As the Sydney CBD went into lockdown yesterday, the computers at honestly-not-a-taxi-service Uber Technologies Inc observed the massive spike in demand and reacted according to the cold business logic of their programming: they raised prices fourfold. The minimum price for any journey was set at $100, Mashable reported. One prospective customer’s quote for a CBD-to-airport trip was a staggering “$145 to $184”.
Uber Sydney tweeted at 1.35pm, more than three hours into the hostage drama. The company’s surge pricing has never been popular. Price gouging, some would call it. But this economic-dry response when people were in mortal fear was particularly tone-deaf.
Uber’s reverse ferret came 50 minutes later:
Subsequent messages confirmed that customers who’d already paid the surge price would get a refund. But by then the PR damage was done — another in Uber’s long series of PR disasters.
Uber was the poster child for digital disruption and the so-called “sharing economy”. They offered a shiny new alternative to uncompetitive taxi cartels. Most customers have experienced exceptional service. Uber now operates in 53 countries and is valued at $40 billion.
But in recent months, Uber has been caught sabotaging competitor Lyft, refusing blind customers and other acts of discrimination, making claims about drivers’ income that couldn’t be substantiated, pushing sub-prime loans, and trying to dupe journalists. An Uber executive even suggested digging up dirt on journalists who were critical of the company. Uber CEO Travis Kalanick, in another tone-deaf moment, compared his company’s problems with regulators in Las Vegas to what happened in Ferguson. The company’s crash-through approach — starting operations regardless of local laws — has gotten them banned in Spain, India, and Thailand. They’re fighting on other fronts too, including Portland.
As more and more of Uber’s ugly side has been exposed, its customers have faced a dilemma that Brooklyn resident Virginia Murdoch summed up perfectly:
Uber’s Sydney surge pricing highlights three problems that the company needs to resolve.
First, does Uber see itself as a top-end service for the cashed-up digital elite? Or, as its brand extension into lower-cost options such as ride sharing and a straight taxi booking service would suggest, does it want to become the utility taxi service of the future?
If it’s the former, then heck, anything goes. But if it’s the latter, then as I wrote in April, Uber needs to take on certain social responsibilities. Even if demand is off the scale, it still needs to provide service for the whole city, including people who can’t afford to throw cash at a short trip.
Second, Uber needs to drop the Nuremberg excuse, “I was just following algorithms”. The business is responsible for how its computer algorithms work.
Third, Uber needs to fix what Pando Daily‘s Sarah Lacy bluntly called its “asshole culture“. The belligerent frat-boy style might have been needed to take on entrenched taxi cartels in the disruption phase. But now that Uber is a global player, it needs a more grown-up approach when dealing with regulators, so that together they can develop a new model for the industry.
The fish rots from the head, as the saying goes, so Kalanik’s recent blog post “The ride ahead” makes interesting reading. “The events of the recent weeks have shown us that we also need to invest in internal growth and change. Acknowledging mistakes and learning from them are the first steps,” he wrote, without actually acknowledging any specific mistakes. “Done right, it will lead to a smarter and more humble company,” he wrote, after having kicked off with three paragraphs boasting of Uber’s achievements.
Uber’s position is fragile. Both customers and drivers can switch services simply by launching a competitor’s app on their smartphones. Something does need to be done to sort out the taxi industry, but Uber doesn’t necessarily represent the thing that needs doing.