In many ways, this is a great time for Uber. The carsharing service keeps expanding (210 cities worldwide) and has recently been valued at over $40 billion. But it also has taken a PR beating in past months, from reasons including thin-skinned executives threatening journalists to thuggish tactics in undermining its competitor, Lyft. Nevertheless, in many cities Uber has become the transport of choice. And it has tried to show a softer side, as in its current campaign to take action against childhood hunger. Fine, Uber is not donating the money, but the company is lending its technology to allow riders to kick in another $5 to their ride fares and help fund No Kid Hungry. Unfortunately for Uber, no one is talking about the rides-for-hunger campaign: the buzz is on the company’s surge pricing, or as some say, price gouging, during the tragic hostage crisis earlier this week in Sydney.
The outrage stems from Uber’s use of algorithms to set “surge pricing” into effect during rush hours, holidays, hectic Friday nights and bad weather. Uber users have long railed against this business practice, and in fairness much of that noise is an insufferable stream of whining—after all, some public transport systems like the Washington, DC Metro increase fares during peak commuting times while municipal taxi services boost fares late at night. Uber is a business, not an entitlement program for those who do not have a car.
What caused the outrage, however, was when Uber rides out of Sydney during that awful day increased as much as four-fold as the chaos in that downtown café unfolded.
Uber always responds that surge pricing is a way to motivate drivers to hit the road during times of high demand. But how Uber got egg on its face is from how it handled the situation. The company stated it was fully aware of the crisis, and according to Gawker, raised fares in order to push more drivers to head towards downtown Sydney. Most likely the snafu started because Uber’s surge pricing is an automated process, but poorly written social media messages and its already shady reputation hardly did the ridesharing service any favors. True, Uber reversed course, offered rides out of downtown Sydney for free, and said it would refund the fares, which reached as high as $200.
So once again, Uber comes across as the Freddy Krueger of the sharing economy. And the backlash is only increasing, kicking a company many see as arrogant when it is already down. Cities in the U.S. including Portland, San Francisco and Los Angeles have threatened legal action against Uber for a bevy of reasons. Spain has banned the service because of “unfair competition,” and New Delhi suspended the company’s operations after a suspected rape by one of the service’s drivers—followed shortly by Thailand. Then add the potential headache of Uber drivers unionizing and you have a company getting hit hard from all directions.
It did not have to be his way. AirBnb has had its share of challenges, but for the most part has given the impression it has learned from missteps and still enjoys a strong reputation. But perceptions of Uber are in tatters, and the company needs to stop hiding behind PR spin and show they are a partner, not a predator. A solid corporate social responsibility could help, but the childhood hunger campaign falls flat for several reasons: first, it is not original; second, it is not as if Uber is contributing its own money; and finally, the program has nothing to do with its core business. What Uber could do is look within: surely its innovative technology could find an application within the non-profit world. It could fund programs for its drivers, from scholarships to paying for more of their costs, just to show it can and will build goodwill.
These are just ideas: Uber executives and employees know their business better than anyone. But this latest fiasco in Sydney, fair or not, behooves Uber to become more serious about righting its ship—because in many ways, these sharing economy firms are like social media channels. Eventually users will get so disenchanted they will find an alternative, and despite Uber’s strength, surely there are entrepreneurs out there who have ideas on how to take on a company that to many offers more bullying than benefits.
Image credit: Wikipedia (Jason Tong)
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.