Uber: Leading the Way to a Total Revolution in the Services Sector

Assignment 3: Critical internet analysis and ecosystem map

Introduction

Internet infrastructures may appear invisible, but they contain powerful impacts in social, cultural and environmental terms. In today’s world, the aggressive development of the internet and the gradual prevalence of smartphones has led to countless transformations in the way that people interact with each other, and fostered the emergence of all kinds of innovative companies and business. Among them, Uber is a representative of the disruptive innovations in the field of sharing economy. This essay is aimed at understanding the transformative effects of Uber by conducting a critical internet analysis of the company. It is divided into four parts. The first part provides an overview of Uber, by introducing the features, ownership, historical development and regulatory pressures. The second part illustrates the business model of Uber, especially the factors that contributed to its success. The third part discusses the role that Uber plays in the online ecology, to find out the interdependent relationships with its competitors, clients, internet service providers and regulators. The fourth part elaborates on the transformative effects of Uber, as an agent of internetworked change, in terms of the social and cultural changes.

Historical overview

Uber Technologies Inc., headquartered in San Francisco, the U.S., is a peer-to-peer ride-sharing and related transportation services company. The company’s mission is to set the world in motion and create human connection by using its technology. It aims to provide safer and more comfortable ways to commute, and enjoy tailored haling service instead of driving a car, so as to improve urban traffic. As Nicholas John (2013) pointed out, the activity of sharing highlights the features of the Web 2.0 and social networking sites. More importantly, it connotes the positive consequences of equality, selflessness and giving. By providing an intermediate platform based on sharing economy, Uber allows clients to order their services according to their specific needs, which helps fully utilise resources and realize risk control to a certain extent. Starting as a small enterprise, Uber has evolved into a large global firm which operates businesses in 65 countries and more than 600 cities (Uber, 2018). In 2017, Uber has over 16,000 employees, and has completed 4 billion trips over the world.

 

The inspiration for getting a cab via smartphone was born on a snowy evening in Paris, where Travis Kalnick and Garret Camp could not find a cab to go home (Hartmans &McAlone, 2016). They realized that sharing the cost of transportation would make it more affordable and convenient. Then they developed UberCab, a smartphone application that allows people to get a ride by taping a button. In 2010, UberCab started its service in San Francisco, and began to receive a large amount of funding at a high speed. In 2011 the company name was shortened to Uber, which became an international brand by launching the business in Paris. After getting a $1.2 billion funding in 2015, Uber’s assets have exceeded the value of $62.5 billion. And in total, it has raised $22 billion through 18 rounds of venture capital investments (Uber, 2018). In 2016, Uber launched the first self-driving vehicle in Pittsburgh.

Figure 1: Uber app interface

Image Source: Alex Segre/REX/Shutterstock

 

Nevertheless, in the process of development, Uber has encountered regulatory controversy and restraints, regarding the legitimacy of operating private cars. Despite the convenience brought by offering private-hire cars, these cars generally are not registered cars in local governments and the drivers have not acquired taxi licences, which make it illegal business. Moreover, there is a grey area for the possible traffic incidents, where the risks and liabilities between Uber drivers and passengers need to be divided. In many countries and regions, such as Australia, France and the U.S., Uber is banned from legislation or subject to legal risks (Jordan, 2017). In Alaska, there was a debate over whether Uber drivers should be identified as independent contractors or taxi drivers, which influences the labour relations and related aspects such as insurance. In the absence of external supervision, the platform could run into chaos and become out of order, which forms a tough problem for the tax and labour authorities to tackle.

Business model

Uber is a typical light capital operational mode (Geissinger, Laurell & Sandström, 2018). The company itself does not own the vehicles or other fixed assets; instead, it connects relevant resources such as private car, taxi and car rental company to the users, with the point to point match between the service provider and consumer. Specifically speaking, after a request is sent by the rider, Uber would immediately acquire the location information of the rider via GPRS location and generate the fares via pricing technology and algorithm (Watanabe, Naveed, Neittaanmäki & Fox, 2017). Then the platform sends the information to the nearby Uber drivers, matching them within a short time. This solves the problems of no available taxi and the refusal to take passengers. A dynamic pricing modelis adopted, where prices vary according to the estimated time and distance, and the status of supply and demand at the time when the ride is requested.And the app would inform the riders the fare they need to pay before requesting the ride.In the process, the riders can instantly check the location and distance of their drivers, the prices, and make mobile payments after the ride. And after a ride is completed, both rider and driver could give a review of each other, which would serve as a standard for evaluating the driver’s credibility and ability (Siegal, 2017).

Figure 2: Uber’s integration with Siri and Maps

Image Source: Christian Zibreg

 

Uber provides a car-hailing service platform to realize the matches between private cars and passenger needs. With the technologies of big data, cloud algorithm, and digital map, the orders sent by the passengers could be quickly and automatically assigned to a vehicle. The formation and implementation of an order are both realized through the internet. In this way, it lowersthe transaction costs, improvesproduction efficiency, and reduceswaste of resources. Also, it divides the cars into three categories, including low, medium and luxury, shown in Uber X, Uber Black, Uber SUV, Uber Lux, to serve customers of different purchasing power and preferences. And there are also personalized services such as helicopter food delivery and hot air balloon house moving, which satisfy the differential needs from the consumers (Uber Newsroom, 2018).

Figure 3: Uber Eats

Image Source: Uber Newsroom

Online ecology

Internet ecosystem describes the system where organisations and communities enable the entire internet to operate and evolve (Looi, 2001). The rapid and continued development of the online technologies should be attributed to the collaborative efforts of a wide range of actors, and the utilisation of products and infrastructures. The operators develop and provide network infrastructure services, such as internet exchange points, and domain name service; the internet users communicate with others and exchange services online; and the policy makers issue local and national policies to govern the internet activities.

 

The competitors of Uber consist of both traditional and homogeneous businesses. Uber caused threats to the profits of the original taxi industry, which may take reaction measures to suppress the company (Hamari, Sjöklint & Ukkonen 2016). Moreover, when more and more entrepreneurs began to pay attention to this market, the blue sea disappeared and a new fight has started. Such as U.S. and Chinese competitors, Lyft and Didi. The core service providers or suppliers for Uber are the owners of private cars, who join the platform to be Uber drivers. Uber earns commission from each ride completed. The right to use, instead of ownership is the object to be exchanged. Moreover, Uber relies on the technology providers to support the seamless operation of the system, such as mobile payment service provider and social media (Ziberg, 2018). As for regulation, Uber is subject to the regulation of the governments and legislative bodies in every jurisdiction. The diagram of Uber is shown below.

Figure 4: Uber Ecosystem Diagram

Transformative effect

In the era of the internet, sharing has become a typical and mainstream feature for people to follow. According to Russell Belk (2010), sharing is a unique form of consumption that is different than commodity purchase and gifting. Sharing economy, also called collaborative consumption, is a social economic ecosystem built on basis of the sharing of materials (Cohen & Kietzmann, 2014). The owners rent their unused items, such as cars and houses to others to use, so as to maximize the utilization and profits of the items. In this mode, everyone can be a manufacturer and a consumer, with the capability to create revenue. The basis is a mutual association, shared interests or intimate relationships.

 

Uber is a disruptive innovation for the new type of business modelestablished on the concept of sharing economy and the social networking systems. Social networking services establish systems and connections in society which allow individual citizens to communicate and share interests with each other (Laurell &Sandström, 2017). Uber achieved revolutionary changes in the car-hailing industry, and greatly transformed the way that people relate to each other. People have the opportunity to expand oneselfandthe projection of one’s identity in the society. And new kinds of social relationships are formed during the riding experiences. It recognizes the importance of creating a win-win situation, instead of the individualist concept of ownership of property in the previous time. In comparison with taxi companies, this business mode saves a large number of operational and maintenance costs.

 

The platform realizes the mobilisation of people, vehicles and objects to the maximum (Gobble, 2017). In the narrow context, the riders could enjoy a pleasurable and relaxed hailing experience, no longer be rejected by drivers. And the drivers could make full use of their private vehicles while creating profits. In the wider social context, ride-sharing also helps lower the unemployment rate of the country, lessen the degree of traffic congestion in cities and reduce environmental pollution caused by private cars.

 

Sharing economy is an economic mode for sustainable development, which could be the major trend for future (Lee, Chan, Balaji & Chong, 2018). Under the guidance of Uber-style sharing economy, many other kinds of service application have evolved overnight and become popular (Smith, 2016). The example of Uber can be applied to the sectors across transportation, accommodation, travel, food, logistics, outsourcing, health and beauty, medical care, education, etc, such as Airbnb in tourism industry, Mobike in bicycle sharing, and Munchery in food delivery.

Conclusion

In conclusion, Uber is a pioneer in the sharing economy industry featured in peer-to-peer ride-sharing. Starting as a small enterprise, Uber has evolved into a large global firmoperating in a lot of countries. Nevertheless, in the process of development, Uber has encountered regulatory controversy and restraints, regarding the legitimacy of operating private cars. Uber is a typical light capital operational mode, which realizes the point to point match between the service provider and consumer. It acquires information and determines fares via GPRS location, pricing technology and algorithm. The competitors of Uber consist of both traditional and homogeneous businesses; the core service providers or suppliers for Uber are the owners of private cars, who join the platform to be Uber drivers; the technology providers support the seamless operation of the system; and the regulators are the governments and legislative bodies in every jurisdiction. Uber is a disruptive innovation for the new type of business modelestablished on the concept of sharing economy and the social networking systems. It promotes transformations in both the narrow context and the wider social context. Sharing economy is an economic mode for sustainable development, which could be the major trend forthefuture.

 

 

References

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Cohen, B., & Kietzmann, J. (2014). Ride on! Mobility business models for the sharing economy. Organization & Environment, 27(3), 279-296. doi:10.1177/1086026614546199

Geissinger, A., Laurell, C., & Sandström, C. (2018). Digital disruption beyond Uber and Airbnb—Tracking the long tail of the sharing economy. Technological Forecasting and Social Change, doi:10.1016/j.techfore.2018.06.012

Gobble, M. M. (2017). Defining the sharing economy. Research Technology Management, 60(2), 59-63. doi:10.1080/08956308.2017.1276393

Hamari, J., Sjöklint, M., & Ukkonen, A. (2016). The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology, 67(9), 2047-2059. doi:10.1002/asi.23552

Hartmans, A. and McAlone, N. (2016, August 1). The story of how Travis Kalanick built Uber into the most feared and valuable startup in the world. BUSINESS INSIDER.Retrieved from <https://www.businessinsider.com/ubers-history>.

John, N. A. (2013). Sharing and web 2.0: The emergence of a keyword. New Media & Society, 15(2), 167-182.

Jordan, J. M. (2017). Challenges to large-scale digital organization: The case of Uber. Journal of Organization Design, 6(1), 1-12. doi:10.1186/s41469-017-0021-2

Laurell, C., &Sandström, C. (2017). The sharing economy in social media: Analyzing tensions between market and non-market logics. Technological Forecasting & Social Change, 125, 58-65. doi:10.1016/j.techfore.2017.05.038

Lee, Z. W. Y., Chan, T. K. H., Balaji, M. S., & Chong, A. Y. (2018). Why people participate in the sharing economy: An empirical investigation of Uber. Internet Research, 28(3), 829-850. doi:10.1108/IntR-01-2017-0037

Looi, C.K. (2001), Enhancing learning ecology on the Internet. Journal of Computer AssistedLearning,(17), 13–20. doi: http://doi.org/10.1111/j.1365-2729.2001.00155.x

Siegal, J. (2017, April 26). Uber’s latest update makes it easier than ever to find your rider rating. BGR.Retrieved from <https://bgr.com/2017/04/26/uber-app-rider-rating-how-to-find/>.

Smith, J. W. (2016). The Uber-all economy of the future. The Independent Review, 20(3), 383-390.

Uber Newsroom. (2018). Introducing Eats for Business.Retrieved from <https://www.uber.com/newsroom/introducing-eats-business/>.

Uber. (2018). Company Info. Retrieved from <https://www.uber.com/newsroom/company-info/>.

Watanabe, C., Naveed, K., Neittaanmäki, P., & Fox, B. (2017). Consolidated challenge to social demand for resilient platforms – Lessons from uber’s global expansion. Technology in Society, 48, 33-53. doi:10.1016/j.techsoc.2016.10.006

Ziberg, C. (2018, February 7). Uber brings back Siri and Maps integration.iDB. Retrieved from <https://www.idownloadblog.com/2018/02/07/uber-update-brings-back-siri-and-maps-integration/>.

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