Uber isn’t going out of business, but going forward, the company needs to be proactive about addressing issues related to overall profitability, employee satisfaction, driver and rider safety, user privacy, and data security.
Uber isn’t going out of business, at least anytime soon. However, that’s not to say that the company isn’t contending with its fair share of troubles at present. In fact, Uber has its hands full dealing with a string of employee protests, a worrisome transparency report, and internal security issues that have put sensitive rider, driver, and company information at risk.
A Brief Look Back At The Birth Of Uber
Uber was founded in San Francisco as Ubercab by computer programmer Garret Camp and entrepreneur Travis Kalanick in 2009. The pair developed an app that would allow users to book rides via a geolocation system. By 2011 the company name was shortened to Uber, and San Francisco residents could use the app to hail private luxury vehicles as a means of getting them to their destinations.
By 2013, the Uber app could be utilized in 35 cities. The company quickly scaled up from there. Today, Uber operates globally in 72 different countries and 10,500 individual cities and has diversified to other industries including food and package delivery.
For All Intents And Purposes, Uber Is Still A Baby
While the ride-share industry as a concept is not new at all, the way that Uber first tapped into the industry was novel. This is because Uber’s entire business model is based around leveraging technology to mobilize independent contractors to facilitate ride services on a global scale.
The enmeshment of old and new was quite ingenious, and as a result of that overt ingenuity, the business took off. But even the most genius ideas are not without kinks. Especially when those ideas are so new.
Unfortunately for Uber, those kinks are presently being reflected in the company’s profitability. According to data from the Nasdaq, Uber has had a negative cash flow since it went public in 2019. Nasdaq journalist Justin Pope cited that in order for Uber to become profitable in the coming years, the company needs to scale up its drivers and even further diversify its business.
Thankfully, it seems Uber has already seen the writing on the wall in terms of diversification. This is why the ride-share giant has launched offshoots such as Uber Eats. Still, it’s important to realize that at just 13 years old, Uber is still very much a baby.
Uber, as a company, still has a lot of growing and maturing to do. And with growing, inevitably comes growing pains. Yes, profitably is a problem, but Uber is starting to see cracks appear in other areas of its business, too.
Employee Backlash In New York City
The old saying goes, “more money more problems,” but in Uber’s case, it seems that more drivers equal more problems. At present, this is particularly true for its New York City employees. At the end of 2022, Uber drivers based in New York City went on strike after the ride-share behemoth halted a raise that the city’s Taxi & Limousine Commission (T&LC) had implemented.
Under the new T&LC implementation, Uber drivers were entitled to an 11% base wage increase. In response, Uber immediately appealed to the court to enact a temporary stay on the wage increase, under the pretense that as Uber employees those drivers should be considered separate from New York City’s T&LC. Should Uber’s legal attempts to thwart the wage increase fail, the company would be required to pay out additional wages amounting to approximately $21 million collectively to drivers in New York City’s five boroughs every year.
Considering that Uber has a profitability problem, it’s easy to understand why the company would want to go to any length to avoid paying out additional sums to its drivers. Not only would this have a potentially negative impact on the business’ financials, but in a likely trickle-down effect it would also spawn a rate increase for riders. Logically, to protect its profit margins, Uber would pass some of the extra costs to consumers by increasing the prices of rides.
Conversely, from a driver’s perspective, an 11% raise could mean a lot. This is especially true for drivers who make their primary living from working for Uber. It’s also worth noting that the cost of living in New York City is one of the most expensive in the entire nation.
Lastly, while this is seemingly just a New York City problem, right now, it doesn’t mean that other Uber drivers in other cities won’t mobilize to negotiate raises, too. If a similar situation in enough cities happens, Uber could find itself with a big mess on its hands.
Cases Of Harassment Occur All Too Often
The safety of both drivers and riders is another big issue for Uber, particularly in terms of cases of sexual abuse. Every few years Uber releases a transparency report. The most recent one published contains incident data collected between the years 2019 and 2020.
Per data from the report, a total of 3,824 sexual assault incidents were documented during that time period. In 2020 specifically, there were a total of 998 incidents recorded. Of those 998, 141 were classified as rape.
Sadly, 20 deaths were also recorded in 2020. A total of 15 deaths were riders, and the 5 others were drivers that perished. These figures are concerning, and unfortunately quite directly a result of Uber’s business model.
It’s extremely difficult to properly vet drivers when you are contracting them out on a global scale. And it’s impossible to screen every rider that enters a driver’s vehicle. Despite the concerning nature of these statistics, encouragingly, the rate of incidents has been steadily declining since Uber first began publishing these public reports in 2017.
The ride-share behemoth has also highlighted its commitment to continuing to improve safety measures to work towards better protecting both its riders and drivers. Unfortunately, these types of issues are inherent to the kind of business Uber runs. As long as Uber stays in business, it will have to contend with the reality of these harrowing incidents.
Uber’s Data Security Needs Work
Driver and rider safety doesn’t always mean in the physical sense. In this digital age, personal data and how well it is safeguarded and kept private has become somewhat of a currency. The safer your data is, the stronger your privacy currency is.
While Uber is working to decrease incidents of sexual assault, it should simultaneously be working to ensure the private data of its employees and users are kept as secure as possible. This became overtly evident after the company suffered a complete system hack in September of 2022.
Back in September, The New York Times reported that Uber became the subject of a social engineering hack by means of Slack that resulted in giving the hacker full access to Uber’s most sensitive data. This came following a series of attacks in the years prior that Uber failed to report in a timely manner. Thankfully, the ride-share giant was quick to notify the public about the breach that occurred in September.
Overall, however, these incidents serve as examples that Uber needs to keep a constant focus on bolstering the security of its systems and networks. This is especially true given the wide breadth of the company. Although, judging by its timely action following its most recent hack they are beginning to learn from past mistakes.
Uber is an exceedingly successful company, and they certainly are not going out of business in the near future. The company does have issues though relating to profitability, employee satisfaction, safety, privacy, and data security. The good news is that Uber is strategically addressing these issues. Depending on how successful the company is in addressing them and how agile it can be when one of its strategies inevitably fails will determine how healthy the company will remain in the years to come.