Uber and Lyft slashed driver pay in recent years more than publicly reported: Report

Originally published at: https://boingboing.net/2019/08/27/with-one-weird-trick-uber-and.html

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You know their “business model” sucks when you casually ask every driver what they think of being a driver and they say “It sucks.”


Originally published at: https://boingboing.net/2019/08/27/uber-and-lyft-gouge-their-driv.html

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I don’t understand how Uber manages to lose money, even when they aren’t keeping $50 of a $65 fare. How much can it possibly cost Uber to tell a driver and a passenger about each other?

I enjoy the Schadenfreude about these apps’ unsustainability as much as anybody, since they’re all such wankers, from poster-jerkoff Travis Kalanick on down, and their business model is based on pitting drivers against each other (so that prices are set by the drivers who understand their car-ownership costs most poorly). But I also rely fairly heavily on ride-share apps, because I don’t own a car. So I hope there’s somehow a not-evil version of these things. And, as I say, I don’t understand why there shouldn’t be (though I accept that there, currently, isn’t).


The methodology sucked because Jalopnik asked drivers to submit single fares. They would have submitted the fares that they were mad about, because they were paid so little.

Now, if Jalopnik was able to ask drivers to extract all their fares and send them, they could crunch that data and have a much more statistically relevant dataset.

However, that doesn’t make the article invalid; it points out that this thing that Lyft and Uber say doesn’t happen… does. If they wanted to deal with this they could provide a fair sample of say a month’s anon data and have them crunch that. But I suspect that while it wouldn’t be quite as bad as Jalopnik says, it would still be pretty bad.

Lazyweb: Someone should open up the business that Lyft and Uber claim to run: a Ride Sharing application that charges a flat 15% commission plus a service fee each month and lets the drivers set their rates and let them bid for customers. The app automatically gives the customer the choice between optimizing for nearness of driver versus cost (on a sliding scale) and hails rides in that order until someone accepts the fare. The driver is only penalized for turning down a fare if they have already accepted it. The acceptance is double blind, although drivers can blacklist passengers and vice versus. (Although these will be statistically checked to make sure that it’s personal, not racial or gender based. Say, if a customer blacklists too many black drivers as a percentage of their total blacklist then they are fired as a customer.)


I don’t follow the details, but is it – I’m asking or suggesting, not saying – that the money is being spent to transform the surrounding system, a.k.a. our society a.k.a. the lives we live, which transformation doesn’t yet contribute to the businesses’ bottom lines? No, I don’t have substantiation for that, I just think they’ve shown that to be one of their goals.


An Uber spokesman explained this dynamic to Jalopnik as follows: “While driver- and rider-side surge are both tied to real-time imbalances in supply and demand, what a rider pays in surge and what a driver earns from surge on a given trip isn’t always the same. This is due, in part, to the fact that new driver surge is based on the driver’s location, not the rider’s. What this means is that a driver may receive surge on a trip even if the rider doesn’t pay anything extra.”

Similarly, a Lyft spokesman said, “Lyft continues to pass the rider Prime Time onto the drivers, via PPZs, at the same rate in aggregate. There are differences on a ride-level but these differences cut in both directions,” in that sometimes drivers earn an usually higher or lower percentage of the fare.

In other words, Uber and Lyft say they are taking all the surge charges riders pay and spreading the proceeds among all the drivers in the area, whether their particular passenger pays a surge fare or not (both companies deny they merely pocket the difference).

Oh yeah I totally believe that Uber and Lyft are distributing these surge payments to all the drivers…


What I gather (I have no sources on this, just a guess) is that they lose so much money because they are heavily subsidizing the drivers’ pay (presumably to undercut taxis and drive them out of business). I’m sure thy are also spending a lot on lobbying in every jurisdiction, because they are resisted everywhere they go.


Do drivers not know what their cut will be before they accept a fare? If not, how is that fair? All the control is held by the company.


I don’t understand how there isn’t a platform that is just running at like a 5% surcharge (or enough to keep the servers turned on and pay for it’s development). I feel the like the company must be bilking in investors to pay for all sorts of pointless shit/perks/lifestyle for c-level employees.

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Amortized costs of advertising, and lobbying?

I don’t understand how there isn’t a platform that is just running at like a 5% surcharge (or enough to keep the servers turned on and pay for it’s development).

Juno caps out at 10% and was originally founded with the intention of giving drivers equity. There are some rideshare companies out there that are trying to function as co ops as well.


Or rather, they are heavily subsiding the passengers’ fares.
I got a ride that was about 100 miles, for about $115, including tolls. No one is making money on that.

Yes, sorry, you said it much better than I did. People love these services not just because the service is better than taxis. They are also a third of the price (at least around here). When you look at the bare bones nature of traditional livery services, there’s no margin to undercut there with an app. There’s no way you price a better service that aggressively without borrowing billions from VCs and pouring it into your loss-leader product. They seem to be counting on driving taxis out of business before their house of cards collapses.


If they’re subsidizing the drivers’ pay then how are the drivers paid so poorly? It’s got to all go to corp salaries, lobbying, and advertising.

Yeah, exactly.

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