UBER UPDATE UK
where 130 drivers have applied for a licence since Uber announced it was creating new regions within which its drivers would be able to work. Many will have been directed there by the Uber website, which directly compares the estimated cost and time taken to obtain a licence in the two authorities, saying it takes £1,112 and 40 weeks to get a drivers’ licence in Brighton compared to £422 and eight weeks in Lewes. Brighton and Hove also has some of the stiffest licensing conditions in the country, many of which are outlined in what is known in the trade as the “blue book”, and include a requirement for CCTV and all new vehicles to be wheelchair accessible. All Brighton and Hove based private hire operators require their drivers to be licensed by the city council – but Uber has until now allowed drivers licensed anywhere in the country to use the app within the city, taking advantage of the deregulation of cross-bor- der restrictions. Following protests from local authorities, who are unable to carry out enforcement on rogue drivers working on their patch if they are licensed elsewhere, Uber last month announced it was splitting the UK into regions, and drivers would only be able to work in the region in which they held a licence. But city taxi drivers – both private hire and hackney – say Lewes District Council’s taxi rules are more relaxed than Brighton’s, and believe Uber is directing Brighton based drivers previously licensed with TfL to apply there instead. Andy Peters, secretary of the GMB Brighton and Hove taxi section, said: “The creation of oversized mythical ‘regions’ by Uber, serves only to further complicate, confuse and add more potential acrimo- ny to a previously (prior to Uber’s arrival) simplistic system of local licensing.
“It will do nothing to eradicate the spectre of Uber vehicles licensed in one area but operating in another many, many miles away from enforcement and the prying eyes of their home licensing authority. “Where this leaves passenger safety is again, anyone’s guess? This announcement is nothing more than the usual ‘smoke and mirrors’ and should be viewed with extreme caution and what’s more, taken with a bucket load of salt!” A spokesman for Lewes District Council said: “If Lewes District Council receives an application for a private hire licence, we have a duty to process the application. “A licence will be granted if the driver is a fit and proper person. We are not able to refuse a licence on the basis that there are too many drivers or that they might operate outside our geographical area, in particular Brighton. “The council understands the frustration this causes the taxi trade, but we are obliged to work within the legislative framework.” The new regions are set to come into force on March 14. However, Uber is understood to have told drivers in some areas of the UK such as Surrey that they will be able to continue driving here until June. Latest figures from TfL showed that 78 drivers were licensed with them using addresses with a BN1, BN2 or BN3 postcode.
UBER IS RUNNING OUT OF WAYS TO SAVE ITSELF
Maya Kosoff writes for Vanity Fair about the current economic situation in which Uber finds iteslf.
Among the messes Dara Khosrowshahi inherited when he arrived at Uber last year is an unanswered, existential question: how to turn a profit on a venture that is bleeding money. Uber’s push to cement
APRIL 2018
its market dominance hasn’t come cheap; according to a new report, Uber has spent $10.7 billion over the past nine years - a stag- gering amount, and significantly more than any other tech company. While it’s not unusual for Silicon Valley start-ups to expe- rience growing pains, Uber is an anomaly for reasons that seem inextricable from the fundamental economics of the taxi industry. Uber insists that its other ventures will prop up its core ride-sharing model. “Our growth at scale remains incredibly strong, and we are driving meaningful improvements in our margins,” an Uber spokesman told Bloomberg in a statement. “Under Dara’s leader- ship, we are making big bets for the long term in new technology like Express POOL and in businesses like UberEATS, which is grow- ing at an extraordinarily fast rate.” Yet under Khosrowshahi, Uber has also accelerated a global retreat after years of aggressive expansion. The company has surrendered China, merged with Yandex in Russia, and is looking to shift away from India, as SoftBank, its largest investor, puts pressure on the company to focus only on its core markets. Even in Uber’s biggest markets, however, there are still too many competitors to boost prices, or to increase its take of receipts. Bloomberg reports that while investors have poured a grand total of $17.3 billion into Uber, much of that goes to its drivers: In 2017, Uber made $37 billion on gross bookings, but Uber’s cut was just $7.4 billion. Drivers in countries around the world are fighting Uber in courts to be recognised as employees, rather than contractors, in a bid to secure health care and other labour rights. Uber’s long- term plan to replace drivers with automated cars, meanwhile, remains years away. At the same time, it is almost impossible to see how Uber can squeeze more money from its drivers. According to the first draft of a paper from Massachusetts Institute of Technology, released in February, the average Uber driver makes $3.37 in hourly profit. (After a backlash from Uber and its own chief economist, Jonathan Hall, the report’s authors released a new draft, this time finding that drivers make a median profit of $8.55 - which still isn’t great for a company whose entire business model is, for now, predicated on persuading potential drivers to work for Uber under the guise of earning a living.) A separate study, published by Australian researchers last month, likewise claimed that the average Uber driver’s earnings in Aus- tralia are below minimum wage. “This subsidy is extracted from drivers, perhaps unwittingly and unwillingly, and is crucial to the company’s aggressive growth strategy (which has relied on a fare structure which undercuts established taxi providers),” said economist Jim Stanford, who conducted the study. “It turns out, in fact, that the subsidy provided to Uber by its drivers is a crucial component of Uber’s pricing advantage over its traditional rivals.” Uber investors are confident that Khosrowshahi can make the pric- ing model work before the company goes public as planned in 2019. But it’s hard to see how Uber generates enough revenue to satisfy shareholders while forestalling a driver rebellion. With its various paths to profitability - stamp- ing out the com- petition, cashing in on self-driving tech- nology,
or
short c hanging drivers - running on fumes, Khosrowshahi will have to pull a rabbit out of his hat to sell Wall Street on a mature tech com- pany that can’t get out of the red.
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