Uber (company)

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Uber, Inc.
Private
Industry Transport
Founded March 2009
Founder Travis Kalanick, Garrett Camp
Headquarters San Francisco, California, United States
Area served
Worldwide
Key people
Travis Kalanick (CEO)
Services Taxi, vehicles for hire
Website www.uber.com

Uber is an American international transportation network company headquartered in San Francisco, California. It develops, markets and operates the Uber mobile app, which allows consumers to submit a trip request which is then routed to sharing economy drivers.[1][2] As of May 28, 2015, the service was available in 58 countries and 300 cities worldwide.[3][4] Since Uber's launch, several other companies have emulated its business model, a trend that has come to be referred to as "Uberification".[5][6]

Uber was founded as "UberCab" by Travis Kalanick and Garrett Camp in 2009 and the app was released the following June. It raised $49 million in venture funds by 2011. Beginning in 2012, Uber expanded internationally. In 2014, it experimented with carpooling features and made other updates. It continuously raised additional funding, reaching $2.8 billion in total funding by 2015. Many governments and taxi companies have protested against Uber, alleging that its use of unlicensed, crowd-sourced drivers was unsafe and illegal. It is estimated that Uber will generate 10 billion dollars in revenue by the end of 2015.[7]

History[edit]

Founding[edit]

Travis Kalanick, co-founder and CEO of Uber, in 2013
Garrett Camp, co-founder of Uber, in 2009

The idea for Uber came to Travis Kalanick when he was trying to find a cab to attend a 2008 LeWeb conference in Paris, France but he could not find one. Kalanick cites "Paris as the inspiration for Uber".[8] Uber was founded as "UberCab" by Travis Kalanick and Garrett Camp in 2009. The service was launched in San Francisco in June 2010, with Ryan Graves appointed as CEO. Graves later stepped down from that role to become VP of Operations and was replaced by Kalanick.[9] Uber's mobile app for iPhones and Android phones was launched in San Francisco in 2010.[10]

Funding[edit]

The company received venture funding in late 2010 from First Round Capital and a group of super angel investors in Silicon Valley that included Chris Sacca.[11] In early 2011, Uber raised more than US$11.5 million in Series A funding led by Benchmark Capital.[12] In late 2011, Uber raised an additional $32 million in funding from several investors, including Goldman Sachs, Menlo Ventures, and Bezos Expeditions,[13] bringing its total funding to $49.5 million.

Google Ventures invested $258 million in 2013.[14] Google Chief Legal Officer David Drummond is on Uber's board of directors.[15]

By August 2014, the company had raised US$1.5 billion in venture capital.[16] Uber hired David Plouffe as a lobbyist in the same month,[17] who joined the company's numerous other lobbyists.[18]

The Wall Street Journal reported on December 5, 2014, that Uber has raised US$1.2 billion from a number of investors, including sovereign wealth fund Qatar Investment Authority, New Enterprise Associates, and hedge funds Valiant Capital Partners and Lone Pine Capital. The successful investors, the names of which Uber did not disclose, participated in a competitive bidding process that lasted several weeks, and their investments meant that Uber was worth US$41 billion. The article only referred to "people familiar with the matter" in regard to the sources of its information.[19]

On December 12, 2014, TechCrunch reported that the Chinese search engine Baidu, the mainland's largest, is expected to make a significant investment in Uber.[20] The deal, the details of which were not shared with the media, was confirmed on December 17, 2014, following a Beijing meeting involving Kalanick and Baidu chief executive and chairman Robin Lee, who made a commitment to connect the search engine's map and mobile-search features with Uber’s app. At the time of the arrangement, Uber existed in eight Chinese mainland cities. Kalanick told the media afterward of an absence of "pressing regulatory issues" for Uber in China.[21]

In May 2015, Uber revealed plans to raise between $1.5 billion and $2 billion in new funding, raising the value of the company to $50 billion or higher. [22]

International expansion[edit]

Paris was the first city outside of the U.S. where Uber's service began operating, in December 2011 prior to the international LeWeb Internet conference.[23] The company expanded to Canada in March 2012.[24] In July 2012, the company launched its app in London[25] and that November it was introduced in Australia following a six-week test period. Sydney was Uber's first launch in the Asia Pacific region and the band Art vs. Science participated in an early promotion.[26]

The soft launch of Uber in Singapore began in January 2013 after Kalanick expressed an intention to expand into Asia in an early 2012 interview.[27] Uber's service was launched in August 2013 in the South Korean capital city of Seoul.[28] In accordance with standard practice, Uber Seoul started as a test phase.[29]

Uber's launch in Bangalore on August 29, 2014, was the company's first day of operation in India. Indian musicians Raghu Dixit and Vasundhara Das participated in the promotion for the launch of the UberX service.[30] On September 4, 2013, Uber announced its first sports deal. The company held a promotion with the NFL Players Association to promote safe rides for NFL players.[31]

Consumers in Johannesburg, South Africa, were able to use Uber after it was launched in September 2013. Uber was then started in Cape Town on October 10, 2013, after a six-week "testing phase".[32][33]

Following a soft launch of the Uber app in the Sanlitun shopping district in March 2014, an official launch was held in Beijing, China, in mid-July 2014. The company's service operates in China’s four largest cities.[34]

In July 2014 Uber's announced a nationwide rollout of UberX in India. In addition to a Bangalore presence, Uber's inaugural Indian location that was publicized in August 2013, drivers in Delhi, Hyderabad, Chennai, Mumbai and Pune made UberX available to users in those cities.[35]

Although the Metropolitan Government of Seoul officially stated in mid-2014 that it would seek to ban Uber from operating in its jurisdiction, while also developing its own Uber-like app for registered taxis to be launched in December 2014,[36] Uber proceeded to introduce its UberX service in the city at the end of August 2014. According to the Wall Street Journal, UberX uses a "for-pay rideshare scheme" and "trips cost less than the same journey in an ordinary taxi". At the time of the launch, an Uber representative based in Seoul said that a charge will not apply to rides in Seoul until further notice.[28]

Drivers in Warsaw began using the Uber app on August 18, 2014. A taxi license or a taximeter are not requirements for drivers, and all payments are made through the mobile app. Swathy Prithivi, coordinator of Uber's entry into new markets, said to Polish media, “Our premise is to be the cheapest. We will even be cheaper than the most popular Warsaw carriers."[37]

The service was launched in Montreal in October 2014. The city's mayor Denis Coderre publicly said, "Right now if they don't respect the rules, yes it's illegal, of course it's illegal". At the time of the launch, 100 Montreal drivers had signed with Uber, while Coderre engaged in talks with Quebec's transportation minister, Robert Poëti.[38]

The service was introduced in Denmark in November 2014, but only the Uber Black was available in the capital city of Copenhagen, while UberPOP was scheduled to be added at a later stage. By November 20, the Danish transport authority, the national body, had filed a police complaint against Uber.[39] On November 28, 2014, Thailand's Department of Land Transport declared Uber's continued operation within Thailand illegal.[40]

Uber officially unveiled Ice Prince Zamani as the Rider Zero in Lagos, Nigeria in July 2014, signifying its launch in the largest city in Africa and most populous country in Africa.[41]

Uber launched its service in Nairobi, Kenya, on January 21, 2015. Nairobi was Uber's first city in Kenya, as well as the East African region.[42] On the same day as the Nairobi launch, Uber raised US$1.6 billion in convertible debt from wealth management clients of Goldman Sachs Group Inc.[43]

On March 10, 2015 Travis Kalanick, Uber’s founder and chief executive announced a partnership between Uber and the UN Women. They intended to invest in local communities where the UN Women’s group was located in hopes of creating 1,000,000 jobs for women globally by 2020. However, after pressure from trade unions and women's rights organisations, UN Women pulled out of the deal, citing Uber's legal status, safety, and privacy concerns.[44]

UberPop and UberPool in Paris and New York[edit]

In the first half of 2014, the UberPop version of the app was launched in Paris, France, whereby users are linked to drivers without professional taxi or chauffeur licenses, while Uber covers supplemental insurance—UberPop was expanded to other European cities over the course of the year.[45] On June 6, 2014, Uber announced US$1.2 billion in funding during its latest round. The round valued Uber at around $17 billion pre-money.[46]

The UberPool service was then introduced to the Parisian market in November 2014, a month after a French court deemed the company's UberPop service to be illegal—Uber claimed that UberPool was the next iteration of the UberPop concept. Uber's Western Europe chief told reporters at the time that it was "very confident" about overturning the court decision.[45] At the start of February 2015, the UberPool service was still operational in Paris, France, despite the regulatory opposition in that country.[47]

Uber announced on December 2, 2014, that the UberPool concept would be rolled out the following week in New York, U.S. The Uber blog announcement offered riders the possibility of reducing their journey costs by 20 to 50 percent, explaining: "On any given day, the vast majority of UberX trips in NYC have a 'lookalike' trip—a trip that starts near, ends near, and is happening around the same time as another trip".[48]

Uber app software and services[edit]

In 2014, the company experimented with online food orders, pilot testing uberFRESH in Santa Monica, California.[49] In April 2014, Uber announced a courier package delivery service called Uber Rush, with pickup from anywhere in Manhattan.[50] While Rush only offers delivery,[51] the Uber Essentials or Corner Store service, starting testing in Washington D.C. in August 2014, allows online ordering from a list of about 100 items.[52][53] In April 2012, Uber launched the Uber Garage initiative, a project to experiment with other ideas for urban transportation services. The first project from Uber Garage was to give Uber users the option to hire a regular taxi driver, or a crowd-sourced Uber driver.[54]

The startup announced a new carpooling service called UberPool at the start of August 2014, when it had already started a beta testing phase in San Francisco Bay Area. UberPool matches riders with another rider who is traveling in the same direction—the app will tell you the first name of the other rider and who is getting picked up first. If a match cannot be found, riders are offered a discount on a regular Uber trip.[55][56]

In May 2014 Google Maps gets Uber integration via API.[57][58]

Promotions[edit]

In July 2012, in honor of National Ice Cream Month, Uber launched an "Uber Ice Cream" program in the U.S. so that users in seven cities could summon an ice cream truck for on-demand delivery, while purchases were billed to users' accounts.[59]

In July 2013, Uber began offering "UberCHOPPER" helicopter rides from New York City to the Hamptons for US$3,000,[60] including availability during the July 4 holiday weekend.[61]

DeLorean time machine provided by Uber

Short-term promotions in the second half of 2013 included: the September hire of ice-cream trucks to deliver ice cream;[62] rides in the DeLorean DMC-12 car, from the Back to the Future film franchise, that were also launched in September;[63] an October National Cat Day promotion, for which Uber drivers delivered kittens;[64] and a Christmas-tree delivery service.[65]

In March 2015, Uber offered luxury car-rental service in collaboration with Dream Drive in Singapore until 20 May 2015.[66]

Pricing and payments[edit]

An Uber ride in Bogotá, Colombia. Visible on the dashboard is a phone running the Uber app. The app provides turn by turn navigation to the driver, and also provides information to Uber so the price of the trip can be calculated.

Uber's pricing is similar to metered taxis, although all hiring and payment is handled exclusively through Uber and not with the driver personally. In some cities, if the Uber car is travelling at a speed greater than 11 mph (18 km/h), the price is calculated on a distance basis, otherwise, the price is calculated on a time basis.[67] At the end of a ride, the complete fare (which does not include a gratuity—Uber's exact wording is "No Need to Tip") is automatically billed to the customer's credit card.[68] Uber has said its prices are the premium that the customers pay for a cab service that is not only reliable, but also punctual and comfortable.[69][70][71]

On 12 May 2015, Uber started testing Cash payments in India. The pilot project was started in Indian city, Hyderabad.[72]

Surge pricing[edit]

Uber uses an automated algorithm to increase prices to "surge price" levels, responding rapidly to changes of supply and demand in the market, and to attract more drivers during times of increased rider demand, but also to reduce demand.[73][74] Customers receive notice when making an Uber reservation that prices have increased.[73] The company applied for a U.S. patent on surge pricing in 2013.[75][76]

The practice has often caused passengers to become upset and invited criticism when it has happened as a result of holidays, inclement weather, or natural disasters.[77] During New Year's Eve 2011, prices were as high as seven times normal rates, causing outrage.[78] During the 2014 Sydney hostage crisis, Uber implemented surge pricing, resulting in fares of up to four times normal charges; while it defended the surge pricing at first, it later apologized and refunded the surcharges.[79] Uber CEO Travis Kalanick has responded to criticism by saying: "...because this is so new, it's going to take some time for folks to accept it. There's 70 years of conditioning around the fixed price of taxis."[78][80]

Rating score[edit]

Users of the app may rate drivers; in turn, drivers may rate users. A low rating may diminish the availability and convenience of the service to the user.[81]

Reception[edit]

Uber faces competition from lower-cost real-time ridesharing startups such as Lyft, Sidecar, Ola Cabs and Haxi. To compete at lower price levels, Uber has introduced UberGo on Nov 19, 2014,[82] UberTaxi (partnerships with local taxi commissions) and UberX (non-luxury cars such as Toyota Prius hybrids).[83] This move has led to dissatisfaction among existing Uber limo drivers who have seen their earnings decrease.[84]

In 2011 Marc Andreessen expressed interest in investing in Uber. He told CNET, "Uber is software eats taxis. [...] It's a killer experience. You watch the car on the map on your phone as it makes its way to you."[85] The same year, the New York Times called Uber "clever but costly", noting the cars are "particularly nice by livery standards" and pickup times were slow compared with traditional New York City taxis and black cars.[69]

In 2013 USA Today named Uber its tech company of the year.[86]

However, it has also gotten negative reception. In October 2014, Uber received an "F" rating from the Better Business Bureau (BBB), which cited complaints over unexpectedly high charges.[87][88]

Regulatory opposition[edit]

Uber has experienced numerous regulatory and legal challenges to its operations.[89] Regulators in California;[90] Vancouver, British Columbia;[91] Seattle, Washington;[92] and Geneva, Switzerland issued cease and desist orders. The launch of UberPop, known as uberX in the United States, generated opposition internationally.[93][94] Taxi organizations such as the Madrid Taxi Association in Spain,[95] ANTRAL in Portugal[96], Italian Taxi association in Italy and Taxi Deutschland in Germany obtained injunctions from local courts based on unfair competition claims.[97] Other injunction requests by taxi companies, taxi drivers, and regulators were denied in the United States,[98] Brazil[99] and France.[94] Officials in Delhi, India banned all app-based ride services to protect cab driver unions.[100] In Belgium,[101] the Netherlands,[95] the Philippines,[102] and South Korea, police forces conducted sting operations against Uber drivers who operated vehicles that were not licensed for commercial use.[103]

Several locales, including Portland, Oregon[104] and the state of Virginia[105] that initially banned Uber from operating, later negotiated changes in local regulations that would permit Uber to continue.[106] In 2015, the company's efforts to work with local municipalities allowed for an increased rate of expansion. As of January 2015, uberX operated legally in 22 cities and states within the U.S. By then, 17 cities outside of the U.S. had passed specific pro-Uber municipal ordinances.[107]

Criticism and controversies[edit]

Lawsuits by private entities[edit]

In December 2013, an Uber driver ran over and killed a six-year-old girl in San Francisco, severely injuring her mother and brother in the same incident. The driver was not carrying a passenger, but the girl's family filed a wrongful death claim against Uber, claiming the driver was using Uber's mobile application at the time.[108][109][110]

In September 2014, a class-action was filed by Atlanta, Georgia taxicab drivers and CPNC holders as the plaintiff class, against Uber Technologies, Inc., its subsidiary Raiser LLC (which operates UberX), and in a rare move, all of both companies' drivers as a defendant class in the Superior Court of Fulton County, Georgia, for restitution of all metered fares collected via the Uber and UberX apps for trips originating within the Atlanta city limits.[111]

In December 2014, Checker Cab Philadelphia and 44 other taxi companies in Philadelphia, Pennsylvania filed a lawsuit in the Federal Court of the Eastern District of Pennsylvania, alleging that Uber was operating illegally in the city.[112]

In 2015, a Delhi woman who claims to have been raped by Uber driver, Shiv Kumar Yadav, in her city, is suing the company for negligence in US courts.[113]

National Federation of the Blind lawsuit[edit]

A lawsuit was filed in the U.S. state of California on September 9, 2014 by the state chapter of the National Federation of the Blind, in response to the reported denial of services to "more than 30" blind customers—the lawsuit claimed that the conduct was in violation of the Americans with Disabilities Act of 1990 and California state law. The Washington Post published a direct quote from the complaint, in which the Federation claims that its constituency "face the degrading experience of being denied a basic service that is available to all other paying customers." Two cases were described in the Post article: First, a California UberX driver allegedly stored a service dog in the trunk of his vehicle and refused to acknowledge the blind passenger's concern upon the latter's realization of what had occurred; second, a driver allegedly cursed at a blind passenger during a verbal exchange, in which the latter was explaining the nature of the guide dog—according to the complaint, the driver suddenly accelerated, and nearly injured the dog, while also striking the passenger’s blind friend with an open car door.[114]

Uber responded to a number of blind passengers who reported their experiences, stating that since Uber drivers were independent contractors, the company was unable to oversee their conduct. The Federation replied in a public statement that Uber closely monitored its drivers' work practices through the Uber app, that Uber advised blind passengers to notify drivers about their guide animals in advance, and that the Federation was proceeding with the filing of the lawsuit after Uber refused to enter into a negotiation with them to resolve the issue.[114]

Protests[edit]

A protest against Uber in Portland, Oregon in January 2015

On January 13, 2014, cab drivers in Paris attacked an Uber driver's car near Charles de Gaulle Airport, protesting competition from the transportation startup.[115] On June 11, 2014, in a concerted action, taxis blocked roads in major European cities in protest against what they perceive as a threat to their livelihoods by companies such as Uber. The cabbies contended that Uber and similar smartphone app-based services have an unfair advantage because they are not subject to the same kinds of fees and regulations placed on taxis.[116][117]

Sabotage against competitors[edit]

Uber issued an apology on January 24, 2014, after documents were leaked to the Valleywag and TechCrunch publications saying that, earlier in the month, Uber employees in New York City deliberately ordered rides from Gett, a newly established competitor, only to cancel them later. The purpose of the fake orders was two-fold: wasting drivers' time to obstruct legitimate customers from securing a car, and offered drivers incentives—including cash—to join Uber.[118] Uber apologized in a statement on its website.[119]

In August 2014, Lyft, another ridesharing service, reported to CNN Money that 177 Uber employees had ordered and cancelled approximately 5,560 rides since October 2013, and that it had found links to Uber recruiters by cross-referencing the phone numbers involved. The CNN Money report identified one Lyft passenger who canceled 300 rides from May 26 to June 10, 2014, and who was identified as an Uber recruiter by seven different Lyft drivers. On this occasion, Uber did not issue an apology, but suggested in a statement on its website that the recruitment attempts were possibly independent parties trying to make money.[120][121] A Lyft spokesperson stated to CNN Money: "It's unfortunate for affected community members that they have used these tactics, as it wastes a driver's time and impacts the next passenger waiting for that driver."[120]

Following a series of 2014 media articles, in which several allegations surfaced that Uber employed aggressive business practices, the news website Salon publication published an article on August 31, 2014 by staff writer Andrew Leonard, titled "Why Uber must be stopped." Leonard described Uber as "the closest thing we’ve got today to the living, breathing essence of unrestrained capitalism," and warned of the harms that will occur if the company achieves a "dominant market position in every major city on the globe."[122]

Operation SLOG[edit]

In August 2014, the online publication The Verge reported that a secret Uber project, called "Operation SLOG"—which recruits members with the assistance of TargetCW, a San Diego, California-based employment agency—appeared to be an extension of the company's activities in relation to Lyft. As reported, on July 9, 2014 following Lyft's expansion into New York City, Uber sent an email offering what it called a "huge commission opportunity" to several contractors based on the "personal hustle" of the participants.[16] Those who responded met with Uber marketing managers who attempted, according to one of the contractors, to create a "street team" to gather intelligence about Lyft’s launch plans and recruit their drivers to Uber. Recruits were given two Uber-branded iPhones (one a backup, in case the person was identified by Lyft) and a series of valid credit card numbers to create dummy Lyft accounts.[16] After being contacted for comment, Target CW warned its contractors against talking to the media, stating that it represented a violation of a non-disclosure agreement they signed.[16]

Threatening journalists[edit]

At a private dinner in November 2014, Emil Michael, senior vice president of Uber, suggested that Uber hire a team of opposition researchers and journalists, with a million-dollar budget, to dig into the personal lives and backgrounds of media figures who reported negatively about Uber. Specifically, he targeted Sarah Lacy, editor of the technology website PandoDaily, who has accused Uber of sexism and misogyny.[123] The controversy made national news and stirred criticism against Uber. "The comments, reportedly made by senior vice president for business Emil Michael at a New York dinner attended by BuzzFeed editor-in-chief Ben Smith," wrote a Washington Post columnist, "ignited a powder keg of criticism about a company already perceived as cut-throat — landing Uber on the front pages of The Washington Post, USA Today and the New York Times."[124]

Michael issued a public apology.[125] Later, he sent an email to Lacy: "I was at an event and was venting, but what I said was never intended to describe actions that would ever be undertaken by me or my company toward you or anyone else. I was definitively wrong and I feel terrible about any distress I have caused you."[126]

Speaking with the Australian media publication The Conversation on November 20, 2014, European PR agency FINN partner Raf Weverbergh said that Uber does not realize exactly how upset journalists are in the wake of the Michael incident. On the same date, the publication reported that more journalists deleted their Uber apps. Uber's Brisbane spokesperson stated that journalists will not be investigated by the company in the Australian state of Queensland, in light of the legislative difficulties that were occurring at the time.[127]

User privacy[edit]

Kalanick received a letter, dated November 19, 2014, from Senator Al Franken, Chairman of the United States Senate Judiciary Subcommittee on Privacy, Technology and the Law, over user privacy. In addition to a list of 10 questions, Franken stated that the company had a "troubling disregard for customer privacy" and that he was "especially troubled because there appears to be evidence of practices inconsistent with the policy [Uber spokesperson] Ms. Hourajian articulated" and that "it appears that on prior occasions your company [Uber] has condoned use of customers’ data for questionable purposes". Franken concluded his letter by asking for a response by December 15, 2014.[128]

Concerns have been raised about internal misuse of the company's data, in particular the ability of Uber staff to track the movements of its customers, known as "God Mode". In addition to the aforementioned use of the service to track journalists and politicians, a venture capitalist disclosed in 2011 that Uber staff were using the function recreationally and viewed being tracked by Uber as a positive reflection on the subject's character.[129] An individual who had interviewed for a job at Uber said that he was given unrestricted access to Uber's customer tracking function as part of the interview process, and that he retained that access for several hours after the interview ended.[130]

On February 27, 2015, Uber admitted that it had suffered a data breach more than nine months before. Driver names and license plate information on approximately 50,000 drivers were inadvertently disclosed.[131] Uber discovered this leak in September, 2014 but waited more than five months to notify the people affected.[132]

Safety[edit]

On August 4, 2014, the company announced the scheduled removal of a driver from the service pending a medical review, after the driver suffered an epileptic seizure while driving that resulted in an accident with a pedestrian in San Francisco. The 56-year-old driver was hospitalized after hitting three parked cars and then a man on the sidewalk; an Uber spokesperson said in the announcement that the driver "has an outstanding record of service and safety with no prior incidents."[133]

In December 2014, the New York Times reported on concerns regarding the manner in which the Uber's app notifies drivers about new requests for pick-up from customers.[134] When a customer makes a request, drivers are notified on an official Uber mobile app and provided information about where the customer is; in order to accept the request, the driver has approximately 15 seconds to tap their phone to accept the request.[135] An Uber driver reported that drivers can be temporarily suspended for ignoring these requests.[134] Deborah Hersman of the National Transportation Safety Board criticized the 15-second system, saying that it presents a significant distraction to drivers, as drivers are financially motivated to respond to fares while driving.[134] In response, Uber has stated that the app "was designed with safety in mind," and that drivers are not required to physically look at the device to accept a fare.[134]

Research[edit]

Uber CEO Travis Kalanick has spoken about his desire to eventually move to using self-driving cars for Uber vehicles.[136] In February 2015, Uber announced a collaboration with Carnegie Mellon University on research into automotive safety and self-driving cars.[137] By May 2015 the company had hired a large number of CMU researchers from the vehicle autonomy department, to work at Uber's Advanced Technologies Center in Pittsburgh.[138] Uber is testing vehicles with extra sensors and hardware, as part of their research efforts regarding mapping, safety and autonomy systems.[136]

See also[edit]

References[edit]

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