Uber has built a business model that allows it to grow big and fast. The ride-hailing app is available in hundreds of cities around the world. And just as it has grown huge, more and more analysts are pointing to the fat in its belly.
Employees vs Independent Contractors
Uber’s business model has come under intense scrutiny in the past couple of years. Not only is the ride-sharing app losing cash like nobody’s business, Uber’s business model relies on hiring ‘independent contractors’ as drivers. In effect, the drivers use the app and pay a fee whenever someone hails them for a trip.
As a result of this, it doesn’t count its drivers as workers. This means that the drivers would have no claim to any benefits that come with having an employer. They have no sick days, there is no pension payment for any of them unless they make private plans. The drivers, who are critical to the success of Uber, are left to exist in a world that demands their service but offers them next to nothing in remuneration.
- Tech or Transport
In addition to all these, Uber has stubbornly referred to itself as a tech company. Instead of a classifying itself as a transport firm, it chooses to see itself as a firm provides Mobility-as-a-Service (MaaS). This has no doubt led it to many challenges across the cities where it’s operated.
By classifying itself as such, Uber is avoiding all the regulations that come with the industry. It basically gets to set its own fare and offer cheaper options to regular taxis.
Uber is built for riders, not drivers
Much of ride-hailing apps are designed to offer the best services to the riders. The drivers don’t seem to matter in the grander scheme of things, which is why Uber and other apps consider them contractors. The flexibility of work might seem attractive, but given the level of scale the companies have, one driver’s absence is hardly felt; there will always be willing drivers. With cheaper fares too, riders are not hard to come by.
A Guardian report sums up the true state of affairs cleanly. “Like other ridesharing companies, it [Uber] made a big bet on an automated future that has failed to materialise.”
Drivers were a temporary cog in the giant wheels that have become ride-hailing apps. The bet was on having driverless cars who had zero demands on nonexistent profits. Robots have no unions and don’t demand terms of service. With next to no costs on driver compensation, these apps, having dominated the transportation market, can now charge whatever prices they wish. It might come at the benefit of the rider if fares are cheap but that doesn’t seem to be anytime soon.
Mobile Techer 