Displaying items by tag: Uber
US ridesharing platform Uber has been hit with a whopping fine of $20m dollars - after it was discovered that the tech firm was guilty of making exaggerated claims about how much drivers could potentially earn working with the company.
Uber agreed the settlement figure with the US Federal Trade Commission (FTC) who also took umbrage with Uber’s misleading message on how affordable its vehicle financing plans were.
The FTC said that the global ridesharing platform’s declaration that uberX drivers earned an income of more than $90,000 per-year in New York and $74,000 in San Francisco were ‘grossly exaggerated’ – and the commission that established less than 10% of all drivers in those cities earned that kind of money.
In addition to these findings the FTC’s also shed light on Uber’s false claims about its Vehicle Solutions Program. The company claimed to offer payment plans for as little as $140 per week to own a car and $119 per week to lease one; between late 2013 and April 2015, those weekly payments exceeded $160 and $200, respectively.
This isn’t the first incident regarding the issue of Uber’s attitude towards its drivers that has been highlighted. In May, 2016 the company was forced to pay $84m in order to settle class-action lawsuits in California and Massachusetts in relation to two cases which raised the question over whether or not drivers should be classified as employees by Uber.
By refusing to accept the responsibility of recognizing its drivers as employees, the company dodged paying out over $730m to the 385,000 plaintiffs in those cases, which would have been towards fuel and vehicle maintenance costs.
Uber has now established a reputation for having a negligent attitude towards ensuring the financial well-being of its drivers – and the issues raised in the US represent the same problems for the company in other countries as they continue to expand globally.
Uber needs to actively work towards changing its attitude towards the people that drive its business – both at home and abroad. It won’t be easy, but no one said that launching a global cab service was going to be a walk in the park.
Global transportation company Uber, have announced that it will purchase artificial intelligence group Geometric Intelligence in an effort to increase its research into self-driving car technology. It’s expected that the acquisition of the artificial intelligence company will form the core of Uber’s own research centre.
The terms of the deal were not disclosed publicly, but it is believed that Uber will allow the fifteen employees of the New York start-up to form the base of Uber’s artificial intelligence efforts in its research center. Chief product officer at Uber, Jeff Holden spoke about how Uber’s aim was to use technology to move people and things in the real world – describing it as a high-order intelligence problem.
In a blog post Holden said: “Uber is in the business of using technology to move people and things in the real world. With all of its complexity and uncertainty, negotiating the real world is a high-order intelligence problem. It manifests in myriad ways, from determining an optimal route to computing when your car or Uber-Eats order will arrive to matching riders for Uber-Pool. It extends to teaching a self-driven machine to safely and autonomously navigate the world, whether a car on the roads or an aircraft through busy airspace or new types of robotic devices."
Uber which operates in more than sixty countries all over the world is valued at more than $600 billion, and earlier this year launched a test project for self-driving vehicles in Pittsburgh, Pennsylvania – its latest move in acquiring an artificial intelligence company signals its intent to step-up efforts in terms of developing autonomous vehicles.
US tech company Uber is fighting a legal battle following a decision by a Spanish judge in 2015 to ban the company from operating in the country. He referred the case to the European Court of Justice at the time to decide how to define Uber’s service. At the core of the European Court case is whether or not Uber can be defined as a transportation company or a digital platform. The American company, which has its HQ in San Francisco - was founded in 2009 and recognizes itself as a digital platform.
However, that assessment has been disputed by those who believe Uber are using labels so they don’t have to comply with national laws if it is defined as a transportation company - that would ultimately impact Uber’s growth in Europe. A lawyer for the Spanish Taxi association who initially filed the complaint against Uber argued that they can’t allow a business model to develop in Europe that could undermine the rights of consumers.
The American company has been accused of aggressively pushing itself into overseas markets, and has often in the past clashed heads with law makers and taxi associations who say Uber flouts transportation and competition rules. That is what occurred in Spain which subsequently led to this long-awaited trial in the European Court of Justice which will go a long way in determining the future of the US firm in Europe.
Uber has expanded its operations into more than 300 countries and is worth an estimated $68 billion.However, Europe’s legal challenge is a direct attack on how Uber operates in the region, one of its most important markets – but it also raises questions regarding the company’s future growth plans as it looks to expand beyond the transportation of people to food delivery and other online services.
At the hearing the company defended itself by framing an argument that it was a new player in Europe’s often lacklustre digital economy, which was offering users and drivers new ways to connect which would also support cities’ existing transportation networks.“Uber’s services can’t be reduced to merely a transport service,” Cani Fernández, Uber’s lawyer, told the Court of Justice during a lengthy session here that also included arguments from the European Commission, the executive arm of the European Union, and several European countries.
“The reduction of unnecessary barriers to information society services is critical in the development of the digital single market,” Ms. Fernández said, in reference to the commission’s goal to reduce national barriers that prevent Europeans from gaining access to e-commerce platforms, streamed television content and other online services.
One of the critical aspects of the legal dispute is actually not whether or not Uber can be defined as a transportation service or digital platform – instead it could well be its blurry stance on consumer rights. At the hearing yesterday afternoon, several of the European judges questioned Uber in relation to its relationship with drivers and about who should be held responsible if a passenger was hurt?
Such consumer protection issues were not part of the original case referred from the Spanish judge but it is now clear that it could form part of the final decision when it is made next year and could be a central topic for the prosecution in this case. “What liability does the platform have?” asked Daniel Svaby, one of the European judges. “The customer doesn’t know the driver who will pick her up. What can a user do to protect herself from harm?”
The trial continues at the European Court of Justice in Luxembourg today.
Uber officially deployed its first fleet of driverless vehicles last week in Pittsburgh, Pennsylvania. The company was beaten to the race to be the first company to deploy autonomous taxis when nuTonomy rolled them out in Singapore in late August. Only customers considered to be ‘loyal’ are able to try out the new driverless vehicles in Pittsburgh.
The deployment of driverless vehicles in Pittsburgh came earlier than was initially expected – only two years after Uber announced its intentions of having driverless vehicles pick up passengers. The company’s CEO initially said would take decades to implement, Econo Times reported. Uber drivers reportedly feared that their jobs would become obsolete once the new concept was put in place.
For now, driverless cars are only able to transfer a select few passengers and take them to select destinations. To maneuver through the busy streets of Pittsburgh, the autonomous cars are equipped with loads of contraptions such as traffic light sensors, 3D-mapping lasers, and a weather detection system, ABC News reported. The cars are occupied by a safety driver behind the wheel to ensure nothing goes wrong. Because of this, passengers probably won’t feel a huge difference in experience.
The execution of driverless vehicles is a big step up for Uber, since it now has its own physical assets. In the past, Uber drivers had to have their own vehicle to be an Uber driver; therefore, Uber didn’t own any vehicles. Now Uber owns driverless vehicles which will be kitted out with all sorts of sensors and safety features to ensure efficiency and safety.
Apple is reportedly easing its self-driving car project as it plans to map a new route. The New York Times recently reported that the company has closed parts of the project, which it never publicly confirmed, and laid off dozens of employees as part of a “reboot” plan.
The report says the team at what Apple called project Titan had grown to over a thousand, but the project ran into problems, such as trying to stand out from other similar self-driving car projects, by the likes of Google and Uber among others. Apple fueled speculation about the project earlier this year, when it invested in Chinese ride-sharing service Didi Chuxing.
According to the Times report, Apple has moved away from pumping resources into its Titan project after two years. The company is up against market rivals Google, Uber and Tesla which have been making major investments in autonomous vehicles. Uber plans to deploy autonomous vehicles for its ride-sharing services in Pittsburgh, Pennsylvania. It also announced moves to further solidify itself as a trailblazer in driverless cars.
Uber also established a $300 million venture with Chinese-owned, Sweden-based Volvo Cars to develop self-driving cars to be ready for sale by 2021. What’s more, the thriving company is purchasing Otto, a San Francisco startup developing self-driving trucks, to add to its fleet. Uber has been working with Volvo, as two of the founding members of a coalition to push for a unified U.S. legal code for autonomous vehicles. Google, Ford and Lyft are also part of the group.
Even though Uber has created a big name for itself and has a large global customer base, reports suggest that the company isn’t actually doing that well – at least in terms of turning a profit. In fact, the San Francisco-based ride hailing service has reportedly lost $1.27 billion this year in just eight months. The company said that it’s nothing new, and that it’s only managing to turn a profit in the United States. Apparently its drivers are to blame.
Gautam Gupta, Uber’s head of finance, recently spoke to Uber investors, saying the ride-hailing service lost around $520 million in the first three months of 2016, and another $750 million in the second quarter of the year, $100 million of which came from the U.S. The loss of capital has been blamed by subsidies for Uber’s drivers. Uber has been looking into potential self-driving vehicles, which in this case, could prove to be financially beneficial.
“You won’t find too many technology companies that could lose this much money, this quickly,” said Aswath Damodaran, a business professor at New York University. “For a private business to raise as much capital as Uber has been able to is unprecedented.” But losing such a hefty amount of capital for the reasonably new company is also surprising. Uber is said to be taking a larger share of its drivers’ fares, according to a report by Bloomberg.
There is hope for Uber however, since the company finally appears to be recovering from its massive financial losses in China. Uber struck a deal in July with its biggest Chinese competitor, Didi Chuxing, obtaining 17.5 percent of the company’s business and a $1 billion investment. Uber is pulling out of China for good. With a total of $2 billion lost in its two years of attempted operations, exiting the country was probably Uber’s best move.
The U.S. state of Massachusetts is reportedly planning to introduce a new 5 cent per trip fee for ride-hailing services like Uber and Lyft, and will use the money to boost its traditional taxi industry. It will be the first subsidy of its kind in the United States. The law was signed by Republican Governor Charlie Baker this month, which is one of many regulations for the industry.
A Fortune report quotes Kirill Evdakov, the chief executive of Fasten, a ride service launched in Boston in 2015 operating in Austin, Texas, who said: “I don’t think we should be in the business of subsidizing potential competitors.”
The new rule is not ideal for ride-hailing app services, but it plays right into the hands of traditional taxi companies. Some taxi companies, according to the report, considered pushing for even harsher laws, perhaps to even ban start-up ride-hailing services unless they meet the requirements that taxis do, such as regular vehicle inspections by the police.
“They’ve been breaking the laws that are on the books that we’ve been following for many years” said Larry Meister, manager of the Boston area’s Independent Taxi Operator’s Association. He refers to a law that levies a 20 cent fee, with 5 cents going to taxis, 10 cents to cities and towns, and the final 5 cents designated for a state transportation fund.
With the law put in place for ride-hailing services, millions of dollars could be raised a year since Lyft and Uber together have a combined 2.5 million rides per month in Massachusetts. The new law is being put into place to help taxis adopt “new technologies and advanced services, safety and operation capabilities,” and to support workforce development, writes Fortune.
Mark Sternman, a spokesperson for Massachusetts’ MassDevelopment agency, said regulations for how the fee will be issued and collected, as well as a plan for how the funds will be spent, still needs to be drawn up. MassDevelopment will be in charge of the funds. The fee will be invisible to riders and drivers because the law prohibits companies from charging them. Instead, ride-hailing companies themselves will pay directly to the state.
Ride-hailing app services have certainly caused a stir around the world and authorities have been struggling to figure out how exactly to regulate them. The city of Seattle in Washington has passed a law allowing drivers to unionize. Meanwhile in Taiwan, Uber is reportedly up against a massive tax bill of up to $6.4 million.
Even though the new law in Massachusetts isn’t particularly ideal for ride-hailing services like Uber and Lyft, the companies are said to have accepted the new fee in exchange for other provisions. For example, the services won’t be blocked from picking up passengers from Boston’s airport or convention center, but there will be special rules put in place for those sites.
Lyft spokesperson Adrian Durbin said the company is pleased with the new law, even though it is not perfect.
A column in the Boston Globe shared ideas of how to spend the new 5 cent fee, such as hospitality training, and incentive bonuses so that taxi owners could potentially upgrade to flagship vehicles like a Porsche to attract customers. But Larry Meister said the money will likely go towards improving the Independent Taxi Operator’s Association smartphone app.
“We definitely need some infrastructure changes,” he said.
The 5 cent fee will be collected through the end of 2021. Then the taxi subsidy will disappear and the 20 cents will be split by localities and the state of Massachusetts for five years. The whole fee will be gone by the end of 2026.
Uber Technologies recently announced that it’s selling its China operations to Chinese rival Didi Chuxing, marking the end of an expensive price war. The sale frees Uber up to focus on other markets that could be popular for it, and also gives it the freedom for a potential IPO. Following the acquisition, Didi will be valued at $35 billion. Didi’s current value is $28 billion, which puts the Uber China sale at $7 billion.
Uber and Didi Chuxing have been heavily competing the past few years for leadership in China’s fast-growing ride-hailing market. The San Francisco-based company has lost $2 billion in China in two years, according to a report by Bloomberg, which prompted investors to pressure Uber to make the deal with Didi Chuxing. Under the agreement, Didi will reportedly invest $1 billion in Uber’s global company.
In a statement, Didi said that it will be purchasing Uber’s brand, business and data in China. Uber Technologies and Uber China’s other shareholders, including search giant Baidu, will reportedly receive a 20 percent economic stake in the combined company. Cheng Wei, Didi’s founder and CEO, and Uber CEO Travis Kalanick, will join each other’s boards.
“Didi Chuxing and Uber have learned a great deal from each other over the past two years,” said Cheng in a statement. “This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable oath of growth at a higher level.”
The United States and Canada, as well as other developed nations, have proven to be profitable places for Uber and its operations. But the company is said to be struggling in developing markets, undercutting its progress globally. Reports suggest that Uber’s losses in China could be the reason behind Uber’s potential IPO.
Arun Sundarajan, a New York University professor, said: “The biggest existential threat to Uber over the last two months was that in China they were losing capital in a way that potentially threatened the rest of their worldwide operations. The fact is that in the short term it may be seen as a loss, but in the long term it’s a good move. Now they can focus on the rest of the world.”
For example, now that Uber is pulling out of China, it can now focus on other regions where it’s currently fighting for market share. Uber is competing against the likes of Grab in Southeast Asia, Ola in India and Lyft in the U.S.
The deal with Didi, however, is subject to government approval, in which competition will be considered. For example, the combination of the top two players in the market could raise regulatory scrutiny, and officials will have to determine the range of competition. “The ministry of commerce has to define the size of the market and see if the car-hailing business Didi and Uber are offering can be replaced by similar services,” said Deng Zhisong, senior partner at Beijing-based law firm Dentons. “If you count taxi services and public transportation, the car-hailing sector will not have a market share that significant.”
After the deal with Uber, Didi’s value will be approximately $35 billion, according to sources. Uber Technologies has been valued at almost $68 billion. Sundarajan said the arranged acquisition has “removed a big roadblock for an Uber IPO. Losing money in China would’ve given many pre-IPO investors pause,” he said.
This isn’t the first change to its business structure Didi has made in recent years. In 2015, the company joined with rival Kuaidi, creating a massive Chinese homegrown company which Uber had to compete with. After the merger, the company backed China’s most valuable internet businesses including Alibaba Group and Tencent Holdings.
Apple has also invested $1 billion in Didi, in a round that valued the company at around $28 billion. Even more promising for the Chinese giant is that the government recently passed a new rule legalizing ride-hailing services, allowing more room for Didi to grow.
But there is a chance that Didi’s purchase of Uber’s China business could complicate its alliance with other ride-hailing startups around the world. For instance, Didi had an agreement with Lyft, Ola and Grab to create a global force to take on Uber. The U.S. firm has been envied because of its ability to reach into China where few U.S. technology firms have managed to succeed.
RHB Research Institute in Hong Kong analyst Li Yujie said China is “such a tough market, in terms of regulation, competition and culture; they [Uber] faced challenges on so many fronts. Cooperating with rather than fighting Didi might not be such a bad idea,” she said.
American multinational online transportation network company Uber recently partnered with satellite imaging company DigitalGlobe – which provides high-resolution aerial imagery to companies like Apple and Google – to enable Uber the ability to use satellite images for its mapping ambitions.
Colorado-based DigitalGlobe posted a blog post announcing the deal, explaining how its imagery would help “improve the Uber experience for riders and drivers,” and that Uber would be using DigitalGlobe’s technology to “identify and improve pick-up and drop-off locations,” as opposed to displaying maps to users of the Uber app.
High-definition maps are essential to Uber’s operations as a self-driving car project and it has been building up its mapping division for some time. According to The Verge, engineers from both Google and Carnegie Mellon University are working on Uber’s mapping efforts. One of the engineers, Brian McClendon, who was the former head of Google Maps, is now in charge of Uber maps.
Ride-sharing services Uber and Lyft are set to exit the Texas city of Austin after voters on Saturday said fingerprinting should be part of driver background checks, reports have said.
The companies had poured $8.6 million into a campaign to keep fingerprinting, which can be expensive and time-consuming, out of driver checks. Results from the vote on Proposition One -- the most expensive campaign in city history -- showed 56 percent in favour of fingerprint checks, compared 44 percent against, according to the Austin American-Statesman newspaper.
The vote came after the City Council passed an ordinance in December 2015 that, among other rules for ride-sharing companies, required their drivers to undergo fingerprint-based background checks by February 1, 2017.
Uber and Lyft announced after the results of Saturday's vote that they were set to suspend operations in Austin, the capital city of Texas, on Monday, May 9.
"Disappointment does not begin to describe how we feel about shutting down operations in Austin," Uber Austin general manager Chris Nakutis said in a statement. "We hope the City Council will reconsider their ordinance so we can work together to make the streets of Austin a safer place for everyone."
Lyft added in his own statement: "We're very disappointed to leave the Lyft Austin community -- and we hope to come back soon. If you'd like to help make Austin rideshare-friendly again, reach out to your City Council member and tell them."
Currently, New York and Houston are the only U.S. cities that require fingerprinting for ride-sharing drivers, media reports have said. Uber has threatened to pull out of Houston if fingerprinting rules aren't changed, saying they hamper driver recruitment. Business is booming for ride-sharing companies but they face tricky regulatory issues in cities around the world.
They are up against stiff resistance from traditional taxi drivers, as well as bans in some places over safety concerns and questions over legal issues, including taxes. On Wednesday, May 4, San Francisco-based Uber announced a policy board that includes a former European Commission vice president to help the company overcome regulatory and other hurdles.