Uber relies on drivers but prepares for autonomous future
While Uber today relies on self-employed algorithm-pushed drivers, it also invests in an autonomous future. A month before its introduction on the stock market, the mobility platform gets a billion dollar private investment from Toyota, Denso and Softbank.
The investment will be used to finance Advanced Technlogies Group (ATG), Uber’s division that, among other things, develops autonomous vehicles. ATG becomes a stand-alone company but remains under Uber control.
The Japanese group, Softbank, already Uber’s biggest shareholder, injects 333 million dollar into ATG through its investment fund, Vision Fund. Toyota and car part maker, Denso, together invest 667 million. Toyota also keeps 300 million dollar available over the next three years to cover the costs for the construction of commercial autonomous vehicles.
It is unusual for a company to get such a large investment sum so close to its entry to the stock market. The move is seen as a sign to reassure Wall Street that Uber won’t have to carry the investment in its autonomous future on its own. Since the start of the ATG division, the company has spent 1,07 billion dollars on it. These kinds of investments weigh on the profitability of Uber, which made a 3 billion dollar loss last year.
According to Uber, ATG is worth 7,25 billion dollar. The whole group would be worth 100 billion dollar. However, certainty about those figures will be clear when the initial share price will be made public.
Not yet autonomous
Meanwhile, Uber relies on self-employed drivers to keep its platform users loyal. Its core business is its ride-hailing service, which it started ten years ago. In essence, Uber is not a service provider, but a data company. The only thing that is really owned by Uber is the app. The drivers work freelance with their own or leased cars.
Customers like Uber because it is faster, cheaper and more customer-oriented than traditional taxi companies. Uber drivers are attracted with the promise of a nice income, a lot of freedom and good customer contacts. In Brussels, 1.200 drivers are thought to serve more than 100.000 active users. They need a special license, a VAT number and a certificate of good conduct.
The Uber app takes care of matching drivers to customers, the navigation and payment. For this service, Uber takes a 25% commission.
Uber slaves that don’t mind it
While Uber heavily relies on the drivers, all is not well. To keep the service running, an algorithm controls everything. It is very efficient, but also causes stress among drivers. They can stop at any time, but they have to work hard and long to earn any money. The app automatically shuts down after 12 hours, forcing a 6-hour resting period.
Drivers who don’t play by the strict rules, face losing their rights to offer their services on the platform. One of the interviewed drivers jokingly refers to his kind as ‘digital Uber slaves’, but says they don’t mind.
One of the ground rules of Uber is customer satisfaction. Customers should not wait for more than four minutes to get a ride. Available drivers closest to a customer location, can only refuse a ride three times before being blocked. This means they sometimes have to accept rides that don’t earn them any money. A customer rating system also has an influence. Drivers that get lower customer satisfaction scores, risk to get banned.
Brussels Uber drivers seem to offer their services through Uber because of the flexibility of the system. Most of them are men under 40 of which a fifth didn’t have a job before. Many combine more than one job, working part-time or irregular hours. Their Uber job takes place during their time off.
Drivers only work when they want to and Uber pays them punctually. Tariffs fluctuate according to timing and driver offer. Although the drivers work under the ‘Limousine’ collective labour agreement, they have to work long hours to get the equivalent of a full-time wage. Seventy hours a week to get around 1.500 euro. Drivers that have worked for Uber for a long time, complain the income used to be better.
In Amsterdam there have been Uber driver strikes to demand a higher income. In Brussels, the drivers are starting to form unions. Uber has not granted their demand for higher wages, but has promised to get them more customers. It will also compensate on short routes so drivers don’t drive for free.
Uber cars and accounts are regularly shared between different drivers. Uber allows cars to be shared, but each driver has to have his own account. Nevertheless, the company doesn’t actively check, so there is abuse.
Although the real war between traditional taxi drivers and Uber drivers seems to have calmed down, a lot of dissatisfaction remains. Taxi rules in Brussels are strict and licenses expensive. A license costs 682 euro a year and the taxi itself has to cost at lease 33.000 euro. In Flanders and Wallonia, rules are less strict, so many Uber drivers don’t bother with the Brussels license.
At Brussels Airport in Zaventem, only Zaventem licensed taxis can pick up passengers and use the taxi parking spaces, but Uber drivers use different parking spots to try to bypass the rules, causing parking nuisance in surrounding areas. Police often check and makes passengers take official taxis, a practice contested by Uber drivers.