Uber Technologies Inc.
Uber Technologies Inc is an online transportation network company, which was founded in San Francisco, California. It was created by a team of four members consisting of Garrett Camp, Oscar Salazar, Conrad Whelan, and Travis Kalanick. Headquartered in the USA and it operates in 82 countries around the world and is valued at about $41 billion.
Kalanick, who was the CEO until 2017, saw Uber as a great opportunity to lower the cost of service through the use of mobile phones. Consumers would need to download an app that would permit them to arrange a vehicle and meet their driver at the designated location. This provides a service that connects independent contractors (drivers) and passengers, which use a mobile app. In June 2010 Uber the company launched with skyrocketing success. As the ability to catch a car through a text or touch of a button was a major hit.
How did Uber become popular?
Just in a short time, Uber became a well-known company. But the question is how?
Well, there are several factors for Uber’s rapid growth in popularity:
The service is more convenient and efficient than traditional cab companies. With a single text or touch, a consumer can order a car within minutes, whereas in the traditional cab service you will have to wait and wave down an empty cab. Moreover, Uber allows you to book your taxi and track the cab as soon as your booking is complete. Customers can see where their taxi is at any point in time due to the geolocation. This allows us to estimate how much time will be spent. As well as with recent growth in online grocery shopping it is more convenient for consumers without cars to order an Uber.
It is cheaper and faster than taxis. Ubers artificially set lower prices to increase user adoption and promote growth. One of the main differences between Uber and taxi companies is that Uber operates on a net loss, which means that it doesn’t have a set price with the goal of turning a profit (at least not yet). Partygoers rely on Uber after a night out as they can find Uber drives through their apps even late at night. However, picking an intoxicated passenger has its challenges such as attacking a driver. India was the first country where a panic button was introduced on the Uber app to contact the police. In 2018 US drivers gained access to it.
Although there were cases with serious incidents in the past, however now riders can choose Uber due to safety reasons. Uber requires drivers to submit to a motor vehicle and criminal background check. The company annually does a background check on all of its drivers (the check reviews criminal database, motor vehicle records, and National Sex Offenders database).
Ubers controversiality:
From the consumers’ point of view, Uber may seem like a blessing: lower prices, more choice, faster and easier access all make it a big improvement from the more traditional taxis. However, there are other sides of the story we need to consider, which account for the company's huge controversiality.
Uber and the taxi industry:
As mentioned before, Ubers are very convenient for consumers, which in and of itself plays a role in having consumers switch sides from using taxis to using Uber. However, arguably the biggest factor that accounts for this is the much lower prices that Ubers charge.
One contributing factor to such low prices is that inherently Uber drivers don’t need a taxi license to be employed by the company *. The reason for this is that technically, Uber isn’t considered a transportation company, rather is a ride-sharing company. Basically, this means that instead of acting as a transportation provider, Uber acts as the intermediary which connects clients and drivers, therefore escaping the legal requirement of their drivers owning a taxi license. This of course means that the supply of drivers for Uber companies is much bigger, as drivers don’t have to spend time to earn their taxi licenses. A higher supply then means that the prices for Ubers are lower than the prices for taxis, the drivers of which are limited in supply, making taxis more expensive. Because of this discrepancy between prices, the demand for taxis falls, which causes a fall in the wages of taxi drivers, and their ability to earn.
Many taxi companies have argued that these types of ride-sharing companies are illegal operations, and should have regulations and restrictions should be imposed on them. This is a controversial topic, as there is no set procedure on how to behave in this situation. We see this in how much laws for Uber vary between countries (and states). In some, they are able to continue without any additional regulations. In many, additional regulations are set, including background checks for drivers, insurance, licensing, and minimum wage. In a few cases, Uber has even been banned, partly banned, or faces a possible ban, from countries and cities, some of which include Bulgaria, Denmark, and Turkey.
Uber and their drivers:
Taxi drivers aren’t the only ones who are affected by Uber being considered a ride-sharing company but Uber drivers too, perhaps even more acutely. You see, Uber drivers are not considered employees of the company. Instead, they pose as individual contractors, which while it allows them more leeway and flexibility, also means they are not entitled to “employee” rights. What this implies is that they don’t have work hours, overtime benefits, paid sick leave, health benefits, minimum wage, or a steady income. This topic has sparked discussion in many places about whether or not Uber workers should be considered employees.
In some places, such as many of the states in the US, it has been concluded and announced that they are employees, resulting in an introduction of a minimum wage, etc. In other countries, such as India, Uber drivers are still considered the company’s “partners”.
*Here it has to be noted that Uber has operations all around the world, which means that the legal requirements it has to comply with can vary a lot from one country to the next. Also, note that many countries and states have imposed regulations to counter this, which will be explored later in the text.
Written by Aidana Assylbek and Togzhan Batyrbekova; edited by Anuar Burkitbayev.
