Uber has rapidly become one of the most common forms of sourcing transportation, in particular in our city, Sydney. Its growth has seen millions of people participating in the culture of Uber. This transformative technology will be the focus of this article, and I will discuss the economic, political and social effects that Uber has had, as well as its business model, Internet ecology and how it is situated within society.
Uber has changed the way that people connect and use public transport, and it is important to understand the effects of this technology.
What exactly is Uber?
Uber is a technology platform that connects people who are in need of transportation (consumers) with people who have the capacity to transport these people (producers) (Schneider, 2017). Uber does not claim to be a new, radical technology, but simply connects people who have needs with others who can supply these services (Schneider, 2017). Uber is an agent in the market process, one that intermediates these two different groups (Schneider, 2017). The success of Uber is based on the simple use of an application (app) on a smart device.
This transformative technology allows users to hail a ride simply and quickly, and be able to pay for this ride through the app (Geoffrey, Banister and Schwanen, 2017). Uber takes part in the ‘sharing economy’, which brings together consumers and suppliers through the effective use of space and time capacity (Geoffrey, Banister and Schwanen, 2017). Political and economic issues have resulted due to this sharing economy, as governments have not yet created regulatory frameworks to deal with these new technologies and there has been various debates surrounding regulation.
Uber is a successful, innovative technology that benefits both consumers and suppliers, resulting in transformative social effects. However, there have been some political and economic implications that will be discussed further.
The History of Uber
The official Uber website provides a timeline of their history. Travis Kalanick and Garrett Camp coined the idea 2008, while they were in Paris and unable to find a taxi. They took this thought home to San Francisco, a city known for taxi inefficiencies. This encouraged their idea for a car share application (Geoffrey, Banister, and Schwanen, 2017). UberCab launched in San Francisco in March 2009.
On July 5, 2010, it made its first connection between driver and rider. From then, the company rapidly grew in San Francisco, and further developed into other cities in the US (Uber, 2018). In November 2012, Uber was launched in Sydney, Australia. The company soon expanded from a luxury car service to one with a variety of different transport options (Posen, 2015).
Uber now provides UberBlack, UberX, UberEats, and a huge selection of other services, depending on group size and need (Schneider, 2017). By 2015 Uber had reached 300 cities, and by December 2016 had reached over 500 cities (Uber, 2018). As of May 2017, Uber had completed 5 billion trips, Uber has developed rapidly as a technology platform, and while there have been a few bumps in the road (see Business Insider for a full history), the company has exploded into contemporary life as a huge investor in the sharing economy.
Uber’s Innovative Business Model
Schneider (2017) discusses the transformative business model of Uber. Uber’s successful business model is premised on social interaction (Posen, 2015). Uber is centred on intermediating two groups of people, providing needs that can be met by the other group (Schneider, 2017).
Uber is not a radical, new concept, as it simply focus on existing social inefficiencies, finds a solution, and capitalises on this solution (Schneider, 2017). This is how Uber differentiates itself from taxi companies, and the conflict between Uber and other transportation companies will be discussed in the following section. According to Schneider (2017), Uber’s business model comprises of 4 main themes:
- The capitalisation on convenience
- Being an intermediary of ‘idle capacity’: space that suppliers have being distributed between the needs of consumers who are willing to pay
- This intermediation is available at a lower cost than other services, providing incentive for consumers
- The app service provides simplicity, clear information, different options for rides, indication of prices, and social interaction
Another part of the business model of Uber involves an invasive approach, according to Geoffrey, Banister and Schwanen (2017). This refers to the platform being introduced in countries and cities where it sought to sidestep regulatory systems and implant itself in public consciousness (Geoffrey, Banister and Schwanen, 2017). By doing this, Uber was able to cement itself as a popular service before the government intervened, so that when it came to legal matters, Uber had the support of the majority of the citizens, making it a service that was now needed in that particular city (Flores and Rayle, 2017).
Uber cements itself as a part of the ‘gig economy’, which takes advantage of precarious work for individuals who choose to take part in this economy model (Shade, 2018). Shade discusses that the company comprises of virtual work, which often constructs gendered relations through the algorithmic culture of online and gig economies, of which Uber is a part of both (2018).
Uber creates content to serve economic transactions, and as rapidly successful as the business is, we must be aware that a part of their business model is chauvinistic, and often targets women with promotional material, as well as using gendered hiring and payment practices (Shade, 2018).
This business model is strategically constructed and takes advantage of already existing issues and needs.
The Internet Ecology of Uber
Uber has most definitely made its mark in the Internet ecology, and has developed competitors and faced various regulatory issues. Part of the Internet ecology of Uber includes the transparent nature of the technology. The app provides information as to who needs a ride, who is offering one, cost indications and implementing quality control (Schneider, 2017).
Uber requires its drivers to pass a variety of tests in order to become a driver. Schneider refers to Uber as a ‘invisible hand’ (2017, pp.36) which facilitates exchange of goods and provides indications and guidelines for the service (2017). The voluntary nature of Uber for drivers and riders situates it in the Internet ecology as a particular service that is not necessarily required, but specific marketing techniques makes it appealing to many (Schneider, 2017). Uber itself does not have specific partners, however services such as UberEats do connect consumers with a variety of food companies.
There are a variety of competitors with the same structure as Uber, including ‘Lyft’ and ‘SideCar’ and ‘Grab’ (Geoffrey, Banister and Schwanen, 2017). One of the largest battles that Uber has had was with ‘DidiChuxing’ of China (see Wired UK), a similar company to Uber who they many legal battles with, and in fact Uber ended up merging with this company in 2016.
Uber is it’s own platform, however some services rely on suppliers for goods. One example is UberEats, in which Uber drivers connect consumers with restaurants, providing transportation of food from the restaurant to the consumer. The users of Uber are both the suppliers of the service and the consumers paying for the service. These two groups rely on each other for the service, and the smartphone app provides the intermediary to create connections.
This brings us to the largest debate surrounding Uber: regulation. Uber defines itself as a technology platform, distinctly separating itself from a taxi service (Flores and Rayle, 2017, Geoffrey, Banister and Schwanen, 2017). In almost every city that Uber has launched, it has violated laws and had regulatory issues; in fact many cities have banned ridesharing as a way to alleviate the issue.
Uber has become known as a disruptive innovator, breaking the rules intentionally in order to spark support for a new, innovative service that people will back them up on (Geoffrey, Banister and Schwanen, 2017). In cities such as Austin, Texas and New York City, there have been major battles from taxi companies insisting that Uber have the same price regulations. In Austin, Uber suspended their operations in 2016 as a result of backlash in regards to regulating their prices, and in New York there has been discussion about doing the same (Flores and Rayle, 2017).
Johana Bhuiyan from Recode discusses the debates concerning regulations for Uber in NYC. She notes that while these debates have happened before, this time Uber seems to have much more support. Her belief is that if the city were to win and price caps were imposed in NYC, this would likely spread to other cities in the US (2018). While it is understandable that taxi companies and other competitors are unhappy with the structure and process of Uber, is it also important to understand the changing nature of communication and how Uber provides a different platform through intermediating between people with different needs (Schneider, 2017).
Uber illustrates the innovations and changes that are occurring as a result of the Internet, and governments need to deal with their regulatory regimes to include innovative operators fairly in the system (Geoffrey, Banister and Schwanen, 2017). Uber has made it clear that it is not a taxi system, and we can see that they are not afraid of a fight in regards to regulation. Forcing Uber and other ridesharing companies to comply with taxi regulations that were created before these services even existed places restrictions on innovation, and provides a disservice to the community (Posen, 2015).
The following map will illustrate where Uber sits within the Internet ecology.
Uber’s transformative effects
Ridesharing platforms such as Uber are innovative in a variety of ways. As discussed by Posen (2015) and Geoffrey, Banister and Schwanen (2017), the business model created by Uber is hugely innovative, but the concept itself it not new. Uber intermediates between two groups of people, providing a connection and ease at which to complete a transaction.
Uber has most definitely changed people’s perspectives on the ways that we can communicate, and how we can take part in the sharing economy (Posen, 2015). This innovate platform has most definitely sparked social and cultural change. We can understand this change through the different perspectives discussed by Karppinen (2017) regarding digital and human rights.
New technologies through ridesharing have created demands for other rights and regulations to be put in to place (Karpinnen, 2017). Karpinnen (2017) notes that this perspective involves rights to data protection, including fair use and ownership of data. However, gender inequalities and algorithmic culture have been used to the advantage of Uber. Uber has been in various disputes about gender discrimination.
The Sydney Morning Herald noted that women are concerned that they are being rated lower as passengers, as many have encountered male drivers who had tried to make moves on them, and their disinterest has provoked low ratings (Shade, 2018). The majority of drivers are men, and it seems that some of them do discriminate against women (Shade, 2018).
The use of algorithms in the payment of Uber drivers has been revealed to pay men more than women. Technology Review notes that men earn $1.24/per hour more than women. While it is undoubtable that Uber has had a transformative effect on the world, there are still issues that must be resolved to make the platform fair and safe for all.
There must also be a demand on governments for new regulatory rules for these innovative services such as Uber. These perspectives provide an insight into the ways that Uber has changed social, economic and political life and how regulatory processes needs to be altered, and gender discrimination be addressed. Social and cultural change has been effected through ridesharing platforms, and the sharing economy is becoming a part of everyday life across the globe (Posen, 2015).
Uber has become one of the most innovative and transformative platforms to ever exist. While it has come up against some scrutiny (Geoffrey, Banister and Schwanen, 2017), ridesharing companies have been able to cement a place in many cities around the world. Uber began as a solution to the taxi inefficiencies in San Francisco, and has expanded as an intermediary for people with excess space and others with a need for transportation.
The simplicity of the design and its business model separates Uber from taxi companies and other transportation services. The transformative effect of the sharing economy has changed economic, political and social practices and continues to evolve in a rapidly changing and Internet focused society. There are most definitely some issues that need to be resolved with regard to the regulation policies and gender inequalities, and despite the huge success of Uber, these must not be disregarded.
Services such as Uber have most definitely changed the way that we live, and this study has highlighted the complexities surrounding the new practices of ridesharing companies. While debate continues, it is clear that Uber is here to stay, and has most definitely had a transformative effect on societies around the world.
Bhuiyan, J. (August 2, 2018). Uber and Lyft are fighting a critical battle against New York City- and this time, they might not win, Recode. Retrieved 24/10/18 from https://www.recode.net/2018/8/2/17635692/uber-lyft-new-york-city-regulation-bills-ride-share-car-cap
Crabtree, J. (February 9, 2018). Didi Chuxing took on Uber and won. Now it’s taking on the world, Wired. Retrieved 26/10/18 from https://www.wired.co.uk/article/didi-chuxing-china-startups-uber
Geoffrey, D., Banister, D., & Schwanen, T. (2017). The Rise of Uber and Regulating the Disruptive Innovator, Political Quarterly, 88(3) pp.492-499.
Flores, O. & Rayle, L. (2017). How cities use regulation for innovation: the case of Uber, Lyft and Sidecar in San Francisco, Transportation Research Procedia, 25: pp.3756-3768.
Karppinen, K. (2017). Human Rights and the Digital. In Routledge Companion to Media and Human Rights. Tumber & S. Waisbord (eds) Abingdon, Oxon: Routledge 95-103.
Hartmans, A. & McAlone, N. (August 1, 2016). The story of how Travis Kalanick built Uber into the most feared and valuable startup in the world, Business Insider. Retrieved 24/10/18 from https://www.businessinsider.com/ubers-history/?r=AU&IR=T/#june-1998-scour-a-peer-to-peer-search-engine-startup-that-kalanick-had-dropped-out-of-ucla-to-join-snags-its-first-investment-from-former-disney-president-michael-ovitz-and-ron-burkle-of-yucaipa-companies-1
Posen, H.A. (2015). Ridesharing in the Sharing economy: should regulators Impose Uber regulations on Uber?, Iowa Law Review; Iowa City. 101(1) pp.405-433.
Schneider, H. (2017). Uber: Innovation in Society. Palgrave Macmillan, Springer International Publishing, doi: 10.1007/978-3-319-49514-9
Schneider, H. (2017). What is Uber’s Business Model? In Schneider, H. (ed.) Creative Destruction and the Sharing Economy: Uber as a Disruptive Innovation, New Thinking in Political Economy series p. 36-62. doi: https://doi-org.ezproxy1.library.usyd.edu.au/10.4337/9781786433435.00007
Shade, L.R. (2018). Hop to it in the gig economy: The sharing economy and neo-liberal feminism. Internation Journal of Media and Cultural Politics, 14(1) 35-54. Doi: 10.1386/macp.14.1.35_1.
Uber (2018). Company Info. Retrieved 24/10/18 from https://www.uber.com/en-AU/newsroom/company-info/
Waters, C. (August 10, 2018). ‘Nice girls’ and Uber: Why the rating system is a gender trap. Sydney Morning Herald. Retrieved 25/10/18 from https://www.smh.com.au/business/small-business/nice-girls-and-uber-why-the-rating-system-is-a-gender-trap-20180810-p4zwrs.html
Winick, E. (February 6, 2018). Uber’s formula for paying drivers is causing a gender gap. Technology Review. Retrieved 30/10/18 from https://www.technologyreview.com/the-download/610195/ubers-algorithm-for-paying-drivers-is-causing-a-gender-gap/