What’s wrong with Uber?
The rise of San Francisco-based Uber has been meteoric. Personal transportation in many of the world’s cities has been revolutionised with increasing numbers of users being attracted to the ride-hailing company’s services.
A survey conducted last year by the Public Transport Council, a statutory body that acts as an advisor to Singapore’s Minister for transport, found that Singaporeans were very satisfied with Uber’s performance.
Predictably, the greatest advantage that Uber offers is its ease of booking. The survey found that rival Grab and Uber jointly scored 8.1 on a scale of 10 for their ease of booking. Singapore’s traditional taxis scored a respectable, but lower, 7.2 on this criteria.
Despite Uber’s success in Singapore, the company is facing a host of difficulties and has been in the public eye in the recent past for all the wrong reasons
Allegations of technology theft
Google has filed a suit against Uber, saying that the latter has stolen its patents and trade secrets connected with its self-driving car project. Anthony Levandowski was a key member of Google’s car project. Soon after leaving Google, he founded Otto, a company specialising in driverless trucks. Subsequently, Otto was bought by Uber in a US$680 million deal.
What did Levandowski do to attract the lawsuit? Google says that he used a Google-issued laptop and “downloaded over 14,000 highly confidential and proprietary design files” before leaving the company. Uber denies that it has used stolen technology for its driverless car project.
Senior management exodus
Uber has lost a several of its top staff members even as it battles mounting losses, regulatory issues, and allegations of harbouring a toxic and misogynistic work culture. Jeff Jones, president of ride sharing and second-in-command of the company has left, while other high-profile departures include that of Brian McClendon, president of maps and business platform at Uber.
Travis Kalanick, chief executive of Uber, says that he is looking for a Chief Operating Officer, “a peer who can partner with me to write the next chapter in our journey.”
This follows a well-established practice in the tech industry where experienced executives are recruited to provide the top management with a degree of maturity and stability. Eric Schmidt played that role at Google as did Sheryl Sandberg at Facebook.
Rivals form cross-border alliances to fight Uber
How do local competitors fight Uber, which has an international presence? This map gives an idea about Uber’s global footprint.
To combat Uber, its rivals entered into cross-border alliances that permit their users to seamlessly switch over to the partner company’s services when travelling out of the country.
Grab, a ride-hailing company with a presence in Southeast Asia has partnered with San Francisco’s Lyft to offer its users local services when travelling to the US. This facility is available in over 200 cities where Lyft operates.
But battling Uber will not be easy. When Uber wants to launch its services in a new city, it simply makes its app available after making minor adjustments. Rival companies have to carry out extensive changes to their apps and their computer programs when they enter into tie-ups.
But is the company making any money?
As Uber is privately held, it does not publish its financial data. But a Bloomberg report points out that the company is expected to report a loss of US$3 billion in 2016. However, revenues are still climbing, although at a slower pace than earlier. In the third quarter of 2016, the company made bookings, the value of fares that passengers pay, of US$5.4 billion. This was more than the US$5 billion in the previous quarter and US$3.8 billion in the first quarter of the year.
Why has revenue growth slowed? In the middle of last year, Uber withdrew from the huge Chinese market after coming to an understanding with local rival Didi Chuxing.
But the mounting losses do not seem to have deterred Uber’s investors. The company is reportedly valued at a staggering US$69 billion.
Is it even safe to take an Uber ride?
While the vast majority of the millions of trips that riders take in Uber vehicles are safe, some disconcerting news has emerged from Massachusetts in the US.
Last year in November, Lyft and Uber agreed to allow the state authorities to carry out background checks on their drivers. The usual practice is that the ride-hailing companies carry out their own checks.
Of the 70,000 drivers who applied, over 10% were rejected. Over 1,500 drivers were denied the approval to drive a ride-hailing taxi because of violent crime charges. Among the other reasons for rejections were earlier driving offences, felony convictions, and sex offences.
The ride-hailing companies look only at the past seven years records of their drivers because Massachusetts law does not allow consumer reporting agencies to look back further than this period. The state does not have this restriction and this could be a reason that some of the drivers failed the background check.
What does the future hold for Uber?
Uber’s problems seemed to have peaked in February this year when CEO Travis Kalanick was recorded berating an Uber driver by a camera mounted in the car. He later apologised for his outburst and, in an email to his employees, said, “I must fundamentally change as a leader and grow up.”
Despite the multitude of issues facing the company, Uber is still the most valuable private firm in the world. Its taxi app is ranked #1 in 108 countries. If it can ride out its current problems, it is likely that the firm will continue to dominate the ride-hailing industry in the coming years.