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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.
"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.
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. Now, any sane society would just have public transportation instead of "Public Transportation with a private company skimming 20% off the top" but that's now how these things usually play out...
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Uber lost billions, but I bet the owners aren't eating cat food.
Yeah advertising, but also through subsidized fare prices; even ignoring driver's real costs and allowing for surge pricing, the operating costs + interest on all the loans, etc. exceeds the value of what is charged to customers. The Uber management has failed at tactics, and also at strategy - it is in the process of eating itself to death. It will not be the scion of sci-fi/fantasy driverless cars, and for that matter neither will Tesla as they ignore user experience and the entire human-machine interface. Uber will inevitably follow the same short-gains model due to lack of experience or insight. It is one of the horrors of the modern age that IT companies were ever viewed as capable, much less the best at anything outside of their limited domain.
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?
Who the F*** is paying for all these stories about Uber and who cares so much about this one company?? It's insane. They get more press than any other company. Why should we care?? They're a big nothing, really.
It's not complicated. Zero tolerance just means any infraction. You're trying to be clever by conflating tolerance with blood alcohol level or somesuch. One tolerance would be that one conviction is allowed. It's not complicated.
Also, coffee isn't a drug for the purposes of the law in so far as driving is concerned. Honestly, I don't know what you think you're illuminating here. We probably agree Uber is money pit. But none of the other stuff you said makes any sense.
"Old man yells at systemd"
Their business model appears to be effectively based upon self-driving vehicles. Human drivers are just a stop-gap for bootstrapping the business, so the investors subsidize your ride to get market share now, and later they will reap the profits when they can fire all their drivers.
But that isn't at all what the state is talking about. They are not talking about DUI convictions, or even arrests. They are talking about complaints.
Meaning, some customer reported that they thought their driver was drunk or on drugs.
What does zero tolerance mean in this context?
A taxi company doesn't have an app for rating every ride. So you have to really, really want to complain. And how well is that tracked?
So now does it make more sense to question what "zero tolerance" means? Surely they don't mean "zero complaints" That would be stupid at every level. And because they are talking about complaints, we know they don't only mean DUI convictions. So the line is somewhere in between.
But we also know that their competition is not going to have nearly the robust and easily accessible complaint system that Uber (and Lyft) have. And they won't have nearly the system for tracking complaints. So how can the state compare a company that tracks every comment with a company that probably says "thank you for your input. We will investigate this immediately." when the customer calls, and then promptly ignores it with no paper trail at all in many, maybe even most cases.
It is a complicated situation to properly adjudicate. And there are lots of incentives to manipulate the system from lots of sources.
All things considered, $2.8B USD isn't a whole lot.
Are you trying to be cool by association, dropping big numbers like that, or are you just terrible at math? $2.8 is a whole lot of money.
If Uber continues to succeed, they will be among giants such as Delta Air Lines and Greyhound but in a more local realm.
Uber has lost more money in 2016 than the entire revenue of Greyhound. Two more years of such losses and Uber will have lost more money than the entire fleet, equipments and offices of Delta are worth.
These guys are WAY more efficient than the public sector transit solutions and are more efficient than the government-sponsored Taxi Cartels. Uber only needs to not be shut down to grow and succeed.
No they're not. The bulk of the $2.8 loss is money paid to the drivers by Uber. Their business model is not sustainable unless they figure out a way to make self-driving cars work. Knowing the current state of technology, it's unlikely to happen before investors pull the plug.
lucm, indeed.
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.
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Uber drivers in several states have been reported cutting off mattress labels that plainly say, DO NOT REMOVE THIS TAG.
Are you kidding? At this rate, Uber Corporation will become president in 2020.
You are welcome on my lawn.
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.
lucm, indeed.
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.
People are obviously happy with Uber rides being cheap. And then they think that Uber has some excellent ideas and implements them well, and that's why they are cheap. WRONG. It's very easy to offer cheap rides if you just subsidize every ride with investors' money.
In China drivers were paid more than the customer paid at some point, so clever drivers let the whole family book rides, didn't drive anyone, paid back the ride fees, and kept the difference in their pocket. Free money, straight from the pocket of an investor into the pocket of a driver in China.
so... "i sell at a loss but i make it up in volume"? yeah, that's not gonna work...
They're certainly more efficient at losing money than taxi companies.