Uber Face Fines Over Drunk Driving Complaints -- And Lost $2.8 Billion Last Year (usnews.com)

While Uber's bookings doubled last year, the company still showed a net lost of $2.8 billion. And now, "California regulators are recommending that Uber pay a $1.13 million fine for not investigating rider complaints that drivers were working intoxicated." An anonymous reader writes: California "requires ride-hailing companies to have a zero-tolerance policy for driving under the influence of alcohol or drugs," notes Reuters -- and yet Tuesday's order reports that investigators "found no evidence that (Uber) followed up in any way with zero-tolerance complaints several hours or even one full day after passengers filed such complaints." Investigators from the state's Public Utilities Commission are asking the full commission to examine their findings,

"To confirm the policy, regulators analyzed selected complaints against drivers who received three or more complaints," Reuters reports. Though Uber has sometimes suspended drivers within one hour of customer complaints -- 22 times -- they've apparently received 2,047 drug- or alcohol-related complaints between August 2014 and August of 2015. "The company said drivers were banned from working in 574 of those complaints, according to the order. But regulators then reviewed 154 complaints, and determined that the company failed to promptly suspend drivers in 149 complaints. The company also failed to investigate 133 complaints, and did not suspend a driver or investigate 113 complaints, the order shows... In at least 25 instances, Uber failed to suspend or investigate a driver after three or more complaints, the order states."
An Uber spokeswoman said the company had no comment, but "Adding to Uber's challenges, a Reuters investigation found a ten-fold increase in attacks on drivers in Sao Paulo last year, including several murders, after the start of cash payments on its platform at the end of July." And in addition, a judge in Brazil ruled last week that Uber's drivers are employees, which could make Uber liable for a variety of benefits, following a similar ruling in another Brazilian state court.

But there's also some good news for Uber. A court in Rome suspended a ban on Uber in Italy until the company finishes its legal appeal, and a two-month suspension in Taiwan also came to an end after Uber agreed to partner with license rental car companies.

Comments

How is that possible?

[Mitreya]

a net lost of $2.8 billion

How can a company continue to operate and attract investors / high valuation with $2.8 billion losses?

California "requires ride-hailing companies to have a zero-tolerance policy for driving under the influence of alcohol or drugs,"

That's a deeply meaningful policy definition. What about someone who had too much coffee?
Also, are some companies in California allowed to have a 1-tolerance policy?

Re:How does a company like Uber lose $$?

[Cytotoxic]

I was wondering the same thing.

Theoretically they are operating in the black at the lowest level - the cost of a ride is less than the company pays their drivers.

App development and hosting is in the millions, not billions.

So that leaves advertising and legal fees, right? $2.8 Billion Dollars.... in legal fees and advertising. Wow. Just.... Wow.

So if each high-profile case runs around $10 million in legal fees.... that's, what? .... a couple hundred cases? Hmm... Ok. Worldwide.... I suppose that is plausible.

But with that they'd still have to be operating at only break-even on the rest of their operations. How is that possible? They don't have any employees to speak of. They only get a cut of orders for other people. They claim to have netted $6.5 billion on bookings of $20 billion. And still they lost almost $3 billion.

That is simply a stunning number. How can their costs possibly be $10 billion per year - above what drivers make? That's just a colossal amount of money for a middle-man. .........So I google.... and find that there are some leaked financial documents running around. Apparently they are paying drivers in places like China 50% more than they are charging the customer, as a "driver incentive". So they lost a billion a year in the china market, because driver incentives were 154% of revenues.

Well... that would explain it then. Next question.... why exactly are they paying drivers more than they charge the customer?

Abusing labor isn't their long term goal

[rsilvergun]

self driving cars are. Millennials won't be able to afford cars. Their wages are dropping and there's no sign of that trend stopping. Once that hits critical mass (e.g. enough of them of voting age who can't buy cars but aren't completely crushed by poverty) they'll be demand for public transportation. That's where Uber is positioning itself. The investors are letting them bleed money because, well, 2.8 billion only sounds like a lot of money to you and me. It's not chump change to the investors, but it's not going to really put them out. We've let wealth inequity get pretty crazy and we don't punish folks at that level for mistakes; so it's not really a risk to them. Maybe it woulda been in the 60s and 70s but not today.

Re:2.8 Billion

[lucm]

isn't a lot of money given what's at stake. If Uber pulls off what they're trying to do they'll become the defacto transportation system for basically the entire modern world.

Uber is losing money on every single ride. That's where the $2.8B went last year: paying drivers. If that money-losing model become a "defacto" transportation system for the entire modern world, it will mean that the bulk of the GDP will be spent on paying drivers to move people around. This is so fucking absurd I really don't get how educated people can even consider that as a serious possibility. The numbers just don't add up.

There's only 2 way Uber can turn a profit:
1) increase their prices to a point where cabs are a lot cheaper
2) use self-driving cars that are cheap to build and operate, and find someone to subsidize production on a massive scale

If they were anywhere near a breakthrough with their self-driving cars, things would be different. But they're not. They've used the worst possible strategy for their business: acquire shitloads of customers long before they can be monetized. They started on that path at a time when it was all the rage in Silicon Valley (case in point: Twitter). But that's not going to work. Tesla, Amazon and Google are all in a much better position to take over this market if it ever becomes cost-effective because they will have the technology to make it happen. Uber only has an app that a handful of RoR retarded programmers could recreate in a week.

Re:A good chunk is

[lucm]

Stop guessing stuff. A "good chunk" is NOT on research and patents. Of the $2.8B loss, a bit over $2.6B went to drivers. Uber is trying to kill the competition by subsidizing their drivers with investors money.

Even if it was to work, it's still not worth it.

Do the math. Average cab fare: $14. In NYC there's about 240 millions taxi trips per year. So roughly. that's a revenue of $3.4B. About half of it goes to car expenses (acquisition, fuel, repairs, etc). The other half goes to drivers.

On a national scale, the revenue is around $11B. This means that if Uber was to take over 100% of the taxi market and replace those 250,000 cars with self-driving cars (that don't exist yet) that are not more expensive than existing non-self-driving cars, they would stand to make an annual profit equivalent to what Facebook makes in profit every quarter. And they start with a huge debt of almost $10B.

There's no money in that business. Costs are too high.