Uber
Sometimes, judges can be vague and hard to read. But this was not one of those times.
“The idea that Uber is simply a software platform, I don’t find that a very persuasive argument,” US District Judge Edward Chen said during a court hearing Friday, according to Bloomberg. The case pits Uber drivers (who seek to be officially recognized as employees) against the hugely popular on-demand rides company (which argues it is a software company that doesn’t employee people).
In its suit, the plaintiffs presented internal emails from Uber management to drivers that, distilled to their essence, sounded a lot like “You’re fired!” But Uber argued that drivers are in fact customers who pay the company money to use its app. “We make our money from licensing our software,” Uber attorney Robert Hendricks told the court. And in that context, drivers are not Uber’s employees. They’re its customers.
The judge didn’t buy that argument, and it seems unlikely Uber will escape from this conflict unscathed. That is, unless it turns out Uber doesn’t need drivers at all. It so happens that Uber took a big step yesterday toward a driverless future. But the dream of perfectly automated transportation won’t come true soon enough to save it from having to reckon with the demands of its human workforce.
Not a Taxi Company
For Uber, the stakes are high (as they are for Uber’s chief rival, Lyft, which is facing a similar suit). Since the start, Uber has always faced down regulators claiming it was running an illegal taxi service by claiming it wasn’t a transportation company at all. It was a tech company that was facilitating an online marketplace to connect drivers with riders. As such, it wasn’t anything like a taxi company that owned a fleet of cars and hired drivers to drive them. It was a new thing, and the law needed to catch up.
Some states and cities have worked to accommodate Uber and similar services. But with a federal judge now casting a doubtful eye on a basic premise of its business, Uber is facing a potentially serious setback. What to do? Well, this is Silicon Valley. When you have a problem, the answer is always obvious: You fix it with technology.
By last evening, Uber’s struggles in court were a distant memory after the company announced it was partnering with Carnegie Mellon University in Pittsburgh, Pennsylvania, to open a research center focused on self-driving cars. That news was quickly followed by the scoop (later disputed) that leading self-driving car developer Google was seeking to launch a ride service in competition with Uber. But Uber’s autonomous vehicle Manhattan Project doesn’t just set up a juicy corporate rivalry. It also offers a way out of its pesky driver problem.
More Uncertainty
Unlike Lyft, Uber never engaged in much pretense that it was building some kind of community around its product. Uber was in business, its drivers were in business, and passengers didn’t want to make new friends. They wanted a ride. In that light, it’s kind of hard to accuse Uber of betraying anyone’s trust by seeking to replace human drivers with cars that don’t need time off or benefits or wages. It’s an unabashedly capitalist enterprise with billions of dollars in capital from investors who expect serious returns.
That said, Uber has taken some steps following a streak of bad publicity to present a kinder, gentler image. In a blog post announcing $1.2 billion in new funding, Uber CEO Travis Kalanick said the company would generate more than 1 million jobs globally in 2015—a promise that could help open doors in cities otherwise reluctant to embrace Uber as it aggressively expands around the world.
While that promise might starts to look a little thin next to a major push for self-driving cars, an all-robot four-wheeled fleet is still years away—at best. In the meantime, the number of people working jobs providing app-based on-demand services—Uber driver, Instacart shopper, Postmates courier—is only likely to grow. And that will mean more conflict and uncertainty as workers, companies, governments, and consumers all stumble through the process of figuring out what exactly is new about these new marketplaces and what just looks different because it’s happening on a smartphone.
A More Creative Safety Net
One possible solution is to take the anxiety out of both sides, workers and companies, by having the government take on more of the burden of providing the kinds of benefits that, in the US at least, are more typically shouldered by employers.
“The broader context here is for us to start thinking about a safety net that is creative, that is not contingent on employment by a large company,” says Arun Sundarajaran, a professor at New York University’s Stern School of Business.
That might be a good idea not just for the so-called “sharing economy” but the broader US economy as well. But if I had to bet on which would come first, widespread use of self-driving cars or a broad new entitlement program passed by Congress, I’d pick the cars hands-down. Uber released a survey recently that found most of its drivers were happy, but enough of them are unhappy enough to sue. At least until robot cars hit the roads en masse, Uber will have to figure out a way to keep the drivers on which its business depends. Or else the courts will.
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