkrqD-711sTo-4ins7s-6pK9Ag-7bi9Yj-4MCwKv-898wwE-bffKpK-7UkpKy-4MCxz4-7A2kM9-4MCwPn-4MCxqD-B5qPP-4MCxwt-AcuYL">yosoynuts/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>Fighting Fear</h2>
<p>Thomas Cook refused to be vilified, and effectively fought back against this scaremongering by defending both his business model and his customers in a manner that was steely but not abrasive. He was unapologetic about his activities and set out to show that they were far from harmful to British society.</p>
<p>Cook used his monthly journal, The Excursionist, to depict his opponents as a “misguided minority” who lacked “genuine nobility” because they sought to deny other people a form of cultural enrichment. He said his tours helped to improve peaceful global relations through closer contact among nations. And Cook argued that his tours allowed respected but poorly paid professions, such as clergy and teachers, to travel abroad: </p>
<blockquote>
<p>There is no class of men to whom a good tour could be more beneficial than to hard-working ministers.</p>
</blockquote>
<p>He also adopted some of the practices of the “Grand Tours” – including offering greater freedom to customers by allowing them to check into hotels individually rather than as a group.</p>
<p>Steadily and rapidly, the “stigma” and bad press attached to Thomas Cook and his customers evaporated. In return, Cook helped the media by providing valuable news tips – gleaned from his customers – about countries that seem so close now, but were then so far away. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/122993/original/image-20160518-13499-7wh0nz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/122993/original/image-20160518-13499-7wh0nz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/122993/original/image-20160518-13499-7wh0nz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=366&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122993/original/image-20160518-13499-7wh0nz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=366&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122993/original/image-20160518-13499-7wh0nz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=366&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122993/original/image-20160518-13499-7wh0nz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=460&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122993/original/image-20160518-13499-7wh0nz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=460&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122993/original/image-20160518-13499-7wh0nz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=460&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">‘Danube route open.’</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/24736216@N07/8010873626/in/photolist-5TGFPs-bHvwFX-4nCyWr-6dqq19-d9STaF-b96uEF-49Qckp-dcTPCN-dkP9iu-dcN9tg-b8SUag-dcU8ot-4sXiqr-5hYUS9-dUsDWH-kQTsQ-fb16Pd-dUygpW-4YaAiE-horc6v-hopw1k-aU3jMR-5rerSL-hoq4gs-72XBEm-bKP4ct-72XCAC-4aSCZa-dUsDYV-hopE3x-68gcFb-4uda1w-4Yazhm-a7kdbq-dUyggC-cV6se5-5cx8m7-dv6Ho-mn8CEP-4su6F5-72XBMj-h5emSZ-72TFEp-dAuyiK-72XCc1-75v6vH">Roger W/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>So just a decade after the Daily News condemned Cook’s “swarm of followers” and “barbarian hordes”, the newspaper batted down rumours that the Danube had been closed to passenger traffic by reporting:</p>
<blockquote>
<p>Messrs. Thomas Cook and Son have received the following telegraphic reply: ‘Danube route open. No fear of its being closed.’</p>
</blockquote>
<p>Before long, newspapers began praising Cook for offering “invaluable services” and joining the ranks of public benefactors.</p>
<h2>Turning Enemies into Allies</h2>
<p>Today’s disruptors, of course, don’t face identical challenges to those handled so deftly by the arriviste Thomas Cook. Not all of Cook’s tactics will transfer successfully to the internet age. Yet we’ve already seen some recent moves that have echoes of those used by Cook a century and a half ago.</p>
<p>This month, Uber appointed <a href="http://www.consultancy.uk/news/12028/neelie-kroes-appointed-head-of-advisory-board-at-uber">former EU competition commissioner Neelie Kroes</a> as an advisor to work more closely with governments around the world to advance its arguments. Thomas Cook, sought support from high places, too; his son John even <a href="http://www.historytoday.com/elizabeth-longford/thomas-cook-150-years-popular-tourism#sthash.KVLO5ffS.dpuf">organised a package tour of the Holy Land</a> for Prince Edward and Prince George. </p>
<p>In another echo of Cook, Uber argues that its service brings simplicity and democratisation to a highly structured system that served a privileged few. Previously, a limited number of licensed taxi drivers and people lucky enough to find a cab in a downpour could prosper; now many drivers and customers can, in theory, benefit from more choice and competition. Like Cook, Uber could try to be more collaborative, too; to present its services as an innovative alternative to licensed taxis rather than their replacement. An Uber that is part of a complementary taxi ecosystem will combat the image that it presents a mortal threat to the black cabs of London or the yellow taxis of New York.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/123049/original/image-20160518-13496-r41p7j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/123049/original/image-20160518-13496-r41p7j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/123049/original/image-20160518-13496-r41p7j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/123049/original/image-20160518-13496-r41p7j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/123049/original/image-20160518-13496-r41p7j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/123049/original/image-20160518-13496-r41p7j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/123049/original/image-20160518-13496-r41p7j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/123049/original/image-20160518-13496-r41p7j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rank and file face a challenge.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/garryknight/5598081483/in/photolist-9wFCAg-4fHe6g-djEQ93-aiiZJb-6J24oP-orsWg6-a5rjmC-pgit3-7DCTyj">Garry Knight/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Thomas Cook is now listed on the London Stock Exchange, and is part of the FTSE 250 index as one of Britain’s largest companies. It has become part of the establishment it once challenged. In the end, that kind of success boils down to staying power. After successfully shedding its stigma, Thomas Cook was able to show good long-term value for money, and Uber will need to do the same. </p>
<p>Uber already has taken some steps towards fostering a gentler image, using its ride sharing service to donate clothes for refugees, and suspending surge pricing <a href="http://www.theverge.com/2016/1/22/10816774/uber-capping-surge-pricing-nyc-winter-blizzard">during a big US snowstorm</a> early this year. If the stigma is to be entirely removed, Uber probably needs to offer a convincing answer to criticism of that system, which allows fares to skyrocket during periods of peak demand in what some see as a grave exploitation of customers.</p>
<p>Just seven years after it was founded in San Francisco, Uber’s history is still being written. But there is an intriguing parallel with the journey of Thomas Cook and his once-upstart travel agency, and it is now playing out with a new high-profile disruptor in a new century.</p><img src="https://counter.theconversation.com/content/59182/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christian Hampel's PhD research has been funded by a scholarship from the UK's Economic and Social Research Council. </span></em></p>How a cabinet-maker and temperance preacher managed what the ride-sharing company is struggling to pull off.Christian Hampel, PhD candidate, Cambridge Judge Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/583362016-04-25T10:04:17Z2016-04-25T10:04:17ZUber’s $100 million settlement with drivers settles very little – here’s why<p>Uber, the popular ride-hailing app, just announced <a href="http://money.cnn.com/2016/04/22/technology/uber-drivers-labor-settlement/">it has settled two class action lawsuits</a> in California and Massachusetts in which drivers sought classification as employees and entitlement to overtime pay and more transparent handling of tips. </p>
<p>Under the terms of the settlement, which <a href="https://www.scribd.com/doc/310033204/Uber-Settlement">you may read here</a>, Uber will pay US$84 million to be distributed among a class of 385,000 drivers (and $16 million more if the company goes public). In return, the drivers will not pursue their claim to be employees. </p>
<p>Uber will also make it clear that tips are not included in the price users pay and will revise its procedures for delisting drivers to give longer notice and greater transparency, including adding an appeals process. And the company will assist the creation of drivers’ councils and meet with them quarterly.</p>
<p>So what does all this mean? </p>
<p>Many people who work in today’s flexible labor markets or the gig economy have issues similar to Uber drivers. They worry about where benefits will come from, how to track their compensation, how to share the benefits if the startup they work for makes it big, how to communicate with management and what labor laws apply to them. </p>
<p>The recent Uber settlements do not settle these big issues and questions, which I’ve been writing about for years. They don’t even settle them for Uber drivers. </p>
<p>Let me address a few of the biggest question marks. </p>
<h2>Settlement’s ins and outs</h2>
<p><strong>Will the judges approve the settlement?</strong> </p>
<p>Federal district judges in Oakland and Boston will now hold hearings on the fairness of the settlement. Approval is not a foregone conclusion. </p>
<p>A quarter of the settlement, $21 million, will go to the lawyers. A few thousand drivers who drove the most miles during the period in question will get a few thousand dollars apiece. <a href="http://www.businessinsider.com/uber-settlement-what-drivers-will-get-2016-4">Most drivers</a> will receive only a few hundred dollars. It’s not clear whether this will seem fair to the judges.</p>
<p>For comparison, a judge in 2015 <a href="http://www.wsj.com/articles/judge-rejects-settlement-in-silicon-valley-wage-case-1407528633">rejected a proposed $324.5 million settlement</a> in a case in which the government found that Apple, Adobe, Intel and Google conspired not to hire each others’ employees, victimizing some 64,000 Silicon Valley employees. The judge, who cited a previous case in which far more was paid out per employee, later <a href="http://www.latimes.com/business/technology/la-fi-tn-tech-jobs-settlement-20150903-story.html">approved a higher settlement</a> of $415 million. </p>
<p>More recently, a <a href="http://www.reuters.com/article/us-classaction-lyft-idUSKCN0X42MN">federal judge this month rejected</a> a proposed $12.25 million settlement involving Uber rival Lyft, saying the deal “short-changed” drivers and didn’t “fall within the range of reasonableness.”</p>
<p>So the judges are not guaranteed to sign off on a settlement just because the lawyers are happy with it. The Silicon Valley case involved well-compensated employees who probably lost large sums when their companies illegally locked them out of the job market. </p>
<p>Uber involves less well-compensated employees and smaller sums, but might, for that reason, invite even more careful scrutiny of the settlement.</p>
<p><strong>Does this settle the issue of whether Uber drivers are employees or independent contractors?</strong> </p>
<p>Not at all. That issue will come up in other litigation. The settlement is not a precedent. </p>
<p>For example, the Internal Revenue Service could audit Uber and decide, as it did with <a href="http://www.huschblackwell.com/%7E/media/files/businessinsights/businessinsights/2010/10/labor%20%20employment%20seminar/files/independent%20contractors/fileattachment/independentcontractors%20employees%20%20temp%20workerspdf.pdf">Microsoft in 1990</a>, that the drivers are actually employees for whom taxes should have been withheld. </p>
<p>The National Labor Relations Board is already <a href="http://www.ibtimes.com/uber-accused-impeding-nlrb-probe-labor-practices-2330613">investigating Uber</a>. Should the Teamsters (<a href="http://www.engadget.com/2016/04/24/uber-drivers-partner-with-teamsters-union/">who are interested</a> in organizing Uber drivers) file charges claiming that Uber’s assistance to the new drivers’ councils violates federal labor law, the board would have to decide whether the drivers are employees. </p>
<p>Employees have a legal right to form unions and negotiate set wages without employer interference. By contrast, the ability of an association of independent contractors to try and set wages is not protected by labor law and may even violate antitrust law. </p>
<p>In administrative proceedings like these, there would be no involvement by lawyers who anticipate millions in legal fees and thus have incentives to reach settlements, as in the Silicon Valley case and that of Uber. Such deals are much better for lawyers than for employees.</p>
<h2>Labor policy and the on-demand economy</h2>
<p><strong>Why are such important issues of national labor policy decided in private class action lawsuits?</strong> </p>
<p>Good question. Americans seem to be the only people in the world who think that employees who haven’t been paid minimum wage or who are victims of discrimination should have to go to a general court rather than an administrative agency or specialized labor court. Canadians <a href="http://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=1433&context=ohlj">call our system</a> the “American litigation model” and have devoted a lot of energy to making sure they don’t follow it. </p>
<p>A few more cases like Uber might lead employer and union advocates to join forces on administrative remedies that would be faster for workers and cut out the lawyers. I’m not aware of any such talks ongoing, so I can’t be too specific about what kind of deal might emerge. </p>
<p>But it would be hard to find defenders of the current practice of huge class action suits in which millions of dollars are wagered on the uncertain reactions of a jury. It is like adding a random function to a program. </p>
<p><strong>Is the problem that the categories of employee and independent contractor don’t fit the new economy?</strong></p>
<p><a href="https://theconversation.com/uber-drivers-stuck-in-legal-limbo-as-us-labor-laws-fail-to-keep-up-43542">Not in my opinion</a>. Most <a href="https://supreme.justia.com/cases/federal/us/518/668/">agree</a> that the line between the two is vague and easy to manipulate. </p>
<p>Many people think we need a third, intermediate category (like dependent contractor, or <a href="http://www.brookings.edu/research/papers/2015/12/09-modernizing-labor-laws-for-the-independent-worker-krueger-harris">independent employee</a>.</p>
<p>In reference to this, earlier in the Uber litigation, the judge in California observed that the case would require the jury to decide into which of two round holes to put this square peg. <a href="https://theconversation.com/uber-drivers-stuck-in-legal-limbo-as-us-labor-laws-fail-to-keep-up-43542">At one time</a> I thought a third category might be a good idea, but I now think it would only invite further strategic manipulation by those who hire labor, and longer jury trials to sort it out. </p>
<p>This settlement makes quite clear that Uber drivers are employees. Uber alone controls the listing and delisting of drivers, how they are evaluated and (most importantly) how they are compensated. Perhaps ironically, the settlement will actually <a href="https://onlabor.org/2015/09/25/uber-employee-status-and-flexibility">help support</a> a future ruling by the National Labor Relations Board that the drivers are in fact employees. </p>
<p>Of course they can set their own hours, but this is entirely compatible with employee status. So the Uber case does not seem to me to show the need for a new category. It shows that the good old category of employment still works.</p>
<h2>The real issue</h2>
<p>Well, OK, maybe Uber drivers are employees. But isn’t the choice between employee and independent contractor still a very old-fashioned debate to be having? </p>
<p>Absolutely. The real issue isn’t who is an employer. The <a href="https://books.google.com/books?id=hDnzCwAAQBAJ&pg=PA17&lpg=PA17&dq=alan+hyde+responsibility&source=bl&ots=a6_Am3arc-&sig=K9JkhFiCIRgXoOPz-owQ8ppoo_o&hl=en&sa=X&ved=0ahUKEwjv46P17qfMAhXKFz4KHY0QAW4Q6AEIRDAH#v=onepage&q=alan%20hyde%20responsibility&f=false">ultimate issue</a> is who is responsible for making sure that employee wages are paid and other employment laws complied with.</p>
<p>State legislation increasingly imposes such legal responsibility on employers, even when they arguably don’t exercise control over an individual’s actual work – the traditional index of employer-employee status. </p>
<p>For example, a <a href="http://www.casp.net/california-anti-slapp-first-amendment-law-resources/caselaw/california-courts-of-appeal-cases/fashion-21-et-al-v-coalition-for-humane-immigrant-rights-of-l-a-et-al/">California court held</a> that the retailer Forever 21 was the joint employer of the workers in the contractor factories that make its clothing, even though it has no control over hours, pay or anything else. </p>
<p>Massachusetts, New Jersey and other states use definitions of employment that include just about any hiring of people. <a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB1897">California law</a> says that customers of staffing agencies, even if they are not employers of those staff, are still responsible for payment of wages and workers compensation insurance. </p>
<p>These examples don’t yet add up to a coherent theory of responsibility to make sure that labor standards are observed. But they do show that such responsibility has begun to burst the boundaries of the traditional employment relationship.</p>
<h2>Question of responsibility</h2>
<p>Debates in employment law increasingly concern these issues of responsibility, rather than classification. </p>
<p>Should Wal-Mart, like Forever 21, be responsible for working conditions in the factories that make the goods it sells? Should this be a legal responsibility? </p>
<p>Retailers and garment manufacturers in the <a href="http://bangladeshaccord.org">Accord on Fire and Building Safety in Bangladesh</a>, including Calvin Klein and Abercrombie & Fitch, agreed to such legal responsibility after the <a href="http://www.nytimes.com/2015/06/02/world/asia/bangladesh-rana-plaza-murder-charges.html?_r=0">collapse of Rana Plaza</a>, but most U.S. retailers and manufacturers prefer to work with other organizations whose commitments are not legally enforceable. </p>
<p>It doesn’t yet appear to make much difference to workers in Bangladesh whether the customers for their clothes accept legal, or only moral, responsibility for building safety, though differences may emerge in the future. </p>
<p>These issues are difficult, but clear thinking about them requires moving beyond the old idea that only the employer with control of work has such legal responsibility. </p>
<p>As I said, I believe that Uber drivers are employed by Uber, and that the National Labor Relations Board will soon come to the same conclusion. But, even if I am wrong, it may not matter whether or not they are formerly employees if the law decides that Uber is responsible for observing employment law even for the independent contractors it hires.</p><img src="https://counter.theconversation.com/content/58336/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Hyde does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The deal, in which drivers won’t pursue their claim to be employees in exchange for the cash and other changes, raises more questions than it answers.Alan Hyde, Distinguished Professor of Law and Sidney Reitman Scholar, Rutgers University - NewarkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/495562015-10-27T18:07:56Z2015-10-27T18:07:56ZUber court win shows change is on the cards for more than just the taxi industry<p>The rise of ride-hailing services such as Uber and Halo has been as rapid as the <a href="http://www.bbc.co.uk/news/world-us-canada-33281422">complaints from established taxi markets</a>, with several cities and countries such as in <a href="http://www.reuters.com/article/2015/04/16/us-uber-germany-idUSKBN0N71WN20150416">Berlin</a>, <a href="http://www.bbc.co.uk/news/world-europe-33281896">Sao Paolo</a> and <a href="http://www.bbc.co.uk/news/world-europe-33281896">France</a> banning Uber outright. However, in London a judgement from the High Court recently declared the service <a href="http://www.bbc.co.uk/news/uk-england-london-34542100">legal in the UK</a>.</p>
<p>Uber convinced the High Court that the company’s smartphone app, which connects drivers and passengers, could not be considered equivalent to taxi meters – which are not allowed for private hire vehicles – and so the company does not break British law.</p>
<p>This is an important step towards establishing this technological approach as a new business model, one that will radically change the way taxi and private-hire services operate. But shouldn’t business models develop over time as changing markets, technologies and legal structures allow?</p>
<h2>Uber’s controversial approach</h2>
<p>Uber has experienced <a href="http://blogs.wsj.com/digits/2015/02/18/uber-expands-funding-round-as-revenue-growth-accelerates/">rapidly accelerating revenue growth</a> and investor interest since launch. But Uber’s critics claim that its prosperity in part derives from the fact it bypasses or ignores existing taxi regulations, leading to an unfair and unethical competitive advantage over a heavily regulated competition. </p>
<p>They argue the absence of effective ride-hailing regulation threatens not just competitors but consumers too. Just days after the court decision, the Indian Court of Justice <a href="http://www.bbc.co.uk/news/world-asia-india-34578477">convicted a former Uber driver</a> for raping a female passenger in New Delhi last year, a case that highlighted Uber’s apparent failure to adequately vet drivers there (a process it says it has since improved).</p>
<p>So, how ethical is it for a court to legitimise a new business model despite apparent shortcomings based on the fact that it only technically doesn’t break the law?</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/99749/original/image-20151026-18426-1hicpvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/99749/original/image-20151026-18426-1hicpvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/99749/original/image-20151026-18426-1hicpvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=301&fit=crop&dpr=1 600w, https://images.theconversation.com/files/99749/original/image-20151026-18426-1hicpvq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=301&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/99749/original/image-20151026-18426-1hicpvq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=301&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/99749/original/image-20151026-18426-1hicpvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=379&fit=crop&dpr=1 754w, https://images.theconversation.com/files/99749/original/image-20151026-18426-1hicpvq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=379&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/99749/original/image-20151026-18426-1hicpvq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=379&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Uber’s legal issues worldwide.</span>
<span class="attribution"><span class="source">taxi-deutschland.net</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<h2>A sharing economy that wasn’t</h2>
<p>Let’s recall a similar tale of how established players faced off against newcomers that did things differently. </p>
<p>Online sharing of music and films began in many countries with Napster, using <a href="http://jr3tv3gd5w.scholar.serialssolutions.com/?sid=google&auinit=M&aulast=Giesler&atitle=The+anthropology+of+file+sharing:+Consuming+Napster+as+a+gift&title=Advances+in+consumer+research&volume=30&date=2003&spage=273&issn=0098-9258">peer-to-peer networking to share digital files</a>. The music and film industries launched lawsuits over copyright violations and introduced digital rights management (DRM) software to protect products from duplication. Some even distributed <a href="http://jcr.oxfordjournals.org/content/34/6/739.abstract">fake or corrupt files to discourage users</a>. After several years <a href="http://news.bbc.co.uk/1/hi/852283.stm">Napster closed</a>, only for many alternatives to fill the gap: Limewire, Kazaa, eDonkey, leading eventually to the development of BitTorrent technology and the infamous Pirate Bay. </p>
<p>These sites generally make claims similar to those made by Uber and similar companies: they are not responsible for content, but merely enable the exchange of information. Having been dragged repeatedly through the courts, most of these sharing sites <a href="http://www.theguardian.com/technology/2010/oct/27/limewire-shut-down">either closed</a> or <a href="http://arstechnica.com/business/2009/07/kazaa-goes-legit-with-boring-subscription-music-service/">went legit</a> with licensing agreements from the big record labels. Yet their very existence opened the door to the many legitimate music streaming services that followed such as iTunes and Spotify, and video-on-demand services such as Netflix. The industry now enjoys increasing market share and profits and develops new products and services.</p>
<p>Both these trailblazing companies and Uber argue that they merely offer a platform. But the outcome in the courts has been very different, on the one hand ruling against what is seen as industry-harming piracy, and on the other ruling that ride-hailing is legitimate.</p>
<h2>David vs Goliath</h2>
<p>What if Google, Microsoft or a similar Silicon Valley mega-corporation had economic interests in Pirate Bay, in the same way they have <a href="http://www.forbes.com/sites/erikamorphy/2015/07/31/microsofts-investment-in-uber-is-a-head-scratcher/">investments in Uber</a>? What if it weren’t taxi drivers disadvantaged by the court decision, but large multinational companies? Would that make any difference to the outcome of the court cases?</p>
<p>In my opinion, the question hinges on how one decides what is legal and what is ethical. There are many views; for example is professor <a href="http://www.uwyo.edu/law/directory/stephen-m.-feldman.html">Stephen Feldman</a> who argues that court decision-making may be influenced by principles, legal texts and precedents, but also by <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1747-4469.2005.tb00347.x/abstract">preferences and political ideologies</a>. Interests, such as the political and economic, may also determine what is deemed legal and what is not in different countries.</p>
<p>On the other hand ethical standards tend to be held more commonly across different times and places, and are less influenced by political and economic factors. So the court may have ruled that Uber is not breaking the law, but this doesn’t mean that what it is doing is fair or ethical. And regardless of controversy, for many Uber is the embodiment of how business models should be in this internet era.</p>
<h2>What lies ahead?</h2>
<p>Instead of wasting time and money on trying to stop progress, perhaps the appropriate response is to reconsider our approach, following the words of Captain Jack Sparrow in the Pirates of the Caribbean:</p>
<blockquote>
<p>The problem is not the problem. The problem is your attitude about the problem.</p>
</blockquote>
<p>Maybe the solution is to stop trying to extend transport rules and regulations from a different age and instead create a modern set of rules and requirements that apply to both taxi and ride-hailing companies equally. It’s essential for businesses to consider not only how to meet their customers’ needs, but also how to create new products and services that capture value and make them more competitive. It may be time to stop waiting for disruptive technology businesses like Uber to behave more like other businesses, and try to create the right market conditions that will lead all businesses to embrace innovation.</p><img src="https://counter.theconversation.com/content/49556/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chrysostomos Apostolidis does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Time to stop trying to make disruptive technology businesses like Uber tow the line, and instead create the right conditions for all businesses to embrace innovation.Chrysostomos Apostolidis, Lecturer, Newcastle Business School, Northumbria University, NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/488202015-10-19T05:55:16Z2015-10-19T05:55:16ZWhen Uber is legal the taxi industry will have nowhere to hide<p>In the latest instalment of Uber versus the taxi industry, the Taxi Industry Forum of WA has conceded the sector could have done better. Responding to a Western Australian Government <a href="http://www.transport.wa.gov.au/taxis/on-demand-transport-green-paper.asp">green paper</a> into the “on demand” transport industry, it has <a href="http://www.abc.net.au/news/2015-10-16/wa-taxi-industry-slams-uber/6862222">reportedly</a> criticised the UberX model, but also admitted its own failure to keep up with technological advances and changing consumer expectations.</p>
<p>Digital disrupters such as Uber have been <a href="https://ipa.org.au/publications/2430/the-sharing-economy">praised</a> by industry commentators for promoting a sharing economy that challenges established oligopolistic transport providers and bypasses government regulation.</p>
<p>So there was some irony in last month’s <a href="http://www.cmd.act.gov.au/open_government/inform/act_government_media_releases/barr/2015/ridesharing-to-improve-transport-in-canberra">announcement</a> from the ACT Government, home of bureaucratic regulatory activity, that it will pass laws to make Uber “legal”. </p>
<p>The proposal has been condemned by taxi providers, who have consistently <a href="http://www.bbc.com/news/uk-england-london-34549700">used established law</a> to try and shut down ride-sharing options, both in Australia and overseas. Conversely Uber has praised the move as enlightened recognition of the opportunities offered by new technologies. </p>
<p>For consumers, placing taxis and Uber on a more level playing field should promote competition, reduce costs and buttress safety. </p>
<h2>Still not a taxi service</h2>
<p>In legal terms, Uber <a href="http://www.abc.net.au/news/2015-10-16/does-uber-need-the-laws-to-change-fact-check/6846512">operates along the lines of a hire car business</a> rather than a taxi service. This will not change under the <a href="http://www.cmd.act.gov.au/__data/assets/pdf_file/0012/778575/150929_ACT-TaxiIndustryReforms_Drivers.pdf">new ACT law</a>. Uber will not be able to pick passengers up from taxi ranks or be hailed on the street. </p>
<p>Reduced licence fees should mean cheaper prices for consumers. The bar to Uber operating “legally” as a hire car business in most states and territories is the high cost of a licence (A$40,000 in Victoria) and/or the requirement that a hire car be a luxury vehicle. These requirements are of course an anathema to UberX, which is premised on ordinary people sharing rides in ordinary cars. </p>
<p>Under the proposed ACT laws, licencing fees for taxis and hire cars will be reduced, while some new, fairly minimal fees will be imposed on ride sharing operators to cover licensing and accreditation</p>
<p>For established services these reductions are significant. Taxi vehicles in the ACT currently pay a A$20,000 licence fee. Under the proposed reforms this fee will be reduced to A$5,000 in 2016 in the ACT. The licence fee for ride share drivers will be A$100 or A$400 for five years.</p>
<p>Given there will be a degree of competition in the market, one would expect this reduction in licence fees to be passed onto consumers on the form of lower prices for taxis and hire cars, as well as more opportunities for ride sharing. In addition, the proposed reforms aim to allow both taxi and ride share drivers to access more than one online “transport booking service” potentially further increasing flexibility and competition.</p>
<h2>Safety improved</h2>
<p>The proposed ACT reforms will impose basic safety and consumer protection standards including requirements for:</p>
<ul>
<li>police and driver history checks</li>
<li>up-front medical assessments of drivers</li>
<li>drivers to have a zero blood alcohol level and be drug-free </li>
<li>minimum training requirements for drivers </li>
<li>rideshare vehicles to be registered and roadworthy </li>
<li>vehicles used for rideshare to receive an accredited annual inspection </li>
<li>specific compulsory third-party and property insurance </li>
<li>handling of private information about passengers, including bank and transaction information, to comply with relevant Commonwealth and ACT privacy legislation </li>
</ul>
<p>In addition, under the proposed new laws, transport booking services (such as UberX) must have customer complaint mechanisms in place and drivers should be aware of the process. </p>
<p>A recent <a href="https://www.choice.com.au/transport/cars/general/articles/uberx-vs-taxi-which-one-is-best">Choice comparison</a> found the UberX service was as safe as that offered by taxis. This was because UberX utilises GPS tracking of all trips and because Uber already requires its drivers to undergo a police check, have a clean driving record and hold third party and third party property insurance, as well as providing insurance coverage itself for all UberX trips.</p>
<p>While some might accordingly see the measures proposed by the ACT Government as regulatory overkill stifling a new industry, realistically it can only bring consumers comfort. Safety is likely to be high on the list of priorities of most taxi, hire car and ride sharing users. </p>
<p>Consumers are unlikely to be able to investigate the driving record of their booked driver or the safety of the vehicle before they set out on a ride. Making safety measures mandatory entrenches the measures already in place by Uber to the benefit of consumers. To the extent Uber already undertakes these types of measures, the new laws should not increase costs significantly. The mandatory nature of the requirements will also prevent new ride share entrants trying to undercut Uber by skimping on safety. </p>
<h2>Other states?</h2>
<p>It’s hard to predict whether these moves to make Uber legal will be followed in other Australian states. But it appears consumers see UberX as offering a <a href="http://www.abc.net.au/news/2015-10-16/wa-taxi-industry-slams-uber/6862222">fresh alternative</a> to the unresponsive and outmoded customer service of the taxi industry. So consumer demand may well prompt reform, through further regulation, of the sector in other jurisdictions before too long.</p><img src="https://counter.theconversation.com/content/48820/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeannie Marie Paterson receives funding from the Australian Research Council.</span></em></p>Whatever happens to Uber’s legal status in Australia, it’s likely consumers will be the eventual winners.Jeannie Marie Paterson, Associate Professor, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/458782015-08-12T04:16:31Z2015-08-12T04:16:31ZFactCheck: are ridesharing services like Uber no safer than hitchhiking?<blockquote>
<p>Ridesharing. It’s no safer than hitchhiking. – full page <a href="http://resources1.news.com.au/images/2015/08/09/1227476/478929-e72c61f0-3e29-11e5-b3df-81490740049a.jpg">advertisement</a> by the NSW Taxi Council.</p>
<p>Allowing illegal taxi services to operate unregulated puts the public at significant risk. – NSW Taxi Council CEO Roy Wakelin-King, <a href="http://www.dailytelegraph.com.au/subscribe/news/1/index.html?sourceCode=DTWEB_WRE170_a&mode=premium&dest=http://www.dailytelegraph.com.au/news/nsw/uber-cabbies-heat-up-the-ridesharing-battle-with-new-series-of-damning-ads/story-fni0cx12-1227476480344&memtype=registered">interview</a>, The Daily Telegraph, August 10, 2015.</p>
</blockquote>
<p>In Australia, as in other countries, Uber and ridesharing apps like it are now posing a threat to the market dominance of traditional options such as taxis.</p>
<p>The threat to livelihood is taken so seriously that taxi drivers recently <a href="http://www.theverge.com/2015/6/25/8844649/french-taxi-driver-protest-uber-pop-paris">rioted in France</a> with the aim of stopping Uber providers and users and eroding their trade. But traditional commercial transport groups have launched other, more subtle, attacks aimed at making people think twice before using these types of apps. </p>
<p>One such tactic is to claim ridesharing carries an <a href="http://www.brisbanetimes.com.au/queensland/uber-potential-sexual-haven-for-predators--taxi-council-20150727-gildms.html">increased risk of crime</a> when compared to traditional transport methods. In other words: scare tactics.</p>
<h2>The NSW Taxi Council’s evidence</h2>
<p>When asked for data to support the claim that ridesharing is no safer than hitchhiking, a NSW Taxi Council spokesman said:</p>
<blockquote>
<p>Illegal ridesharing is provided by private drivers in private vehicles. The services are provided outside of the law and therefore none of the safety systems that are mandated for taxis exist in illegal ridesharing vehicles and ridesharing drivers.</p>
<p>Specifically, illegal ridesharing vehicles do not have:</p>
<ul>
<li>Security cameras as mandated by the NSW Government</li>
<li>Alarm systems as required by the NSW Government</li>
<li>Vehicle tracking devices that are fixed to the vehicle</li>
<li>Distinctive livery and internationally recognised signage to identify the vehicle</li>
<li>Compulsory independent vehicle checks on a regular basis at a Government authorised inspection station</li>
<li>Roadside compliance operations which in the last 12 months have checked over 2000 vehicles</li>
</ul>
<p>In addition to the above, illegal ridesharing drivers are not required by law to:</p>
<ul>
<li>Undergo criminal background checks</li>
<li>Driver history checks</li>
<li>Medical checks to a national standard</li>
<li>Immigration checks</li>
<li>National based training and competency standards</li>
<li>Independent knowledge and English language testing</li>
</ul>
<p>For taxis, all of these checks occur upon application and they are ongoing. Taxi drivers who fails to continuously meet these obligations can lose their authority to drive. It is clear that illegal ridesharing, in the absence of the government requirements above, is no safer than hitchhiking. There have been numerous examples both overseas and now emerging in Australia where passengers of illegal taxi services like ridesharing are being exposed to significant risk.</p>
</blockquote>
<p>The spokesman referred The Conversation to <a href="http://www.wfaa.com/story/news/crime/2015/08/08/uber-admits-mistakes-apologizes--sex-assault-victim/31328465/">several</a> <a href="http://www.businessinsider.com.au/r-indian-woman-alleges-rape-by-uber-cab-driver-in-new-delhi-2014-12">recent</a> <a href="http://www.latimes.com/local/lanow/la-me-ln-uber-criminal-records-20150804-story.html">examples</a> <a href="http://www.thelocal.se/20150707/uber-sweden-in-hot-water-over-driver-checks">of</a> <a href="http://www.nswtaxi.org.au/sites/default/files/Triple%20J%20hack_wed_2015_5_6.mp3">risk</a> to <a href="http://www.theguardian.com/technology/2015/mar/23/united-nations-uber-womens-safety">passengers</a>.</p>
<p>In both the <a href="http://www.mirror.co.uk/tv/tv-news/whos-driving-you-chilling-uber-6204293">UK</a> and the <a href="http://www.latimes.com/local/lanow/la-me-ln-uber-criminal-records-20150804-story.html">US</a>, criminals convicted of sexual and violent crimes have successfully passed Uber background checks. All criminal background checks of Uber drivers are conducted via the Australian Federal Police’s <a href="http://www.crimtrac.gov.au">Crimtrac</a> database, while driving history checks are conducted by the relevant transport authority in each state. </p>
<p>A factsheet provided to The Conversation by Uber says: </p>
<blockquote>
<p>When a rider books a ride through the app they are provided with the name, photograph and vehicle plate number of the driver-partner and can track their route on a map. A rider can also share the details of their trip with others through the Share My ETA feature.</p>
</blockquote>
<p>Uber also riders and drivers to rate each other out of five stars after each trip and to submit written feedback.</p>
<p>The Routine Activity Theory or “crime triangle” theory provides a relatively simple explanation as to why most crimes occur. The theory argues that a crime is more likely to occur when there is a lack of capable guardianship.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/91265/original/image-20150810-11068-1efexp6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/91265/original/image-20150810-11068-1efexp6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/91265/original/image-20150810-11068-1efexp6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/91265/original/image-20150810-11068-1efexp6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/91265/original/image-20150810-11068-1efexp6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/91265/original/image-20150810-11068-1efexp6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/91265/original/image-20150810-11068-1efexp6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/91265/original/image-20150810-11068-1efexp6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Crime Triangle theory as to why crime occurs.</span>
<span class="attribution"><span class="source">Terry Goldsworthy</span></span>
</figcaption>
</figure>
<p>The NSW Taxi Council’s claim that using an Uber service is as dangerous as hitchhiking is not well supported by evidence. Clearly, it is not as dangerous. Uber drivers do undergo some background checking; in the hitchhiking scenario there is none. Second, in using an Uber app, the passenger creates an electronic record of their interaction with the provider. </p>
<p>This is something that would be of crucial importance to investigators later, as it would allow the driver to be identified. The app and its electronic record provides guardianship and makes the offence less appealing to a potential offender. It may not stop the offence, but it will certainly aid in solving it. The same can be said for booking a taxi online, use of in-taxi cameras and GPS tracking for both taxis and Uber.</p>
<p>Violent crime is not unique to rideshare app users. In past years, a number of concerns have been raised in <a href="http://www.theage.com.au/victoria/we-cant-ignore-the-reality-of-cab-attacks-20130920-2u56s.html">Australia</a> and <a href="http://www.gatestoneinstitute.org/3854/uk-taxi-rapes">overseas</a> about sexual offences committed by taxi drivers against passengers. </p>
<p>In some regards, Uber is <em>more</em> traceable due to it operating through technology. Compare that to a taxi fare picked up on the side of the road. Although most taxis now have GPS tracking and in-car cameras, these are only of use once the taxi used in the offence has been identified. It is for this reason that the <a href="https://www.police.qld.gov.au/programs/cscp/personalSafety/adults/safetyonpublictransport.htm">Queensland Police Service</a> advises people to book a taxi (electronically, via phone or SMS) in preference to hailing one. A record is kept by taxi companies of all bookings made.</p>
<h2>Little – if any – empirical data</h2>
<p>Much of the debate is relying on single cases or anecdotal evidence. There is little – if any – empirical data available to draw a valid comparison between Uber and taxis drivers and the crimes they may commit in the course of their employ.</p>
<p>In some jurisdictions, there is some limited data that has been made publicly available in relation to <a href="http://www.theage.com.au/victoria/police-target-taxi-crimes-20120331-1w5il.html">offences committed by taxis drivers</a>. </p>
<p>Uber, however, is an unknown beast. One <a href="http://www.theatlantic.com/technology/archive/2015/03/are-taxis-safer-than-uber/386207/">US news service</a> did try to unsuccessfully compare data for Uber and taxi crime from government sources. The reporters asked police departments in five cities — Boston, San Francisco, Chicago, New York, and Washington, D.C. — for information about assaults against passengers of taxis or Uber cars, finding that:</p>
<blockquote>
<p>None of them tracked violent crimes at that level. This is meaningful because it underscores how the narrative about ridesharing and public safety is largely anecdotal. It raises another question, too: If Uber is potentially unsafe for passengers, what about taxis?</p>
</blockquote>
<p>To ensure safety, Uber <a href="https://newsroom.uber.com/australia/2015/07/ubersafeau/">relies</a> on background checks, safe pickups, anonymous feedback, driver profiles and insurance and certain vehicle standards. </p>
<p>The taxi industry argues that this falls short of its requirements, but does not provide empirical data to show that ridesharing is no safer than hitchhiking.</p>
<h2>Verdict</h2>
<p>The claim that ridesharing is no safer than hitchhiking is not supported by empirical data. Much of the data used by critics of Uber rely on anecdotal data and media reports to support their view ridesharing puts passengers at personal risk. </p>
<p>In general terms, a Uber service is safer than hitchhiking due to the safeguards built into the Uber system. Is it as safe as catching a taxis? The answer to this remains unknown due to a lack of data and empirical research. </p>
<hr>
<h2>Review</h2>
<p>I concur with this assessment. In order to sustain the claim made, there would need to a systematic comparison of the experiences of hitchhikers and Uber passengers. There is no study of this kind, it would appear, or those making the claim would presumably have referred to it. </p>
<p>Anecdotal accounts, while making good news copy at times, prove nothing; as noted, anecdotes can also be found to indicate dangers in the regulated taxi industry. It should be borne in mind that there is powerful negative symbolism associated with hitchhiking in New South Wales not least because of the <a href="http://guides.sl.nsw.gov.au/content.php?pid=242811&sid=2075601">Ivan Milat</a> cases. </p>
<p>To invoke that association even implicitly or subconsciously in relation to the activities of one’s competitors is a tactic likely to be effective in terms of raising public fears about the safety of alternatives to regulated taxis. <strong>– Andrew Goldsmith</strong></p>
<hr>
<p><em>Correction: An earlier version of this article included a comment from the NSW Taxi Council that there is no mandatory maximum age for ridesharing vehicles. In fact, Uber does have a mandatory maximum age for vehicles.</em></p>
<p><div class="callout"> Have you ever seen a “fact” that doesn’t look quite right? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/45878/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Goldsmith has received funding in the past form the ARC. </span></em></p><p class="fine-print"><em><span>Terry Goldsworthy does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The NSW Taxi Council says ridesharing platforms like uberX are no safer than hitchhiking. Is that supported by the evidence?Terry Goldsworthy, Assistant Professor in Criminology, Bond UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/453912015-07-30T13:39:54Z2015-07-30T13:39:54ZShould we love Uber and Airbnb or protest against them?<p>An angry crowd <a href="http://www.theguardian.com/technology/2015/jul/30/uber-drivers-attacked-outside-mexico-city-airport-as-taxi-drivers-demonstrate">has attacked</a> Uber cars with bars and stones outside Mexico City airport, the latest in a series of worldwide protests against the ride-hailing app. More than 1,000 taxi drivers <a href="http://www.i24news.tv/en/news/international/americas/79635-150725-taxi-drivers-block-streets-of-rio-in-protest-against-uber">blocked streets</a> in Rio de Janeiro a few days ago, and the service has been restricted or banned in the likes of <a href="http://www.bbc.co.uk/news/business-33382006">France</a>, <a href="http://www.ft.com/cms/s/0/d522e39e-2a47-11e5-8613-e7aedbb7bdb7.html">Germany</a>, <a href="http://www.ft.com/cms/s/0/d522e39e-2a47-11e5-8613-e7aedbb7bdb7.html">Italy</a> and <a href="http://www.latimes.com/business/la-fi-the-download-uber-in-asia-20150728-story.html#page=1">South Korea</a>. Protests <a href="http://www.sfweekly.com/thesnitch/2014/10/27/protesters-accuse-airbnb-of-killing-san-franciscos-neighborhoods">have</a> also <a href="http://www.theatlantic.com/technology/archive/2014/04/remember-the-great-airbnb-protests-of-2014/361464/">been staged</a> against Airbnb, the platform for renting short-term accommodation. </p>
<p>Neither platform shows any signs of faltering, however. Uber is available in 57 countries and <a href="http://fortune.com/2015/06/29/report-ubers-huge-growth-comes-with-huge-losses/">produces</a> hundreds of millions of dollars in revenues. <a href="https://www.airbnb.co.uk/about/about-us">Airbnb</a> is available in more than 190 countries, and boasts more than 1.5 million rooms. </p>
<p>Journalists and entrepreneurs have been quick to coin terms that try to capture the social and economic changes associated with such platforms: the <a href="http://www.theguardian.com/books/2015/jul/17/postcapitalism-end-of-capitalism-begun">sharing economy</a>; the <a href="http://www.businessinsider.com/the-on-demand-economy-2014-7?IR=T">on-demand economy</a>; the <a href="http://wealthofthecommons.org/essay/peer-peer-economy-and-new-civilization-centered-around-sustenance-commons">peer-to-peer economy</a>; and so on. Each perhaps captures one aspect of the phenomenon, but doesn’t make sense of all its potentials and contradictions, including why some people love it and some would smash it into pieces. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/90299/original/image-20150730-25742-nhep2n.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/90299/original/image-20150730-25742-nhep2n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/90299/original/image-20150730-25742-nhep2n.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=366&fit=crop&dpr=1 600w, https://images.theconversation.com/files/90299/original/image-20150730-25742-nhep2n.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=366&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/90299/original/image-20150730-25742-nhep2n.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=366&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/90299/original/image-20150730-25742-nhep2n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=460&fit=crop&dpr=1 754w, https://images.theconversation.com/files/90299/original/image-20150730-25742-nhep2n.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=460&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/90299/original/image-20150730-25742-nhep2n.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=460&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">How Mexican taxi drivers feel about the sharing economy.</span>
<span class="attribution"><a class="source" href="http://wfla.com/2015/07/29/video-uber-drivers-attacked-in-mexico-city/">YouTube</a></span>
</figcaption>
</figure>
<p>Economic sociologists believe markets are always based on an underlying infrastructure that allows people to find out what goods and services are on offer, agree prices and terms, pay, and have a reasonable expectation that the other party will honour the agreement. The oldest example is the personal social network: traders hear what’s on offer through word of mouth and trade only with those they personally know and trust. </p>
<p>In the modern world we can do business with strangers, too, because we have developed institutions to make this reliable, like private property, enforceable contracts, standardised weights and measures, and consumer protection. They are part of a long historical continuum, from ancient trade routes with their customs to medieval fairs with codes of conduct to the state-enforced trade laws of the early industrial era. </p>
<h2>Natural selection</h2>
<p><a href="http://www.haas.berkeley.edu/groups/pubs/books/williamson/economic_institutions.html">Institutional economists</a> and <a href="http://www.cambridge.org/gb/academic/subjects/history/european-history-general-interest/rise-western-world-new-economic-history">economic historians</a> theorised in the 1980s that these have gradually been evolving towards ever more efficient forms through natural selection. People switch to cheaper, easier, more secure and more efficient institutions as new technology and organisational innovations make them possible. Old and cumbersome institutions fall into disuse, says the theory, and society becomes more efficient and economically prosperous as a result. </p>
<p>It is easy to frame platforms as the next step in such a process. Even if they don’t replace state institutions, they can plug gaps. For example enforcing a contract in court is expensive and unwieldy. Platforms provide cheaper and easier alternatives through reputation systems where participants rate each other’s conduct and view past ratings. </p>
<p>Uber does this with government-licensed taxi infrastructures, for instance, addressing everything from quality and discovery to trust and payment. Airbnb provides a similarly sweeping solution to short-term accommodation rental. The sellers on these platforms are not just consumers seeking to better use their resources, but also firms and professionals switching over from the state infrastructure. It is as if people and companies were abandoning their national institutions and emigrating en masse to Platform Nation.</p>
<h2>Downside or upside?</h2>
<p>The natural selection theory argues that the government shouldn’t try to stop people from using the likes of Uber and Airbnb, nor impose its evidently less efficient norms on them. Let people vote with their feet. But is that an oversimplification? </p>
<p>If buyers switch to new institutions, for instance, sellers may have little choice but to follow. Even if taxi drivers don’t like Uber’s rules, they may find there is little business to be had outside the platform and switch anyway. In the end, whether the market shifts can boil down to <a href="http://press.princeton.edu/titles/7206.html">power rather than choice</a>. </p>
<p>Even when everyone participates willingly, the arrangement might be bad for society. It might <a href="http://www.cambridge.org/gb/academic/subjects/history/economic-history/institutions-and-european-trade-merchant-guilds-10001800">adversely affect</a> third parties, for example, such as Airbnb guests annoying neighbours through noise, traffic or being unfamiliar with the local rules. In the worst case, a platform can make society less efficient by creating a “free-rider economy”.</p>
<p>If these kinds of conflicting interests are reconciled, it is through the political institutions that govern the markets. Social scientists can often find out more about a market by looking at its political institutions than comparative efficiency. Take the hotel industry. Local governments try to balance the interests of hoteliers and their neighbours by limiting hotel business to certain zones. Airbnb has no such mandate to address the interests of third parties on an equal footing. Perhaps because of this, 74% of Airbnb properties <a href="https://www.airbnb.co.uk/economic-impact">are not</a> in the main hotel districts, but often in ordinary residential blocks. </p>
<p>Of course, government regulators are at risk of being captured by incumbents, or at the very least creating rules that benefit incumbents to the detriment of possible future participants. An example would be taxi-licensing systems that strictly limit the numbers of cab operators. Whatever quality assurance this offers customers, among the main losers are excluded would-be drivers. </p>
<p>Against this background, platforms can look like radical reformers. For example Uber <a href="http://www.huffingtonpost.co.uk/2015/03/10/uber-says-itll-create-1-million-jobs-for-women-by-2020_n_6839342.html">aims to</a> create 1m jobs for women by 2020, a pledge that would likely not be possible if it adhered to government licensing requirements, as most licences are owned by men. Having said that, Uber’s definition of a “job” is much more precarious and entrepreneurial than the conventional definition. My point here is not to take sides, but to show that their social implications are very different. Both possess flaws and redeeming qualities, many of which can be traced back to their political institutions and whom they represent.</p>
<p>What kind of new economic institutions are platform developers creating? How efficient are they? What other consequences do they have? Whose interests are they geared to represent? These are the questions that bureaucrats, journalists, and social scientists ought to be asking. I hope we will be able to discover ways to take what is good from the old and the new, and create infrastructure for an economy that is as fair and inclusive as it is efficient and innovative.</p><img src="https://counter.theconversation.com/content/45391/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Vili receives funding from the European Research Council.</span></em></p>Some theorists suggest that such platforms are making our world more efficient by natural selection. The reality is a little more complicated.Vili Lehdonvirta, Associate Professor and Senior Research Fellow, Oxford Internet Institute, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/443292015-07-06T15:02:16Z2015-07-06T15:02:16ZRobocabs: how long before you ditch your car for a driverless electric taxi?<figure><img src="https://images.theconversation.com/files/87490/original/image-20150706-1012-ppx24g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The real world is finally catching up with 1950s sci-fi.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/befuddledsenses/2904000882/">Luke Jones</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Trend-spotters may have declared the <a href="http://www.theguardian.com/cities/2015/apr/30/have-we-really-reached-peak-car">car is dead</a> for 20-somethings in central London or Paris but among the rest of humanity sales of the ubiquitous gas-guzzler <a href="http://press.ihs.com/press-release/automotive/slower-not-lower-ihs-automotive-forecasting-886-million-unit-global-light-v">continue to climb</a>. It seems however environmental we may wish to be, owning a set of wheels is just too convenient to give up.</p>
<p>But maybe not for long. A more radical solution to tackling climate change is proposed in a paper in the journal <a href="http://nature.com/articles/doi:10.1038/nclimate2685">Nature Climate Change</a>. As the industry inches towards self-driving cars isn’t it time to consider trading in the family wagon and simply hail a lift?</p>
<p>The argument is seductively simple. We can’t do without cars. No transport alternative offers the same flexibility, personalised comfort and sense of control. But automobiles are spectacularly inefficient in terms of environmental and personal cost. Cars depreciate rapidly, are left idle most of their life-time, eat through fuel while seats are often left empty and they demand no end of real-estate to be parked on.</p>
<p>If any field is overdue a wave of disruption it’s personal car ownership. Car-sharing schemes such as BMW’s <a href="https://uk.drive-now.com/">DriveNow</a> and on-demand services such as Uber give us a glimpse of the benefits cloud computing can bring to fleet management. Autonomous vehicles (AVs) however, could transform this field.</p>
<h2>Ditching the driver</h2>
<p>Autonomous taxis would be more expensive than a normal car, but with no driver the running costs would be substantially lower. Operators would therefore be likely to run large fleets and would keep their cars on the road for as long as possible – meaning that in areas of high population a vehicle would never be too far away.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/NNIFNmpB6Oo?wmode=transparent&start=8" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Stanford engineers recently designed an autonomous car able to beat a human racing driver.</span></figcaption>
</figure>
<p>These vehicles would be different. Just as electric cars have increased interior space by doing away with the engine, dispensing with the steering wheel, gear stick and other controls would free up room for extra people and their belongings.</p>
<p>This also links to the potential for what the paper’s authors, two Berkeley scientists, call “right-sizing”. If a wide range of vehicles are in constant circulation, people will be able to order whatever suits them: a people carrier to take the kids to school, then a sporty coupé for the commute to work. This would mean more choice for the individual, but with a knock-on benefit for the environment through reducing the number of large fuel-hungry vehicles with only one occupant.</p>
<p>It points towards another expected benefit of autonomous taxis. If fleet operators want cheap and easy re-fuelling (to lower those overheads) then fully-electric vehicles make sense. Whereas single car-owning individuals are likely to be concerned about vehicle range, taxi firms smooth out journey and fuelling requirements over an entire fleet, enabling them always to take advantage of the cheapest electricity.</p>
<p>Autonomous vehicles could revolutionise driving. Sensors linked to sophisticated electronic control units would enable cars to anticipate and to respond to risk faster than a human driver. Breaking distances could be reduced, enabling convoys of cars to reduce aerodynamic drag and use their power more efficiently.</p>
<h2>Heading to the mainstream</h2>
<p>A great vision for the future, one might observe, but isn’t this all a bit sci-fi? Well at this stage, the answer is probably “yes”. Vehicle automation has of course been with us for years and is actively used in high-risk fields such as bomb disposal, mining or submersibles, not to mention the release into the world of <a href="http://www.theguardian.com/technology/2015/feb/24/irobot-roomba-880-review-robotic-vacuum-cleaner-thats-almost-a-pet">robot vacuum cleaners</a>. But these are relatively controlled environments to operate within, and a world away from the complexity of fast-paced, complex city streets.</p>
<p>As it stands there are substantial limitations on autonomous vehicles. Cars are reliant on processing, in advance, extensively mapped environments – making any spontaneous deviations from a route difficult. Snow, heavy rain or bright light can cause havoc with sensors, and “reading” visual symbols such as a police officer signalling would be beyond most current processors. Add to this, the <a href="https://theconversation.com/data-mining-the-new-black-box-of-self-driving-cars-31685">cyber-security risks</a> inherent in all connected vehicles and it becomes plain just how much work developers have to do.</p>
<p>Even if these challenges can be overcome in any realistic time-frame the usual drawback of car-sharing services would still apply to autonomous vehicles. Being able to hail a taxi when you want it, never mind in the form one desires it, requires a huge fleet to be operating in densely populated area. We’d also need advanced GPS mapping and tracking systems and large out-of-town charging bays – because although more autonomous taxis would mean less parking needed overall, the fleet as a whole would likely seek cheaper overnight charging at a similar time.</p>
<p>Yet what was once science fiction has a tendency to move into the mainstream. Carmakers such as BMW and Tesla have been acquiring driverless technology, as have tech giants Google and Apple – not to mention the car-and-driver-for-hire firm Uber. Indeed one doesn’t need to be an early adopter to see driver assistance and connected technologies becoming commonplace. Crossing the hurdle to fully autonomous vehicles will be a major challenge, but once it has been credibly achieved (and credibility is everything), a whole new market may be awaiting the pioneers.</p>
<p>Ultimately this is the point. From San Francisco to Moscow, from Seoul to mighty Coventry (where the <a href="http://www.coventrytelegraph.net/news/coventry-news/coventry-firm-unveils-uks-first-8615384">UK’s largest driverless car test</a> is taking place), there is a digital infrastructure being laid down and growing expectations among the younger generation of ever more connectivity. Autonomous taxis may not be appropriate everywhere or for everyone, but they do have the potential to capture a large slice of interest in urban centres and, because the capital costs are borne by the transport operators not individuals, there is lots of potential for the business models to spread quickly. </p>
<p>By 2030 our cities, not to mention our cars, may start looking very different. It might be worth thinking about grassing over your driveway.</p><img src="https://counter.theconversation.com/content/44329/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Brooks does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Cars are dirty and wasteful. Large fleets of autonomous taxis could cut emissions and reduce inefficiency.Richard Brooks, Research Associate - Centre for Business in Society, Coventry UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/435422015-06-22T10:18:32Z2015-06-22T10:18:32ZUber drivers stuck in legal limbo as US labor laws fail to keep up<p>Uber’s arm’s-length relationship with its drivers just got a bit closer after the California Labor Commission <a href="http://www.reuters.com/article/2015/06/17/us-uber-california-idUSKBN0OX1TE20150617">ruled</a> that one of the ride-hailing company’s motorists in San Francisco is an employee, not a contractor, as it contends.</p>
<p>This is a big deal because the rights of Uber drivers depend sharply on whether they are deemed employees or self-employed independent contractors hired for particular jobs. By extension, the success of Uber’s business model may hinge on the question as well, but that’s for another article.</p>
<p>If they are employees, a litany of rights and requirements go along with it. They have a right to form a union, they must be paid minimum wage, they must be paid extra for overtime hours, their federal taxes must be withheld, Uber is liable if they hit anyone or anything, and Uber may not discriminate among drivers on the basis of race, color, religion, sex, national origin, age or disability. </p>
<p>But if they are self-employed, Uber <a href="http://robertreich.org/post/111784272135">may owe them nothing</a>, except what it explicitly promises in the contracts it drafts. </p>
<p>Courts have given mixed rulings on the issue as more workers have been labeled “self-employed contractors” by companies eager to cut costs, a trend accelerated by the rise of the on-demand economy of companies that quickly provide goods and services. Part of the problem is that independent contractors fall into a hole in labor laws, one that could be filled by taking a page from our northern neighbors and creating a new class of worker: dependent contractors.</p>
<h2>Merely a facilitator</h2>
<p>Uber maintains that it is merely a software company that facilitates deals between customers and drivers. While the courts have generally been skeptical on this point, if Uber manages to win this argument, it would not be an employer at all – at least as far as the drivers are concerned. </p>
<p>Uber would not have to recognize a drivers’ union. So-called unions in which independent contractors fix their compensation normally <a href="http://www.natlawreview.com/article/dol-to-issue-independent-contractor-guidance">fall outside</a> of current labor laws and <a href="http://scholar.valpo.edu/cgi/viewcontent.cgi?article=2188&context=vulr">violate</a> antitrust <a href="http://caselaw.findlaw.com/us-supreme-court/493/411.html">laws</a>. Nor, if drivers are self-employed, would Uber be liable for their accidents, or owe them any particular level of compensation.</p>
<p>Employers naturally like to claim that the individuals who perform services for them are self-employed. But courts have been pushing back against these claims.</p>
<h2>Let a jury decide</h2>
<p>In May, a judge <a href="http://www.forbes.com/sites/ellenhuet/2015/03/11/lyft-uber-employee-jury-trial-ruling/">refused</a> to dismiss a class action by Uber and Lyft drivers in San Francisco complaining of Uber’s treatment of their tips, saying it should be up to a jury to determine whether the drivers were employees or self-employed. </p>
<p>A few weeks ago, a federal appeals court similarly <a href="http://www.dailyreportonline.com/id=1202727980734/US-Appeals-Panel-Its-Not-Clear-if-FedEx-Drivers-Are-Company-Employees?slreturn=20150519132424">argued</a> the determination should be left to a jury when it reversed a lower court’s ruling that FedEx drivers are employees. The judges <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/27/12-17458.pdf">said</a> it was unclear whether they were. Last year a different federal appeals court found instead that FedEx drivers are its employees.</p>
<p>Other courts have been more forceful in favor of certain classes of workers that have slipped between the cracks. A federal judge in New York <a href="http://example.com/">found</a> that production interns on the set of the movie Black Swan were actually employees of both the production company and of Fox Searchlight Pictures.</p>
<p>And most recently, the California Labor Commission ruled last week that an Uber driver was an employee, not a contractor. Uber, while insisting the ruling applied to only that individual driver, is appealing. </p>
<p>The commission found that Uber is “involved in every aspect of the operation,” a sharp turnaround from the same agency’s ruling in 2012 that deemed an Uber driver an independent contractor. </p>
<h2>Who’s in control</h2>
<p>Such rulings are normally highly fact-specific. The basic legal approach to the question of employee status looks to who controls the means and manner of work. There are some interesting variations among the states, but they all – including federal statutes – look mainly to this question of control.</p>
<p>This is not a very clear test, and it would be impossible to find any labor relations expert who would defend it as a general approach. The Supreme Court <a href="https://supreme.justia.com/cases/federal/us/518/668/case.html">has noted</a> that the line between employee and independent contractor “can be manipulated largely at the will of” the employer, and is often a “very poor proxy for the interests at stake.” </p>
<p>The two decisions that found that Uber is, or might be, its drivers’ employer, rested on the tech company’s control of hiring, rules of driver conduct, restrictions on drivers’ ability to solicit other work and ability to terminate drivers at will. In some other ways, however, Uber drivers do control their work; they own their own cars and pick their own hours, for example.</p>
<h2>More legal wrangling ahead</h2>
<p>The latest decisions are invitations for future litigation. They do not settle the legal question permanently. </p>
<p>If you were Uber, you would not immediately begin treating drivers as employees, withholding taxes, paying back taxes, purchasing employment practices liability insurance and filing W-2 forms. You would be more likely to relax your control of drivers in minor ways, and then invite them to litigate again. </p>
<p>Uber might, for example, drop its rules over which radio stations drivers can play in their cars, permit drivers to hand out business cards, and then <a href="http://uberlawsuit.com/OrderDenying.pdf">insist</a> that now the drivers were actually self-employed.</p>
<p>The labor laws of Canada, Sweden and some other countries recognize a category called “dependent contractors.” Such workers are self-employed for some purposes, say tax administration. But if their livelihood depends on the richer entity that hires them, then that entity is bound by labor laws when it administers tips, or compensation. </p>
<p>Creation of such a category by US state legislators, or by some future Congress capable of legislation, would be highly desirable. It has been <a href="http://www.buzzfeed.com/carolineodonovan/meet-the-new-worker-same-as-the-old-worker#.gqL11yB48">reported</a> that tech companies are enthusiastic about the idea of creating such a category, though there is much hard work ahead in working out the details. </p>
<p>It would recognize that Americans are committed both to the creation of new ways of working and, at the same time, to the proposition that the powerful must not be permitted to exploit people whose services are integral to their businesses.</p><img src="https://counter.theconversation.com/content/43542/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Hyde does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A California commission ruled that an Uber driver is an employee, not a contractor, but the decision will do little to resolve the murky legal issue.Alan Hyde, Distinguished Professor of Law and Sidney Reitman Scholar, Rutgers University - NewarkLicensed as Creative Commons – attribution, no derivatives.