The yammering cheerleaders of CNBC were in full glory mode Friday morning, talking up the initial public offering of “ride-share” behemoth Uber which made its debut on the New York Stock Exchange. Uber’s IPO, priced at 45$ per share, was the largest in the past five years, garnering 8.1 billion dollars from hopeful investors eager to cash in on an anticipated “pop” in the stock’s price, as carefully ginned up by the endless hype-mongering of the moneyed class.
Alas, it was not to be. Thanks in part to Donald Trump’s pointless and self-destructive brinkmanship with China over tariffs, and in the midst of a worldwide strike by its underpaid drivers, the “hip” and “edgy” lodestar of the much-vaunted “gig economy” fairly collapsed, closing at under 42$ per share, making it the biggest first day loser in IPO history, according to Gizmodo:
According to University of Florida professor Jay Ritter, Uber’s 7.62 percent decline since hitting the NYSE makes it “bigger than first day dollar losses of any prior IPO in the U.S.”
Uber cheerfully delivered $618 million in paper losses to its investors, the worst for any U.S. IPO since 1975. In terms of share price drop, it logged in as the ninth worst perfomer in human history (although to be fair, data from the Paleolithic era is somewhat sketchy).
Sarah Jeong of the New York Times editorial staff explains why Uber’s lackluster performance on Friday was wholly predictable for a company that represents the worst excesses of capitalism.
There is no future for Uber as we know it, and no one knows if the company will ever make the leap to a profitable business model.
That’s a mild concern for investors who are choosing to either bet big or cash out quickly. But the consequences are staggering for its drivers and the public at large.
Drivers led a strike against Uber in cities around the world in advance of the I.P.O., protesting the unfairness of their working conditions as investors prepared to get rich. Both Uber and Lyft (which made its initial public offering in March) are offering bonuses to some of its drivers to buy stock. But the bonuses are small unless you’re one of a dedicated handful who’ve completed thousands or tens of thousands of rides.
The problem for Uber — and everyone else — is that its very business model excludes a future of fair labor practices.
Jeong cites one study showing that half of Uber’s drivers in New York City are trying to support families with children, on a “salary” paid by Uber that qualifies nearly half of those for Medicaid and nearly 20% for food stamps. Those lousy wages were the primary reason for last week’s strike. But, as Jeong observes, there isn’t going to be any sudden burst of compassion for its drivers at Uber headquarters anytime soon. As a company that has been kept afloat solely by venture capital and operates at a constant loss, Uber’s business model depends on underpaying its workers (who are “independent contractors” rather than employees) and denying them benefits. Even as it muscles out (or attempts to privatize) public transportation, Uber has bet its future on replacing drivers altogether--with autonomous vehicles (AV’s) that are essentially robot-operated.
Early on, Uber bet big on self-driving-car technology, hoping to replace drivers en masse. Robot cars don’t complain, don’t strike and don’t have families to feed.
But the company’s plans went awry after an expensive and embarrassing intellectual property lawsuit over its self-driving-car tech. Evidence shown at trial suggested that Uber is several years behind the autonomous-vehicle technology of Alphabet, Google’s parent company. A few weeks after Uber settled the lawsuit, an Uber self-driving car struck and killed a pedestrian in Arizona. The company’s experimental cars are back on the streets after a hiatus, but the testing has been significantly downsized.
Uber aimed to dominate the AV space in competition with motor vehicle manufacturers such as GM, Toyota, and Silicon Valley gargantuans like Google. But the fact that a few unwitting human guinea pigs didn’t survive their supposedly “safe” experiments in shaping the future of mobility in this country has put a dent in Uber’s big ambitions, at least for the near term.
If Uber cannot make the leap to eliminating its human drivers, it must suck as much value as it can out of its huge store of data — data that ranges from relatively anonymous information about traffic patterns to deeply intimate details like trips to a place of worship, to a gay bar, to an abortion clinic.
So without a plan B, Uber is stuck with monetizing a bunch of personal data on its customers’ personal and travel habits and a raft of disgruntled drivers taken in by groovy ads like this one, promising the freedoms and joys of the so-called “side hustle” Uber offers with no benefits and meager protections for workers:
Uber didn’t invent the “side hustle” line because it gave a damn about the livelihoods of its drivers. Promoting their labor practices as some sort of perverse form of “freedom” was the only way for them to make any money on their business, The reality is that most people are working for Uber because they need a second (or third) job to keep a step ahead of poverty in a “service economy” where wages still haven’t grown much at all over the past three decades.
The salient characteristic of this company has been its overweening arrogance and haughty disregard of the people who become the roadkill to its pursuit of profits. CNN investigated the number of sexual assaults committed by Uber drivers. Since Uber doesn’t make this data available to the public (although you can be sure their lawyers have each case available at their fingertips) the news network was compelled to examine police reports, federal court records and county court databases. They found 103 reported instances of sexual assaults, which suggests hundreds or thousands more that went unreported (for the same reason most sexual assaults go unreported). One driver rapist who was convicted called rape a “perk” of the job.
Court records uncovered in another investigation by The Guardian show that the legal posture Uber takes with regard to these assaults is geared towards keeping them out of the public eye, and keeping the victims quiet. The company gleefully points out that an “agreement” not to sue in court is in the fine print at the time you click on the app.
Uber is trying to force women who say they were sexually assaulted by drivers to resolve their claims behind closed doors rather than in the courts, a move that critics say silences victims and shields the company from public scrutiny.
Court records in a California class-action lawsuit revealed that the ride-sharing firm has argued that female passengers who speak up about being raped in an Uber must individually settle their cases through arbitration, a private process that often results in confidentiality agreements
In many ways Uber has become the perfect metaphor for the evils of late-stage capitalism, with those at the top of the company benefiting handsomely from the huge sums now handed over by the investing public, and those workers who will see virtually none of that money. It is a more than cautionary testament to the effects of deregulation in a “see no evil, hear no evil” environment like that fostered by Donald Trump’s hollowed-out federal agencies. But since the service it inarguably provides assures its existence for as long as people continue to prioritize their convenience over everything else, Uber will likely be with us for some time, even as its business model seems to be hurtling towards failure.