|Type||Privately held company|
|Founders||Travis Kalanick, Garrett Camp|
|Headquarters||San Francisco, California, United States|
|Key people||Travis Kalanick (CEO)|
|Services||Vehicles for hire, ridesharing|
Uber is a ridesharing service based in San Francisco, California, United States. The company uses its own smartphone application to connect passengers with drivers of vehicles for hire, whereby customers use the app to request rides and track their reserved vehicle's location. As of September 16, 2014, the service was available in 45 countries and more than 100 cities worldwide, and was valued at more than US$15 billion.
Upon its inception, Uber only offered full-size luxury cars for hire, and the "UberBlack" title was adopted for the company's main service (named after the "black cars" private transportation services in New York City, U.S.). In 2012 the company launched its "UberX" program, which made available to consumers smaller vehicles such as the Toyota Prius. Due to the lower fees that accompanied the program, the service became extremely competitive with traditional taxi services, expanding Uber's appeal to a broader cross-section of the market.
As Uber (and other ridesharing companies, like Lyft), increased in popularity and market share, the taxi industry staged protests in numerous global jurisdictions, due to a perception of ridesharing companies as being "illegal taxicab operations" with unfair business practices and compromised safety. As of September 2014, protests had been staged in nations such as Germany, France, and England.
- 1 History
- 2 Pricing and payments
- 3 Promotions
- 4 Reception
- 5 Regulatory opposition
- 6 Controversy
- 7 See also
- 8 References
- 9 External links
Establishment in the U.S.
Uber was founded as "UberCab" by Garrett Camp and Travis Kalanick in 2009—the service was officially launched in San Francisco in June 2010, with Ryan Graves appointed as CEO in August of that year. Graves later stepped down from his role as CEO—becoming VP of Operations and a board member—and was replaced by Kalanick. Uber's mobile app—for both iPhones and Android phones—was launched in San Francisco in 2010.
The company received venture funding in late 2010 from a group of super angel investors in Silicon Valley, California, which included Chris Sacca. In early 2011, Uber raised more than US$11.5 million in Series A funding led by Benchmark Capital. In late 2011, Uber further raised $32 million in funding from several investors that included Goldman Sachs, Menlo Ventures, and Bezos Expeditions, bringing their total funding amount to $49.5 million.
Paris, France, was the first city outside of the U.S. to be targeted by Uber and the service began operating in December 2011 prior to the international "LeWeb" Internet conference. LeWeb founder Loic LeMeur said to the TechCrunch publication: “This [Uber] is going to end the monopoly of the taxis in Paris.”
The company's entrance into the Canadian market occurred in March 2012 when an official launch was held in Toronto. At the time of the launch, the company presented data that showed a ratio of 1.9 taxis per 1000 people and concluded that "one must drive to effectively get around the city." The Vancouver testing phase commenced in May 2012, and served HootSuite founder and CEO Ryan Holmes soon after inception.
In April 2012, Uber launched the Uber Garage initiative that was described by the TechCrunch online publication as "a workshop where the company will experiment with new ideas for urban transportation." The first project occurred in Chicago, Illinois, U.S., and provided Uber users with the option of both taxis and their own vehicles on the mobile app. Kalanick explained to the media that the Chicago project was an experiment with different car options to test the viability of working with pre-existent taxis in U.S. cities. Chicago was chosen due to the high ratio of cabs in the city and the low price.
In July 2012, the company entered the London, United Kingdom, market with an initial driving team of about 90 drivers of Mercedes, BMW, and Jaguar autos. During the same month, 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.
Following a six-week testing period, Uber was officially launched in Sydney, Australia, in November 2012. Sydney represented Uber's first comprehensive launch in the Asia Pacific region and the band Art vs. Science participated in an early promotional exercise.
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. The official launch was attended by Graves and an article published by the Next Web website stated that Singapore was specifically chosen due to its reputation as an Asian technology hub.
In July 2013, Uber began offering "UberCHOPPER" rides, from New York City to the Hamptons, for US$3,000 in either a cab or helicopter. On September 4, 2013, Uber announced its first sports deal. By partnering with the NFL Players Association to promote safe rides for NFL players, Uber planned to appeal to a more mainstream audience.
Uber's main ridesharing service was launched in August 2013 in the South Korean capital city of Seoul. In accordance with standard practice, Uber Seoul started as a test phase, and football star Koo Ja Cheol was the first Korean to use the service in the city.
Although Uber was already banned in the Belgian capital of Brussels, the company advertised for a Brussels-based "General Manager" on the LinkedIn website in June 2014. The advertisement explained that the role was "by far the most demanding position Uber has to offer." 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.
Following a soft launch of the Uber app in the Sanlitun shopping district in March 2014, an official launch occurred in Beijing, China, in mid-July 2014, meaning that the company's technology exists in all of China’s four "tier-one" cities. At the time of the Beijing launch, Allen Penn appeared in the media as the head of Uber's Asia division.
On August 4, 2014, the company announced the scheduled removal of a driver from the app—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 to the media as part of the announcement that the driver "has an outstanding record of service and safety with no prior incidents."
Drivers in the Polish capital city of 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."
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, 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.
At the end of August 2014, the company had reportedly raised US$1.5 billion in venture capital. Following a series of media articles, in which Uber's aggressive business practices were exposed, the 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."
Pricing and payments
Uber's pricing is similar to metered taxis, although all hiring and payment is handled exclusively through Uber and not with the driver personally. 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. At the end of a ride, the complete fare (which includes gratuity—Uber's exact wording is "No Need to Tip" and no option to add a tip exists except to offer it by cash) is automatically billed to the customer's credit card. Uber has said its high prices are the premium that the customers pay for a cab service that is not only reliable, but also punctual and comfortable.
During high demand times such as Halloween, New Year's Eve, or severe inclement weather (such as heavy snowstorms), Uber increases its prices to "surge price" levels to reach an economic equilibrium by attracting more drivers. Uber has also used surge pricing during extremely inclement weather, such as a July 8, 2013, rainstorm that flooded many streets in the greater Toronto area, and during Hurricane Sandy. Customers receive notice when making a reservation that prices have increased. During New Year's Eve 2011, prices were as high as seven times normal rates, causing outrage in response. Uber co-founder Travis Kalanick responded: "...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."
Uber has had multiple limited-time offers, featuring specialty vehicles, to promote their services. One such offer was for hiring ice cream trucks to come to a specific place, including one of several ice cream packages, for a flat fee. Another had Back to the Future enthusiasts flocking to the San Francisco Bay area and offering rides in DeLorean DMC-12s to people through Uber's mobile application, as part of a joint promotion effort with General Electric.
Uber has also offered slightly more practical promotions from time to time. For example, they offered helicopter service from New York City to The Hamptons during the July 4 weekend, and also offered ferry service during the 2013 BART strike to help with the additional transit load.
On October 29, 2013, celebrated as National Cat Day in the United States, Uber offered a limited-time kitten delivery service. In addition to their car services, Uber allowed users to select a "Kitten!" delivery button. This service cost $20 and included 15 minutes of playtime with the kittens, plus cupcakes and t-shirts. The proceeds from this promotion were given to local animal shelters. The kitten promotion was only available in San Francisco, Seattle, and New York City.
For Christmas 2013, Uber also had a Christmas tree delivery service in Atlanta, Boston, Chicago, Dallas, Los Angeles, New York City, Philadelphia, San Diego, San Francisco, and Washington, D.C. in cooperation with Home Depot.
In Bangalore, Uber worked with Zoom, a car-sharing organization, and the Ashoka Foundation, on the RideSmartBLR campaign aimed at discouraging personal vehicles and encouraging car-sharing or taxis for environmental and safety reasons.
In 2013, USA Today named Uber its tech company of the year.
In 2011, Marc Andreessen said he would love to invest 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." Also in 2011, 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.
Uber faces competition from lower-cost real-time ridesharing startups such as Lyft and Sidecar. To compete at lower price levels, Uber has introduced UberTaxi (partnerships with local taxi commissions) and UberX (nonluxury cars such as Toyota Prius hybrids). This move has led to dissatisfaction among existing Uber limo drivers who have seen their earnings decrease.
On April 30, 2014, Transport for New South Wales, the government authority regarding transportation in New South Wales, Australia, responded to the introduction of ridesharing function of Uber and clarified that "if a NSW driver is taking paying members of the public as passengers, the driver and the vehicle must operate in accordance with the Passenger Transport Act" and "Under the act, such services must be provided in a licensed taxi or hire car, by an appropriately accredited driver, authorised by Roads and Maritime Services (RMS)."
On May 6, 2014, the Taxi Service Commission in Victoria, Australia, issued a number of infringement notices to Uber drivers with a fine of Au$1,723, after a public warning discouraging people to use ridesharing applications like UberX. NSW Transport Minister Gladys Berejiklian said RMS is investigating Uber's case.
Uber was banned in Brussels, whereby the company will be fined €10,000 (US$13,500) if it offers fares to drivers who are not in possession of a taxi license. Bruxelles-Mobilite, the city's federal region administration responsible for infrastructure and traffic, impounded 13 cars aligned with Uber after March 2014 and a spokesperson for the body described the service as "illegal" in June 2014. The spokesperson further explained to the media that Bruxelles-Mobilite is generally addressing the issue of illegal taxi drivers in a sector that is difficult to regulate.
A September 2012 article in the Vancouver business press reported a dispute with local regulators. On November 22, 2012, Uber announced it was exiting the "Secret Uber" stage in Vancouver and raising its rates to C$75 per hour to comply with provincial regulations. As of December, Uber had not applied for a license from the city.
On December 5, 2012, officials at the City of Toronto charged Uber with "25 municipal licencing offences, including operation of an unlicensed taxi brokerage and unlicensed limo service". City officials said they had advised the company to comply with local regulations. Rival taxi dispatch apps had obtained licenses.
In early 2014, Berlin authorities ruled against Uber—which operates in the German cities of Berlin, Munich, Frankfurt, Hamburg and Düsseldorf—on two occasions following a case filed by the Berlin Taxi Association. The first ruling, delivered by a court of law in April 2014, deemed Uber's limousine service to be in breach of local legislation, while an August 13, 2014 decision banned the service from operating in Berlin due to safety concerns—the latter decision, which includes a €25,000 (Euro) (US$33,400) fine for non-compliance, cited issues pertaining to unregulated vehicles and unqualified drivers who are not properly insured. A Berlin Taxi Association representative explained on August 14 that the legal proceedings are ongoing, as Uber can lodge an appeal against the second decision.
On August 28, 2014, a court in Frankfurt issued an immediate cease and desist order against Uber, following an appeal from the cooperative Taxi Deutschland. The preliminary injunction applied to all of Germany and included a fine of €250,000 (US$328,108) per ride for non-compliance. If the injunction was breached, Uber's German-based employees could be jailed for up to six months, in addition to an imposition of fines upon the company. Uber's premium Uber Black service was not affected by the ruling.
On September 16, 2014, the district court of Frankfurt revoked the preliminary injunction, thereby re-allowing Uber to operate in Germany. The presiding judge explained that the Taxi Deutschland case "would have had prospects for success," but the case was merely lodged too late, as any case needs to be filed within two months of a service's launch—Uber started in Germany in April 2014, but the case was filed in August 2014. According to Taxi Deutschland's legal representative after the announcement of the decision, the body had "already decided to appeal the decision, and we [Taxi Deutschland] will also seek that the temporary injunction be reinstated," meaning that the matter must be heard in a higher court.
Following the commencement of Uber services in Warsaw, Jaroslaw Iglikowski, chief of the Union of Warsaw Taxi Drivers, explained to the media: "We will put pressure on politicians, and demand that they change the regulations [for firms offering taxi services]."
The Seoul city government released an official statement in July 2014 expressing it intention to seek a ban on Uber's smartphone app. The government stated that South Korean law prohibits fee-paying transport services that use unregistered private or rented vehicles, and a Seoul driver received a one-million won (US$974) fine in April 2014 after using Uber to solicit customers in a rented car. The city government also initiated a police investigation of Uber in June 2014, but the request was suspended due to a lack of evidence; however, the July statement indicated that the investigation would be recommenced. A response from Uber warned the government that it risked being "trapped in the past."
On June 11, 2014, London-based Hackney carriage (black cab) drivers, members of the Licensed Taxi Drivers Association, disrupted traffic as a protest against Transport for London's refusal to stop Uber's calculation of fares based on distance and time taken, as they claimed it infringes upon their right to be the sole users of taxi meters in London. The following week, London mayor Boris Johnson stated it would be "difficult" for him to ban Uber "without the risk of a judicial review"; however, he expressed compassion for the view of the black-cab drivers. Johnson explained:
I think it's a very difficult [question] ... We've gone to the high court to get a ruling on this, and the issue is basically: is the driver's mobile in the cab equivalent to a taxi meter? I can see why m'learned friends might think that it is, because it's receiving data about, or it's calculating, the distance and time and the fare. And there are other lawyers who say that it isn't, and that was the advice of the counsel to TfL. And so we've got a legal problem.
In a blog post black-cab driver Rooney Johan explained: "if they (had) included us and the limousine companies instead of the private cars we would have acted differently", which was followed by another black-cab owner George Ryan saying: "if Uber want to operate outside US they have to modify their business model". Following the black-cab protest, driver Richard Cudlip conceded, "as a trade we failed to get our message across". Cudlip further explained his perception of the salient concerns: safety in minicabs, slow issuing (and reissuing) of black-cab licences, a failure to prevent minicabs from illegally touting for business, and a lack of space outside key London tourist destinations.
In May 2011, Uber received a cease-and-desist letter from the San Francisco Municipal Transportation Agency, claiming it was operating an unlicensed taxi service, and another legal demand from the California Public Utilities Commission that it was operating an unlicensed limousine dispatch. Both claimed criminal violations and demanded that the company cease operations. In response, the company, among other things, changed its name from UberCab to Uber. In the fall of 2012, the California Public Utilities Commission issued a cease-and-desist letter to Uber (along with rideshare companies Lyft and SideCar) and fined each $20,000. However, an interim agreement was reached in 2013 reversing those actions.
In September 2013, the CPUC unanimously voted to make the agreement permanent, creating a new category of service called transportation network companies to cover Lyft, UberX, SideCar, and Summon, thereby making California the first jurisdiction to recognize such services.
In January 2012, an Uber driver's cab was impounded as part of a sting by the Washington, D.C., taxicab commission. The commissioner said the company was operating an unlicensed taxicab service in the city. Following a social media campaign by Uber's users, the D.C. City Council voted in July to formally legalize this type of service, with no minimum fare which led to taxicab drivers protesting.
On August 1, 2012, the Massachusetts Division of Standards issued a cease-and-desist letter to Uber, on the grounds that the GPS-based smartphone app was not a certified measurement device, but on August 15, the agency reversed its ruling after prodding by Governor Deval Patrick, saying that technique was satisfactory because it was under study by the National Institute of Standards and Technology.
On October 5, 2012, Uber was sued by the taxi and livery companies in Chicago. According to the release, Uber is accused of violating Chicago and Illinois laws designed to protect public safety, consumer protection, and fair practices.
The New York City Taxi and Limousine Commission has discouraged drivers from participating in Uber, resulting in suspension of Uber's New York taxi service in October 2012. Uber's premium sedan service was not affected. When Hurricane Sandy hit New York later that month, Uber drew criticism for doubling prices as part of its "surge pricing" system. (Uber ultimately waived its fees and passed on all of the fares to its drivers, and defended its pricing by noting that it tripled the number of vehicles available.)
As of August 2013, Uber was being sued by American drivers who claimed that the company was stealing their tip money.
On March 17, 2014, the Seattle City Council voted to limit the number of drivers that ridesharing services like Uber, Lyft, SideCar, and others could operate to 150 per service. City Council Member Kshama Sawant argued in favor of the caps as a means to protect traditional taxi drivers. However, on April 17, 2014, the council's ordinance was suspended by a coalition that obtained 36,000 signatures to put the question to voters in a referendum. As a result, Mayor Ed Murray announced a 45-day negotiation process to find an alternative approach. As of July 14, 2014, Uber has donated over $500,000 to "Seattle Citizens to Repeal Ordinance 124441," a political group seeking to overturn the ordinance limiting the number of rideshare vehicles in Seattle.
On September 17, 2014, California's Governor approved the "Assembly Bill No. 2293" bill that will become effective on July 1, 2015. The bill will amend "the Passenger Charter-party Carriers’ Act to enact specified requirements for liability insurance coverage for transportation network companies, as defined, and their participating drivers." The driver under the new law is defined as "any person who uses a vehicle in connection with a transportation network company’s online-enabled application or platform to connect with passengers." The stated minimum insurance requirement ranges from US$50,000 to $100,000 for death and injuries per individual or incident, and stipulates US$30,000 for property damage. As a breach of the bill would be classified as a criminal act, a corresponding "state-mandated local program" will be implemented.
On August 22, 2014, the Reserve Bank of India issued "Security Issues and Risk mitigation measures related to Card Not Present (CNP) transactions" probably with an intention of targeting Uber (or companies like Uber), which mandates a "two factor authentication" in where cards are not present. In the case of Uber, the RBI also believes that it results in foreign exchange leaving the country as payments are made in another currency.
In December 2013, a person who worked as an Uber driver ran over and killed a six-year-old girl, severely injuring her mother and brother. The driver was not carrying a passenger, but the girl's family filed a wrongful death suit against Uber, claiming the driver was using Uber's mobile application at the time.
National Federation of the Blind
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 claims that the conduct is "in violation of the American with Disabilities Act 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 elaborated upon 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.
Uber's response to a number of blind passengers who reported their experiences explained that, because Uber drivers are independent contractors, the company is unable to oversee their conduct; however, the Federation informed the media of its belief that Uber closely monitors its drivers' work practices through the Uber app. The Federation further explained that Uber advised blind passengers to notify drivers about their guide animals in advance, and that it proceeded with the filing of the lawsuit after Uber refused to enter into a negotiation with them to resolve the issue.
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. 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.
Sabotage against competitors
The company issues an official apology on January 24, 2014 after documents leaked to the Valleywag and TechCrunch publications revealed that, earlier in the month, Uber employees in New York, U.S. 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. Uber's apology was released in the form of a statement on its website, titled "Statement on NYC Driver Outreach," and the company explained:
The sales tactics were too aggressive and we apologize for our outreach approach to these drivers. But to be clear there was no time spent by the providers, as the requests were canceled immediately and Uber did pay cancellation fees for these requests. We have messaged city teams to curtail activities that seek lead generation in this manner.
The Lyft ridesharing service then reported to the CNN Money media outlet in August 2014 that 177 Uber employees had ordered and cancelled about 5,560 rides since October 2013—Lyft said it 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 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. 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."
In an August 26, 2014 Verge article, an unnamed Uber contractor informed the publication that Lyft's concerns were warranted:
What’s simply untrue is that not only does Uber know about this, they’re actively encouraging these actions day-to-day and, in doing so, are flat-out lying both to their customers, the media, and their investors.
The Verge online publication reported on a secret Uber project called "Operation SLOG"—which recruits members with the assistance of TargetCW, a San Diego, U.S.-based employment agency—that appears to be an extension of the company's activities in relation to Lyft. Using interviews with current and former contractors, as well as leaked internal documents, the Verge's Casey Newton wrote about an email that was sent to particular Uber contractors on July 9, 2014 following Lyft's expansion into New York City, U.S. The email reportedly targeted from eight to ten people, offered a "huge commission opportunity," and was dependent on the "personal hustle" of the participants.
The special project received the codename "SLOG" and those who responded to the initial email message were invited to individually meet with Uber marketing managers who had been selected from the company's Los Angeles and Washington, D.C. offices. According to a contractor who spoke to Newton, Uber wanted to create a "street team" to gather intelligence about Lyft’s launch plans and recruit their drivers to Uber. Successful recruits were given two Uber-branded iPhones and a series of valid credit card numbers so that they could create dummy Lyft accounts—the second phone was reportedly provided as a backup, in the event that a person was identified by Lyft.
Lyft declined to speak with Newton for the story, while Target CW warned its contractors against talking to the media, stating that it represented a violation of a non-disclosure agreement they signed. In terms of Uber, Newton wrote: "the company [Uber] stalled for time until they could write this blog post introducing Operation SLOG to the world."—the post claimed: "We [Uber] never use marketing tactics that prevent a driver from making their living—and that includes never intentionally canceling rides."
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