How Uber conquers a city in seven steps
A new website, ‘Why everyone hates Uber’, argues that the company uses controversial tactics to bulldoze its way to domination – one city at a time
By Olivia Solon
Apr 12 2017
The tides are turning for the poster child of the gig economy. Uber’s “disruptive” approach has up until now attracted investors like flies, leading to its valuation snowballing to $69bn. However, a string of allegations about sexual harassment, intellectual property theft and driver manipulation have called into question the aggressiveness of its expansion practices.
The consumer rights activist group SumOfUs has mapped more than 100 alleged incidents from news reports on a website called whyeveryonehatesuber.com to argue as to how Uber’s bulldozer approach to entering new markets sees it sidestep regulators, bully competitors and mistreat employees. These have been distilled into a seven-step playbook outlining the ride-hailing company’s modus operandi as it colonizes cities across the world and disrupts their transportation economies.
“Uber plays by its own rules – [it has been accused of] shortchanging drivers, [avoiding] local taxes and sometimes laws by hiding behind an army of expensive lawyers and lobbyists,” said Carys Afoko, communications director of SumOfUs. “And now, we’re exposing it.”
1. Bulldoze into a market
Uber enters a city without seeking permission from regulators or officially clarifying its position. When questioned, the company has argued that existing regulations do not apply to its business model.
This started with Uber’s first market, San Francisco, in 2010. City agencies ordered the startup to cease and desist operating without a taxi license or insurance. Uber ignored them and published a blogpost stating that state regulations hadn’t been written with Uber’s “cutting edge transportation technology” in mind.
After facing similar tensions in Boston and Washington DC, Uber’s CEO, Travis Kalanick, described city officials as obstructive pencil-pushers.
“Every city we go to, eventually the regulators will make something up to keep us from rolling out or continuing our business,” he said at a TechCrunch conference in 2012.
2.Recruit drivers aggressively
There’s no Uber without a critical mass of drivers, so the company offers $1,000 sign-up and referral bonuses to lure them away from legacy taxi firms. For those who don’t have their own car, Uber’s Xchange leasing program allows even those with low credit scores to get deals on vehicles. However, drivers who opt for these financing deals can end up paying high prices. “The lease terms are awful – you could buy the car for what they are being leased for, or maybe even less,” said Greg McBride, a financial analyst who looked at the figures for the Associated Press. In response, Uber said the program offered weekly rentals, flexible leases, traditional leases and purchase discounts through some carmakers.
According to Uber’s arch-rival, Lyft, one of Uber’s more grubby tactics includes allegedly ordering and cancelling more than 5,000 rides from Lyft in order to make drivers think the service was less reliable and to drive passengers looking for available cars to Uber. Uber denied the allegations.