A federal judge has rejected a proposed $100 million settlement between Uber and its drivers in a widely watched lawsuit intended to put the labor practices of the on-demand economy to the test.
In an order handed down today in San Francisco, US District Judge Edward Chen said that, despite changes to its policies that Uber was ready to enact, the proposed settlement on the whole “is not fair, adequate, and reasonable.” Had it been approved, the agreement would have impacted about 385,000 Uber drivers California and Massachusetts involved in the class-action suit.
At the heart of the case is whether Uber is right to classify its drivers as independent contractors or if the law requires the company to recognize them as true employees. The plaintiffs argued that Uber should classify them as employees, and as such they deserved mileage and tip reimbursement. As independent contractors, drivers today shoulder those expenses themselves. Reclassifying them threatened Uber’s business model by posing the possibility of significant added costs.
The settlement amount agreed to by the parties represented a “substantial discount” far below the potential total damages Uber drivers could claim, Chen said. (The plaintiffs calculated the potential damages at more than $850 million.) Complicating matters, Uber had only agreed to guarantee $84 million as a settlement payment to its drivers, with the remaining $16 million contingent on the company’s value growing by one-and-a-half times within a year of its as-yet-unscheduled IPO. As a private startup, Uber is currently valued at $62.5 billion. Because Uber could not prove “a realistic likelihood” that it could achieve the multiple set in the agreement, Chen said he could only consider the $84 million amount in the proposed agreement.
Nor was Judge Chen impressed by the policy changes Uber proposed as part of the settlement agreement. Uber had committed to a comprehensive written deactivation policy to address driver complaints that the company kicked drivers off the platform without explanation. Yet under the agreement, Uber would still retain the ability to “temporarily log a driver out of the app for a limited period of time” for any reason. And while Uber has agreed to “clarify” its tipping policy to let riders know they are now allowed to tip drivers, Chen said Uber has so actively discouraged tipping and asked riders to tip using cash—which many may not have on hand, given Uber’s emphasis on cashless payments.
Uber, for its part, defended the proposed settlement. “The settlement, mutually agreed by both sides, was fair and reasonable,” Uber spokeswoman Jill Hazelbaker said in an emailed statement. “We’re disappointed in this decision and are taking a look at our options.”
Shannon Liss-Riordan, the Boston attorney representing Uber drivers, has defended the settlement agreement in the past, saying drivers may have risked getting nothing if they were not ready to compromise. In an email to WIRED, she said the possibility of coming up with a new settlement has not yet been ruled out. “It is possible the parties could reach a revised agreement that satisfies the court’s concerns,” she wrote. “But if not, as I’ve said before, I will take the case to trial and fight my hardest for the Uber drivers.” Uber may still go to trial yet. But for now, the status of drivers in today’s 1099 economy remains far from settled.
Update on 8:50 PM ET 07/18/2016: This article has been updated to include a response from Shannon Liss-Riordan, the lawyer defending the Uber drivers in the suit.
<a href=”https://assets.documentcloud.org/documents/3031645/Uber-Settlement-Denied.pdf”>Uber-Settlement-Denied (PDF)</a><br />
<br /> <a href=”https://assets.documentcloud.org/documents/3031645/Uber-Settlement-Denied.txt”>Uber-Settlement-Denied (Text)</a><br />
Uber has taken people for a lot of rides—two billion, that is, according to CEO Travis Kalanick in a Facebook post today. The milestone comes only six months after Uber said it reached 1 billion rides, an acceleration that highlights the company’s global ambitions, as well as its increasing dependence on the biggest prizein the ride-hailing wars: China.
Kalanick said in his post that 147 Uber trips tied for the two billionth ride. These started simultaneously at 4:16 AM GMT in 16 different countries on five continents. The longest ride, a trip in Jakarta, Indonesia, lasted more than an hour, while the shortest was a three-minute trip in Changsha, China. “It took five years to reach our billionth trip, six months to reach the next billion … and we’ll hopefully reach our third even more quickly,” Kalanick wrote.
That will depend on how effectively Uber competes in its biggest market, China. According to Reuters, 54 of the 147 trips tied for the two billionth ride took place in China. In fact, five of Uber’s 10 top cities by volume are in the country. Unfortunately for Uber, China is also where it’s embroiled in a fierce battle with homegrown Chinese rival Didi. In January, Didi said it was operating in more than 400 Chinese cities, where analysts estimate it’s captured about 87 percent of the private ride-hailing market. And, oh, Didi earlier this year said it had booked more than 1.4 billion rides in 2015 alone. (That’s not exactly a parallel comparison to Uber since Didi counts taxi rides, carpooling, buses, and corporate rides, among other services, as part of its tally).
Both companies are raising an enormous amount of financing to stay ahead in China as they bleed money in operations costs. But even as Uber’s spending has reportedly far outpaced its net revenue, the company is at least clearly leading by a few measures. Uber now has more than $13 billion in its cash pile, and it’s valued at $62.5 billion, compared to Didi’s $25 billion valuation. Add 2 billion rides to that list, and Uber can boast it’s ahead in the numbers game. And for now, that’s the only game Uber is playing.
In Silicon Valley-speak, “on demand” means requesting a service—laundry, a ride, a massage—right now. All you have to do is push that button. But of course you still have to wait for the ride to come; no one has figured out (yet) how to make it materialize out of thin air.
Now Uber wants to approximate that feeling by letting you schedule your ride ahead of time. When you need it, goes the idea, your ride just appears.
Starting today, business travelers in Seattle will be able to schedule rides 30 minutes to 30 days in advance. It’s the first step in what the company says will be a global rollout of the feature.
“Even though we’re an on-demand company, we totally get it,” says Tom Fallows, Uber’s director of global experiences. “Sometimes you just want that extra reassurance that your Uber will be there when you want to leave.”
After tapping on UberX in the Uber app, users will see a new option to schedule a ride to within a 15-minute window. You’ll set their pickup date, time, location, and destination, and you’ll be able to edit details up to 30 minutes before the pickup time. You can also cancel anytime without a penalty so long as your ride isn’t already on the way. Uber says it will send you reminders 24 hours ahead of your ride, and again 30 minutes before.
Passengers will also get a notification after the ride is on the way that includes, among other information, whether or not surge pricing is in effect. Since surge pricing is a strictly real-time computation, Fallows says, users see only the base fare when they initially order a scheduled ride. But if you’re not willing to pay the surge pricing, you have a five-minute window to cancel without a penalty after the driver is on the way. Wait longer than five minutes and the standard cancellation fee applies. (The amount varies by city: It’s $5 in San Francisco and Seattle, for instance, and 5 euros in Paris.)
What the Driver Sees
Meanwhile, the process on the driver’s end remains exactly the same. “The most efficient way to do this by far is for us to send your ride request to the nearest driver at the right moment,” Fallows says. “So from their perspective, it’s a normal ride.”
Uber does the technical heavy lifting to decide when to send the ride request out, says Fallows, which includes examining such signals as where all Uber drivers on the network are at that moment; where those drivers are headed and likely to be in the next few minutes; and how long it would take those drivers to arrive at your pickup location. Traffic is another factor, Fallows says, as is the likelihood of a driver accepting your request.
Scheduled rides go live today in Seattle, with other “top business travel cities” following soon, according to Uber. At launch, the feature is available only to users who have a business profile set up on the service, and only on the UberX tier. The announcement comes shortly after Uber’s archrival, Lyft, said it was testing a similar feature among its own employees in San Francisco. Lyft said it would like to offer scheduled rides to regular customers but has no definite plan for releasing the feature.
A company doesn’t grab the title of world’s most valuable startup by always playing nice. But Uber is eager to show it also has a public-minded side.
The ride-hailing giant said today that it had reached a new milestone of recruiting more than 50,000 US veterans as drivers through its UberMILITARY initiative. The company also said it’s donating up to $1 million to organizations that support veterans and their families.
“Uber uniquely can be this on-demand income generator,” says Emil Michael, senior vice president of business at Uber. “You can turn the app on and make money, and turn the app off when you have other things to do.”
The company launched its UberMILITARY initiative in September 2014 as a way to reach out to veterans and their families. From 2009 to 2011, Michael served as a special assistant to the former Secretary of Defense Robert Gates, accompanying him to Afghanistan, Iraq, Pakistan and elsewhere. He says a central concern among veterans is re-integrating into their communities after leaving the service, and he saw a need for flexible work options—like driving for Uber—while they’re transitioning into more permanent employment.
For the near future, Michael says the company has several more priorities, including paying out as much as a half billion dollars to drivers who have worked or still work in the military by 2020; improving access to military bases; and coming up with a special perks program for veterans who drive on Uber.
Robert Isaac Jr., a veteran who’s been driving for Uber in the San Francisco Bay Area for the past two years, said he’s been surprised to find how easy it is to casually talk with passengers about serving in the military—an otherwise difficult topic for him to bring up in other everyday settings.
“Anyone in the military is more than happy to talk about their experiences,” Isaac said during an interview at Uber’s San Francisco headquarters. “We know a kind of separation is there, and we want to close that. We’re just as normal as everyone else—we just did a different kind of job.”
After first launching in, of all places, Toronto, the standalone UberEATS app has finally arrived elsewhere in the US.
The standalone app has now officially launched in Chicago, Houston, and San Francisco, after it landed in Los Angeles earlier in March. Uber says it will be rolling out UberEATS in Atlanta, Austin, Dallas, Melbourne, New York, Paris, Seattle and Washington D.C. in the coming weeks. The company made the announcement with a blog post today. The standalone app works just like the Toronto version: You can opt to get regular delivery from a hundred or so restaurants in the area, with the full menu available for you to pick and choose from; UberEATS offers this service from morning until 10 p.m. everyday, and you can see how long it will take for Uber to get the food to your doorstep within the app (15-20 minutes, 20-30 minutes, etc).
Or, if you want food delivered to you faster—Uber says as fast as 10 minutes or so—you can choose Instant Delivery, which features three to five daily dishes in every city, all displayed in big, clean photos in the app. Instant Delivery is only offered between 11 a.m. to 2 p.m. during weekdays.
“We learned quickly that requesting a ride and ordering a meal are two very different experiences,” Chetan Narain, product manager of UberEATS, writes in the announcement post. “They each deserve their own home.”
As we explained when the app first launched in Canada, Uber had to make sure a few things were in order, logistically, for UberEATS to work. Drivers can’t arrive at a restaurant too early and waste precious time hanging around while the food is still being prepared; they also can’t arrive too late, and risk the food being served cold. Uber says its map-routing algorithms help so that drivers get to the restaurant at the right time, hitting the sweet spot.
There’s also a separate driver base handling UberEATS deliveries, which doesn’t overlap with the group of regular Uber drivers picking up people in their cars. (Drivers can choose to switch between modes freely, by logging into and out of the app.) According to Uber, the partnerships with Instant Delivery restaurants require special arrangements, including a scheduled pickup at the restaurant before 11 a.m. hits. Meanwhile, regular UberEATS delivery is done more ad hoc: orders come through the app, and drivers drive to the restaurants to pick up the food, then bring them to the customer. Uber declined to provide details on how it and participating restaurants split the revenue they bring in, but one can imagine how agreeing to be listed on Uber’s app wins these restaurants some high-tech local advertising.
Update at 2PM ET 03/15/16: This story has been updated to clarify that UberEATS officially launched in several US cities today, after first coming to LA earlier in March.
US ride-sharing company Uber is trying to succeed in unfamiliar countries, and it needs to make some local friends to help.
Enter LetterOne, an international investment firm established by Russian billionaire Mikhail Fridman, which just made a strategic $200 million investment in Uber, the world’s most valuable private startup.
The move, announced on Friday, is meant to help Uber wade even further into emerging markets. LetterOne, founded in 2013 and based in Luxembourg, has typically focused on the telecoms and energy sectors—areas that Fridman has historically invested in. But more recently, the company has been seeking to invest in “late-stage technology growth opportunities globally,” according to the company’s release.
Uber fits in well with this vision, and benefits from the deal in other ways. While the ride-hailing giant dominates the market in the US, it has lagged behind other players abroad, coming in second to Didi Kuaidi in China, Ola in India, and Grab in Southeast Asia. And these players, along with Lyft, Uber’s biggest ride-hailing rival in the US, have already moved to form a global anti-Uber alliance. This partnership, the company says, will help Uber boost its local knowledge of many emerging markets.
“Our goal is simple: reliable and affordable transportation everywhere, for everyone, at the push of a button,” Uber CEO Travis Kalanick said in the announcement.
In other words, if Uber truly wants to dominate globally, it must adapt to local climates and their unique quirks—something a local partner can help with tremendously, especially in emerging markets. In India and the Philippines, for example, Uber allows passengers to pay with cash because it works better with the culture.
And yes, $200 million may not sound like much for a company reportedly valued at upwards of $60 billion. But in Uber’s greater quest for world domination, a strategic partner may have more value than the specific monetary value of the investment itself.
Uber has agreed to settle two class-action lawsuits over its safety-related advertising.
The ride-hailing giant has agreed to pay $28.5 million to around 25 million US passengers who rode in Ubers from January 2013 to January 2016, according to a settlement agreement submitted for court approval today. Among the issues was how it advertised its one-dollar “Safe Rides Fee.” After attorney fees and administrative costs, passengers who qualify for the payout can expect to each receive a grand total of 82 cents or so.
At issue is how company described driver background checks (“industry leading”) as well as how it implemented the fee beginning in April 2014. Because other kinds of background checks are actually more rigorous, the suits alleged, the language was misleading—and riders shouldn’t have to pay the fee.
Uber said the fee was a way to recover some of its costs in running its background checks, as well as provide 24/7 support to its riders in the event of safety issues. In the settlement, however, the company has agreed to avoid using certain language to describe these operations. From now on, the company says, it will call the “Safe Rides Fee” a “Booking Fee” instead.
“Accidents and incidents do happen,” Uber wrote in a blog post detailing the settlement. “That’s why it’s important to ensure the language we use to describe safety at Uber is clear and precise.” A federal judge will still have to approve the settlement.
To be clear, Uber is changing only the language around its fee, not getting rid of it. San Francisco-based Lyft, Uber’s closest rival in the US, has had similar issues (it now calls its “Trust and Safety Fee” a “Trust and Service Fee”). But the processes themselves that led to these complaints are still in place.
That’s because ridesharing, as with anytime you get into a car with a stranger, comes with a certain amount of inherent risk. Uber has faced its share of publicity over drivers with criminal records finding their way onto its platform. In settling the suit, Uber gets at least some litigation off its plate. But its lawyers still have plenty of work to do.
French taxi unions and Uber are clashing again.
Taxi drivers in France have once more gone on strike—shutting down roads, demonstrating across Paris, and blocking access to major airports and railway stations, according to French media reports. At least 2,000 drivers took part in the protests, and police have arrested 20 so far.
The latest demonstrations coincided with a broader nationwide demonstration against France’s government, including a walkout by air traffic controllers that disrupted flights and a protest by teachers during the school day.
But according to journalists on the ground, the taxi protests were by far the most volatile: Security forces reportedly fired teargas at crowds to try to maintain order, and television footage in western Paris showed demonstrators burning tires and blocking several lanes of traffic.
Taxi unions say Uber and other ride-hailing apps create unfair competition and are not adequately policed. “Unfortunately, the governments are weak and as unemployment is pressuring them, they give in,” Karim Asnoun, head of the CGT taxi union, told The Guardian. “They think they are creating jobs, whereas for every created job there is one that’s destroyed.”
Uber, meanwhile, reportedly emailed its French users, describing the strike as an attack on the market for ride-hailing apps in France and asked its users to lend their support to help ease regulations in the country.
Uber France spokesman Thomas Meister told The Verge that, unlike previous strikes, today’s demonstration isn’t specifically aimed at Uber but rather targets “the general organization and structure of the industry.”
But as Uber well knows, its strategy to make its way in France—and other parts of the world—hasn’t gone over smoothly in the past. If the problem truly is cultural, as it increasingly appears to be, Uber would do well to figure out how to run its business on France’s terms—or risk facing a bumpier road than ever when it comes to trying to take over the world.
Ride-hailing giant Uber says it’s using smartphone gyrometer data to double-check if drivers on its platform are speeding.
At least, it does for a portion of its drivers on a new pilot program. Joe Sullivan, Uber’s chief security officer, explained that the tactic is meant to corroborate whether a low “star rating” from a passenger may have stemmed from how fast their Uber driver was going.
“If the rating is low, we ask why,” Sullivan said. “We need to check what actually happened. Mostly it’s about talking to both sides. But increasingly technology can help get to the truth.”
Sullivan says the measure is part of a mix of methods to address road safety. In North Carolina, the company has provided Bop It toys in the backs of drivers’ cars to keep drunk passengers entertained, according to the company—though some have pointed out that the strategy of treating passengers like children could come off as insulting.
Some drivers in Seattle, meanwhile, are using color-coded lights to help riders find the right car at night. In the future Sullivan says Uber could use gyrometer data to verify whether drivers were constantly messing with their phones and offer them smartphone mounts.
There’s no doubt that safety is important. But to Uber’s critics, all that monitoring might seem to give Uber more control over its drivers than it ought to have, given the company’s stance that its drivers are independent contractors, not employees. Some drivers have already alleged that anything below a 4.6 average rating can get them deactivated from the system. Now, it seems, Uber is looking to have even greater oversight.
In San Francisco, the birthplace of Uber, the largest traditional taxi company has filed for bankruptcy.
But Yellow Cab Cooperative doesn’t call out the ride-hailing giant as the reason for its woes. Instead, the company said that lawsuits filed by passengers had finally forced it to restructure its business.
Last year, The San Francisco Chronicle reported, a San Francisco Superior Court jury found that the company was liable for a crash allegedly caused by a Yellow Cab driver. The jury awarded $8 million to the injured passenger.
Not that the Ubers of the world are immune from such pressures. In one tragic instance, an Uber driver on New Year’s Eve 2013 ran into a family in a San Francisco crosswalk, killing a 6-year-old girl and seriously injuring her mother and brother. In July, Uber reached a settlement with the family, the terms of which were kept confidential.
But ride-hailing services do have an advantage over traditional taxi companies, at least for now, in the form of billions of dollars in funding.
Yellow Cab declined to comment on whether competitive pressures from app-based services like Uber were a factor in its filing.
Uber wants you to believe it’s emerged as the global leader in the world of on-demand rides. To be sure, some signs do already point to that: it’s raised more than $10 billion in venture funding, and the company’s worth a reported $62.5 billion. Still, it would be shortsighted to assume Uber has the edge in every aspect of the fight, especially in one of the biggest battlegrounds for ride-hailing thus far: China.
Last December, Uber announced a metric seemingly designed to let everyone know that it was absolutely killing it: it had hit 1 billion rides worldwide since the company launched in 2009. Not to be outdone, today Didi Kuaidi—Uber’s biggest rival in China—announced that it booked 1.43 billion rides—in 2015 alone.
That figure, first reported by tech news blog Re/code, is certainly enormous. Didi Kuaidi further claims that it completed 200 million rides in December, and added that Uber’s billion rides came only after six years of maturation and an aggressive global expansion—while Didi Kuaidi operated only in China in 2015.
On the other hand, though, Didi Kuaidi admits it tallied its rides from seven different services it offers, including private cars, taxis, carpooling, buses, and corporate services, among others. So it’s not quite fair to compare those reported numbers directly with Uber’s tally.
But the announcement speaks to the overarching message Didi Kuaidi badly wants to project: that it’s far ahead of everyone else in China. Period. According to research from the China Internet Network Information Center, Didi Kuaidi holds 87.2 percent of the private car-hailing market in the world’s most populated country. Its user base in the country exceeds 250 million people. And it holds this majority in spite of the fact that five of Uber’s top 10 cities by ride volume are in China. Uber, for its part, has long made it clear that it considers the country to be a central piece of its strategy for growing its ride-hailing business globally. Just today The Wall Street Journal reported that the company poured fresh new funds into its China unit that would value it at $7 billion.
Didi Kuaidi isn’t retreating from its ambitions to capture a meaningful share of the worldwide ride-hailing market, either. Last fall, the company announced a partnership with Lyft that would link the companies’ apps and let Didi users traveling to the US to hail rides on Lyft’s platform, and vice versa. In December, Didi Kuaidi and Lyft’s alliance expanded to include the ride-hailing leaders in India and Southeast Asia, Ola and GrabTaxi. Together, that global coalition will reach nearly 50 percent of the world’s population, according to the companies. Joint partner projects are scheduled to start rolling out in the first quarter of 2016.
So yes, it’s true that Didi Kuaidi’s 1.43 billion rides is yet another boastful metric and an incremental development among many others as ride-hailing companies fight to come out on top all over the world. But with the winds of favor constantly shifting for these companies, one thing’s for sure: no one player can—or should—take its dominance in the market for granted.
The global anti-Uber alliance is growing.
Today US-based Lyft said it was allying itself with Asia-based ride-hailing companies Didi Kuaidi, GrabTaxi, and Ola. Together, the alliance will reach nearly 50 percent of the world’s population, Lyft said.
“We’re excited to join with Didi, Grab, and Ola to make global travel simpler for passengers,” Lyft co-founder and president John Zimmer said. “This isn’t solely a partnership of four companies, but also an opportunity to have a greater impact on the future of our cities worldwide.”
The massive global coalition has been a long time coming. Back in September, Lyft and Didi Kuaidi, China’s biggest homegrown Uber rival, joined to allow Lyft users visiting China to book Didi drivers from the Lyft app, and vice versa. Now, users of any of these apps will be able to order rides where the other ride-hailing partners are based. (Each company will still handle mapping, routing, and payments in the countries in which they operate.)
Ola is the leading ride-hail company in India. GrabTaxi, meanwhile, offers services in Malaysia, Singapore, Indonesia, Philippines, Vietnam, and Thailand. Each of the companies says it receives more than a million booking requests a day. Together, they make a seemingly formidable force. Each provides the other an apparently easy way to make inroads in new countries where a preferred service already exists, and quickly achieve scale.
In doing so, the alliance would also seem to help these startups go up against the global juggernaut that is Uber. The world’s largest ride-hailing company operates in 67 countries, and it’s still growing at a rapid clip thanks to billions in funding from optimistic investors.
Though no financial details have been divulged in the announcement, the companies revealed their plan to leverage the partnership in other ways. Joint partner products—which might include courier services, food delivery, and other logistics services—will start rolling out in the first quarter of 2016, the group said.
Bloomberg is reporting that Uber is attempting to raise as much as $2.1 billion in a financing round that would value the car company at $62.5 billion. It cites sources who shared paperwork filed privately in Delaware. If true, the move comes just months after a private funding round that valued the company at more than $50 billion, and it propels the company into the position of the world’s most valuable privately held startup. It will bring Uber’s total venture funding to $12 billion.
In its final funding round, 17 months before going public, Facebook was valued at $50 billion. At the time, that figure was considered eye-popping. Despite the massive valuation, founder and CEO Travis Kalanick has no immediate plans for an initial public offering. Speaking at a tech conference in October, he said Uber was still in its “junior high” stage of development. He said talk of going public now is like “telling us to go to the prom.”
A Florida state agency that had earlier ruled that an ex-Uber driver was an employee has reversed its decision after Uber appealed the case.
In May, the Florida Department of Economic Opportunity found that former Uber driver Darrin McGillis was an employee, not an independent contractor, when he drove for the ride-hailing company for seven months until April 2015. The state agency resolves claims on unemployment benefits, and in siding with McGillis, allowed him to claim them. Independent contractors don’t usually get such benefits—in exchange for the flexibility of choosing their own shifts, the independent classification means they don’t receive Social Security, Medicare, or workers’ compensation, along with unemployment insurance.
Uber appealed the May decision; after a telephone hearing in August, the agency published a new 9-page finding in Uber’s favor.
It’s worth noting that this is yet another isolated decision by a single state agency; it only applies to the claimant either way. Florida’s ruling in May was the first time a state agency sided with an ex-Uber driver, and others have followed suit in California. Agencies in nine other states, meanwhile, have sided with Uber that drivers were independent contractors, not employees. But none of these individual decisions carry the weight of court precedent.
Uber’s more important battle is a federal class-action lawsuit currently under way in California, in which thousands of California Uber drivers are seeking recognition as employees of the company. Shannon Liss-Riordan, the labor lawyer who is representing the Uber drivers, has mentioned the state agency decisions in her arguments in court in the past, saying the rulings strengthen her side’s stance. But now it seems, there’s one less decision she’ll be able to cite.
Uber is the world’s most valuable startup—now valued at close to $51 billion, according to the Wall Street Journal—and the undisputed king of the ride-hailing industry. At least at the moment. But outside the US, where Uber is most aggressively seeking growth, its overseas rivals are increasingly banding together in a bid to hamper its rapid expansion.
On Monday, Reuters reported that Chinese ride-hailing giant Didi Kuaidi had invested in Ola, the biggest ride-summoning app in India. The amount was not disclosed, though the Times of India, citing unnamed sources, previously reported that Didi Kuaidi’s stake in the company would be around $30 million. Ola confirmed the investment to WIRED but not the amount. Didi Kuaidi did not immediately respond to a request for comment.
Didi Kuaidi’s investment comes right on the heels of the announcement of its partnership with US-based Lyft. Earlier in the month in New York, the two companies revealed they would link their apps. Lyft users traveling in China could hail Didi Kuaidi drivers from their Lyft app, and vice versa. The feature is set to go live by early 2017. But the partnership appears to go beyond apps. Didi Kuaidi also reportedly invested $100 million in Lyft earlier this year. It has also invested in the Singapore-based ride-hailing company GrabTaxi.
All of this cooperation among Uber’s rivals signals the emergence of consolidation as the key strategy for challenging the global juggernaut that is Uber. As Uber’s most formidable competitor in China—the company’s most coveted market—Didi Kuaidi is in a prime position to lead this charge, and it’s not shying away from the task. Consolidation is also in the interest of Uber rivals’ deep-pocketed investors. Chinese tech giants Alibaba and Tencent, for instance, have a stake in Didi Kuaidi and Lyft, and Japan-based SoftBank has investments in Ola and Didi Kuaidi.
Uber has made no secret of wanting to own the Chinese market, recently raising $1.2 billion in fresh funding to pour into its China operations. It has also expressed a special interest in India, now the world’s fastest growing major economy. But its rivals are determined to create at least a few bumps along Uber’s road to global dominance.
The slew of worker misclassification lawsuits filed against on-demand companies just won’t stop.
On Wednesday, class-action complaints were filed against on-demand food delivery companies DoorDash and GrubHub in California state court, alleging that the drivers should not be considered independent contractors, as their companies have deemed them, but official employees.
Shannon Liss-Riordan, a Boston-based labor lawyer, filed the suits against the two companies, seeking class action status. She also brought forward a complaint in arbitration against Caviar, a curated food delivery service owned by Jack Dorsey’s company Square. The Caviar complaint is a little different in that Liss-Riordan represents only one San Francisco driver. After filing a class action complaint against Caviar earlier this year, Liss-Riordan explains, the court ruled that the arbitration clause in Caviar’s written agreement was enforceable, requiring workers to resolve their disputes through an arbitration process, per complaint, rather than lumping the cases together in a class-action suit.
“There’s a lot of commonality among these cases,” Liss-Riordan tells WIRED. “Companies basically hope to massively save on labor costs by classifying their workers as independent contractors rather than employees.”
That brings the tally of companies Liss-Riordan has brought complaints against to 11, which includes on-demand ride-hailing companies Uber and Lyft, laundry service Washio, home services Homejoy and Handy, grocery delivery service Instacart, and on-demand delivery services Postmates and Shyp, in addition to DoorDash, GrubHub and Caviar. So far, only the case against Uber has been certified as a class action. Of these companies, a couple—Instacart and Shyp—have reclassified part of its workforce in what looks to be a reaction to pressure from these filings. One company, Homejoy, shut down, citing the suits as a “deciding factor” in the decision.
The class-action suits against on-demand ride-hailing services Uber and Lyft are the furthest along in the process. On September 1, a federal judge in San Francisco granted class-action status to a lawsuit brought by three Uber drivers against the on-demand ride company. (Uber is appealing that decision.) Lyft, meanwhile, faces a similar suit, with its class certification hearing in December.
“All of these companies seem to be watching what other companies are doing,” Liss-Riordan says, “and thinking they can get away with it.”
You can read the complaints filed against DoorDash, GrubHub and Caviar below.
Doordash Grubhub Caviar Complaints (PDF)
Doordash Grubhub Caviar Complaints (Text)
Uber on Tuesday filed to appeal a ruling by a federal judge in San Francisco to grant class-action status to a lawsuit brought by three Uber drivers against the on-demand ride company.
On September 1, US District Judge Edward Chen decided that Uber drivers in California could join the case seeking mileage and tip reimbursement from the company. The drivers can also collectively challenge the company on the main issue of worker misclassification—whether they should be considered employees of Uber under the law, rather than independent contractors—which could have far-reaching implications for the on-demand economy’s basic business model.
The lawsuit against Uber is the furthest along of a slew of recent cases against on-demand companies, including Lyft, Caviar, Postmates and Homejoy, among others. These startups employ freelance contractors, or 1099 contract workers, instead of employees, arguing that this can make the work more flexible than a structured, 9-to-5 job. But as of late, critics have been calling for better protection for these workers, who lack benefits such as Social Security, Medicare, and workers’ compensation. Others, meanwhile, also point out that companies who employ this business model stand to save on payroll taxes, undercutting other on-demand tech firms who do make an effort to classify their workers as employees.
Uber has largely stuck to the same arguments it used in court. It is “manifestly erroneous” that the suit has been certified as a class, the company says, because there is no such thing as a typical Uber driver. That lumps the issues of thousands of drivers into a single suit, Uber argues, whereas there are substantial differences in how drivers use its platform. Beyond that, the company insists, converting Uber drivers to employees would cost the drivers the flexibility they love, because it upends Uber’s business model.
The appeal (see below) is worth perusing in full. But in case you’d like to skip to the juiciest parts, we’ve added comments to the document for extra context.
2015 09 15 as Filed O’Connor Rule 23(F) Petition (PDF)
2015 09 15 as Filed O’Connor Rule 23(F) Petition (Text)
Ride-hailing giant Uber has lost another battle in the incendiary debate over whether or not its drivers should be considered employees.
Officials at California’s Employment Development Department (EDD) recently determined that an ex-Uber driver qualified as an employee of the company, not an independent contractor, and as such was entitled to unemployment benefits. To be sure, it’s one decision by one state agency and only applies to one individual. But an administrative law judge backed the decision on appeal, and Uber ultimately decided not to fight further.
“We disagreed with the decision, but since it only affects one person …we decided to focus on the bigger picture,” an Uber spokesperson tells WIRED. That bigger picture is a federal lawsuit filed against Uber that was granted class-action status earlier this month seeking to gain Uber drivers recognition as employees of the company, not independent contractors.
Not the First Time
This latest decision is not the first time a state agency has determined an Uber driver was an employee. In May, the Florida Department of Economic Opportunity found that Uber driver Darrin McGillis was an Uber employee and thus eligible for unemployment insurance. In June, the California Labor Commission, which investigates wage claims, decided that ex-Uber driver Barbara Ann Berwick was entitled to unpaid wages and reimbursement for business expenses in the nine weeks she worked as an Uber driver last year.
Shannon Liss-Riordan, the Boston lawyer who is representing the Uber drivers in the class-action suit against the company, has cited the California Labor Commission’s decision in her arguments in court. She says this and other decisions by state agencies solidify her side’s stance. “This California decision supports our argument that when a fact-finder sits down to look at the facts, and applies California laws, Uber drivers are employees,” Liss-Riordan says.
For its part, Uber says that other states have determined Uber drivers are independent contractors rather than employees of the company, including labor or unemployment boards in Georgia, Arizona, Pennsylvania, Colorado, Indiana, Texas, New York, Illinois, and California—where at least one decision, the company says, came from the EDD itself.
Back in February, Uber announced a strategic partnership with Carnegie Mellon University’s robotic research group: an initiative the ride-hailing service said was meant to help it develop driverless-car technology. Now, in an apparent move to deepen that alliance, Uber has just revealed that it is giving $5.5 million to the university to support a new robotics faculty chair as well as sponsor three graduate fellowships.
“We’re pumped to be part of a growing innovation ecosystem in Pittsburgh that includes world leading research institutions and companies, as well as an increasing number of start-ups,” Travis Kalanick, Uber’s CEO, said in a blog post announcing the endowment.
It’s an interesting move from Uber, the undisputed giant of ride-hailing apps, and a company that has gained notoriety for its obsession with growth. Even after five years, the company is still expanding rapidly; in spite of regulatory hurdles, it’s still muscling its way into new markets, both in the US and abroad.
But another reason for Uber’s outpouring of generosity could be its, ahem, unique relationship with Carnegie Mellon. Not too long after the announcement of their partnership, according to several reports, Uber hired away dozen’s of CMU’s scientists, leaving one of the world’s top robotics institutions in a crisis. Some viewed Uber luring these researchers away as a good thing, certifying the academic institution as a place of opportunity. Indeed, Uber has provided desirable jobs to researchers from other, more unconventional sources in the past, including hiring the two hackers who wirelessly hijacked an Internet-connected Jeep.
But others may see the move more as a way to make amends with Carnegie Mellon. And certainly, with competitors like Google bearing down on Uber’s as-yet-unattained dream “to make transportation as reliable as running water” (read: self-driving cars), the ride-hailing giant needs all the allies it can get.
Uber may have finally found a friend in New York City’s government after all. Today, the city’s Comptroller, Scott Stringer, wrote in a post on Medium that the City Council should postpone its vote on a bill that would temporarily cap the number of new driver licenses available to companies like Uber and Lyft.
An arbitrary cap on for-hire vehicles is not the answer – we need to think strategically about our transport networks http://t.co/QzSI8Q9yoW
— Scott M. Stringer (@scottmstringer) July 21, 2015
The city’s plan calls for studying the impact of ride-hailing services on traffic congestion before approving new licenses. But Stringer says that approach gets it all backwards. The plan, he says, “seems to ignore the fact that so many other factors — from economic growth to street design — affect congestion.”
Stringer said in a speech today he had met with David Plouffe, the political strategist who has been leading Uber’s campaign against the bill, which New York City Mayor Bill de Blasio has fiercely defended. But the comptroller didn’t let Uber completely off the hook, writing that both Uber and the city need to come to the negotiating table. “We must take a close look at wage standards in the shared economy,” Stringer wrote, “and reexamine the City’s traditional cab drivers and their working conditions, which for decades have been defined by long hours, low wages, and few, if any benefits.”
Uber CEO Travis Kalanick wants you to know that Uber is great. So great, in fact, New York City Mayor Bill de Blasio should abandon any effort to cap the company’s growth.
The mayor has called for a limit to the number of licenses available to ride-sharing companies like Uber while the city studies the impact of the influx of car services on traffic. Uber is vociferously opposed to the idea—the company’s New York general manager even challenged de Blasio to a public live-streamed debate. (The mayor declined.)
Now, Kalanick has taken to Twitter, a time-honored tactic in his company’s frequent battles with city governments. Once a singularly outspoken tweeter, Kalanick has quieted as Uber’s value has skyrocketed. But over the past week, via a storm of retweets, he’s made sure to call out the stories and anecdotes that appear to support Uber’s side (including at least one WIRED story). Here’s a sampling:
How @Uber saved me from cabs http://t.co/0EI6Asm1Kp
— Errol Louis (@errollouis) July 21, 2015
@gawruff @hadip @coiascience I think you may be misinformed… Every NY driver is commercially licensed by the TLC as are Uber’s operations — travis kalanick (@travisk) July 21, 2015
@hadip @coiascience @deBlasioNYC Uber pays for more insurance, pays more in taxes, and uber drivers make more per hour
— travis kalanick (@travisk) July 21, 2015
Laura Washington: Uber upends problem of ‘hailing while black’: http://t.co/Xf8ywQNTV4 — Corey C Owens (@coreycowens) July 20, 2015
Is Bill de Blasio’s crusade against Uber standing in the way of social progress? @jheil weighs in: VIDEO: http://t.co/jMXMcHdRaR — Joe Scarborough (@JoeNBC) July 20, 2015
An army of preachers in New York defending Uber for the opportunity it provides to minorities pic.twitter.com/F5jmkPeEQD
— Comfortably Smug (@ComfortablySmug) July 20, 2015
deBlasio could hedge bets by at least including his Uber referral code every time he mentions the company — Hunter Walk (@hunterwalk) July 20, 2015
On call with tech CEOs + me pre-election, Bill de Blasio said his #1 priority as mayor –> expand economic opportunity for regular people.
— Marc Andreessen (@pmarca) July 20, 2015
De Blasio is making New York look terrible for tech. Like starting a company in France. https://t.co/iEXzJBTbHj — Jd Ross (@justindross) July 19, 2015
Watch now: Mayor @BilldeBlasio, don’t leave New Yorkers stranded. https://t.co/No4ghRt4Lk
— Uber NYC (@Uber_NYC) July 17, 2015
Among the many heated debates around on-demand ride-hailing services like Uber is whether they act as an antidote to the longstanding patterns of red-lining in the traditional taxi industry.
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