Ten years after its founding, the ride-hailing giant Uber is finally a publicly traded company. But on the first day of trading, its stock price took a hit. There’s a good reason for the company’s lackluster initial public offering: 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.
The Uber strikers have legitimate grievances. According to one study conducted in New York City, about half of ride-hailing drivers are supporting families with children — yet their earnings are so meager that 40 percent of all drivers qualify for Medicaid and another 18 percent qualify for food stamps.
Underpaying drivers also hasn’t led to profitability for the companies that employ them. Year after year, both Uber and Lyft, Uber’s closest competitor, have lost money. Floated by a raft of venture capital, they have undercut the taxi industry and in some places even public transit.
Now that Uber is public, fares will probably go up, but the pursuit of profits to satisfy stockholders will not create better working conditions.
Uber’s current model isn’t meant to get better, however. It’s meant to be eventually replaced wholesale. 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.
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.
Uber’s I.P.O. spells trouble for the company. But in the larger scheme of things, it doesn’t matter much whether Uber’s investors take a hit or make a killing. From the underpaid drivers it hopes to replace, to the customers whose data it has hoarded for a decade — it’s everyone else who’s on the hook for the repercussions of both Uber’s success and its failure.