Uber Hits a Bump in the Road
Uber Hits a Bump in the Road
Consumers use the Uber app to contact a driver in the nearby vicinity when they want a ride. The app also allows consumers to get an estimated time of arrival on their smartphones with the use of an integrated GPS system. Many people use Uber as an alternative to taxis, which is upending the taxi industry on a global scale.
Uber is also having an impact on other industries as well. For instance, companies like Zappos are planning to adopt Uber’s surge-based pricing strategy. Drivers for Uber act as independent contractors who can run their own ridesharing business and drive whenever they so choose.
However, Uber is encountering a lot of challenges as it expands globally. Internally, Uber is facing some problems with its drivers. Despite the drivers’ status as independent contractors, Uber still exerts much control over the drivers, including setting rates. In California lawsuits have been filed by Uber drivers claiming that they should be legally considered as employees. One driver won a lawsuit against Uber in California. Uber might need to amend its strategy so that Uber drivers will fall beneath the employee threshold.
Additionally, Uber has faced many difficulties from the taxi industry. The taxi industry points out that it is unfair that Uber gets to offer taxi-like services without having its drivers go through the same licensing requirements that taxi drivers must go through. Many governments seem to agree, and Uber has been partially or wholly banned in places such as France, Germany, India, Australia, South Africa, Spain, and Indonesia. Protests of taxi drivers further discourage Uber’s expansion. An alleged rape in India by an Uber driver has caused some governments to question how Uber vets its drivers, prompting Uber to implement more safety measures. Uber has also clashed with laws such as the American with Disabilities Act because many of the drivers drive their own personal vehicles, which are not wheel-chair friendly.
In 2017 Uber’s co-founder and CEO, Travis Kalanick, resigned. Kalanick was known for his aggressive strategies, and critics believe this began to trickle down into the corporate culture. Additionally, some female employees at Uber claim they had suffered sexual harassment on the job. Uber’s resistance to releasing its diversity statistics also led to major criticism. The investigation into the harassment claims resulted in 20 employees being fired. Investors were uneasy about Kalanick’s leadership ability and pressured him to resign, although he remains on the board.
Despite the challenges Uber faces, it has a bright future ahead of it. Uber has expanded its operations to 425 cities in 72 countries around the world and is valued at around $70 billion, making it the world’s most valuable startup. Approximately 30 million users use Uber’s services monthly. It has become by far the most well-known company in the sharing economy. This case provides students with an excellent opportunity to examine the ethical challenges that an innovative and disruptive company faces as its expands.
1. What are the ethical challenges that Uber faces in using app-based peer-to-sharing technology?
2. Since Uber is using a disruptive business model and marketing strategy, what are the risks that the company will have to overcome to be successful?
3. Because Uber is so popular and the business model is being expanded to other industries, should there be regulation to develop compliance with standards to protect competitors and consumers?