Uber's 'inflection point', it's new era of profitability, lasted just three financial quarters. The Silicon Valley company was back in the red for Q1 2024 to the tune of $654 million, a loss that was not predicted by analysts, who estimated a €500 million net income. The loss was a four-fold increase on that which Uber made in the same quarter of 2023 ($157 million). So much for the most loss-making company in history having finally turned the corner.CEO Dara Khosrowshahi is claiming that Uber was profitable on its operations to the tune of $172 million, and that the net loss is due to a $721 million write-down in the value of its equity stakes. The main equity investment is in Chinese ridehailing firm Didi which, as transport economist Hubert Horan has pointed out before, is delisted from exchanges and therefore there is no objective way of measuring the value of this equity. Uber estimated in Q4 2023 that its stake in Didi had increased in value by $773 million, a re-valuation which conveniently made Uber's profit look much more handsome and thus helped Khosrowshahi launch a share buy-back scheme and trigger his humungous bonus. Uber has a bad habit of drawing attention to its equity stakes when their accountants writes down their value, and ignoring them when the same accountants raise their value: a practise the media never seems to take any interest in.The other item Khosrowshahi blamed for the company's Q1 loss was the cost of “resolving several legacy matters”. By that, the Uber CEO means paying legal costs relating to the company's illegal entry into markets all over the world, the most recent being in Australia, where the company paid $178 million to settle a class-action lawsuit brought by taxi drivers. Khosrowshahi presented these costs as if they would soon disappear from Uber's balance sheet, but that's highly unlikely. Just last week, London taxi drivers brought forward a case against Uber on very similar lines to that of Australia, with the black cabs asking for £250 million. Being "just fucking illegal" - as the company's former head of comms described Uber in internal messages revealed by 'the Uber Files' - can catch-up with you eventually.The Uber CEO has new worries on the horizon too. Questions are being asked, including by Uber's investors, about the challenge posed by Tesla's plan to create self-driving taxis, a move which CEO Elon Musk has described as being based on a business model somewhere between AirBNB and Uber. Khosrowshahi has damned Musk with faint praise, but said that even if Tesla and any other autonomous vehicle manufacturer managed to deliver 'robotaxis', they would still need transport technologies that Uber specialise in, such as algorithmic pricing and identity verification. "We can drive enormous demand to this promising technology," he said. Whether Musk's robotaxis will ever get off-the-ground is too early to say. Tests in San Francisco have revealed that self-driving Tesla's struggle with left turns at busy junctures, which is quite a big problem, one would have thought. Uber sold-off its autonomous vehicle division in 2020 exactly because putting robotaxis on the road was a long-way off coming to fruition and the company was in no position to keep burning cash. But in doing so Uber lost the dream it had sold venture capital all the way back in 2009, that Uber could develop a model that fundamentally transforms the economics of the taxi industry. Despite what Khosrowshahi says, If Tesla robotaxis do become real they will constitute an existential threat to Uber. The point which Uber's top executive wanted the media to focus on from the Q1 results was revenue growth, which grew 15% compared to Q1 2023. The major lever for this revenue growth is a rising 'take rate' - the commission Uber takes on each trip - which analysis from Worker Info Exchange has found increased to a huge 30% for the first time in Q1, the highest it has ever been. Reminder: when Uber's take rate goes up, drivers' take rate goes down. 'Dynamic pricing' has allowed Uber to make massive wage cuts by stealth.Despite ratcheting up the rate of labour exploitation, Uber is still struggling to bring in more revenue than it spends. Khosrowshahi was hailed by investors and the media after the company turned its first annual profit in 2023. He's been described by the FT as Uber's "adult in the room", while the New York Times has called him "the dad of Silicon Valley". The narrative is that Khosrowshahi had got rid of the chaos under Travis Kalanick and has put the company on the road to sustainable profits. But that narrative hit a bump in the road on Wednesday. The reality that investors will not like to hear is that with an Uber, like a taxi, the core costs remain the same: a driver, petrol, a car and insurance. Wedging a high-powered app onto a taxi doesn't change the unit economics. Musk's robotaxis may well be pie-in-the-sky, but at least it's an attempt at a genuine innovation in the sector. As Horan puts it, "Uber is now just a much higher cost version of the traditional operators they vilified as an 'evil taxi cartel'." Ben Wray, Gig Economy Project co-ordinator
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Gig Economy news round-up |
- STRUGGLING GLOVO EXITS SLOVENIA: The Catalan food delivery platform Glovo is withdrawing from Slovenia, after only arriving in 2021. The company, which is owned by German multi-national Delivery Hero, ceased activity in the southern-central European country on Friday [10 May]. The decision was taken due to "a reassessment of our priority investments," Glovo announced. Forbes reports that Glovo made a €7.8 million loss on its three years of operating in Slovenia, in which the company was one of two main players in the market, along with Wolt. Delivery Hero and its accountants, KPMG, both stated in a financial report last month that Glovo faces the threat of liquidation due to its financial problems. The company faces over €400 million in fines in Spain due to its refusal to employ its riders despite the passing of the 'Rider Law', which established a legal presumption of employment in the food delivery sector. Glovo managed to get 12 fines worth €67 million suspended by the Spanish National Court after the company said payment of the fines could tip it over the financial edge. Delivery Hero has said its financial support for Glovo, which it purchased on New Year's Eve 2021, will be on a "limited basis, both in time and amount". Read more here.
- 81% OF FOOD DELIVERY COURIERS IN SCOTLAND FEEL UNSAFE AT WORK, STUDY FINDS: A new study on the food delivery sector in Scotland has found widespread problems of abuse and harassment. The study, 'Fair Gig Work in Scotland?', authored by Dr Pedro Mendonça, Dr Anastasios Hadjisolomou and Dr Nadia Kougiannou from Heriot-Watt, Strathclyde and Nottingham University respectively, was published at an event at Strathclyde University on Wednesday [8 May]. The authors find that 90% of riders had experienced verbal/psychological abuse, 60% racial or ethnic abuse, and 55% physical abuse. Every female respondent said they had experience sexual harassment. Four out of five couriers said they felt unsafe at work. Other findings include that 11.9% of riders are trade union members, while over 65% believe trade unions are important or extremely important to improving working conditions. For almost half of riders in Scotland (48%), food delivery is their primary source of income. The majority of riders (52%) were non-EU migrants, with 88% of those who were fully dependent on their income from food delivery being from outside the UK. Sixty-two per cent of riders were either dissatisfied or very dissatisfied with their pay. Policy proposals include new legislation to protect riders from abuse and harassment, and initiatives to address barriers for migrants to secure better jobs. Read more here.
- TAXI PROJECT FILES COMPLAINT AGAINST SPANISH RIDEHAIL PLATFORMS FOR COLLUSION: The Taxi Project 2.0, an advocacy organisation for taxi drivers in Spain, has filed a complaint to the General Directorate of Competition of the National Commission of Markets and Competition (CNMC) against Uber, Bolt and Cabify for "collusive practices that could be restricting and distorting competition". The complaint is based on a report by Taxi Project, which is linked to the union Elité Taxi Barcelona, which finds a "significant correlation" between the pricing strategies of Spain's three major ridehail platforms. The collusion the platforms are accused of is based on their "dynamic pricing" model, which de-links driver pay rates from time and distance travelled and bases it instead on a complex set of data inputs including supply and demand conditions and historic driver acceptance rates. "This conduct could constitute a violation of articles 1 of the Law on the Defense of Competition and 101 of the Treaty on the Functioning of the European Union," the Taxi Project statement reads. Also in Spain, Uber, Bolt and Cabify drivers could go on strike in Madrid after weeks of negotiation have failed to lead to a breakthrough. The sticking point in talks with the SLT, CCOO and UGT unions is over pay, with drivers' demanding a minimum of €18,000 per annum. Read more here.
- JUST EAT COURIERS IN COPENHAGEN SUPPORT STUDENT GAZA PROTESTS: The Just Eat Worker's Club, an association of Just Eat riders in Copenhagen, have organised a fundraiser to support students at the University of Copenhagen who have set-up a solidarity encampment in opposition to Israeli atrocities in Gaza. The students set-up the solidarity encampment on Monday [6 May] as part of an international wave of campus protests which began at Columbia University in New York, United States. The students want their universities to divest from Israel as well as an immediate ceasefire in Gaza. The Worker's Club Facebook statement explaining their fundraiser said: "The wish for a ceasefire is a workplace issue for us. Many of our colleagues are affected by the heartbreaking scenes of the current catastrophe going on in Gaza. Yesterday, students of Copenhagen University, of which some of our colleagues have enrolled, protested for a ceasefire and a wish for [divestments] in the illegal Israeli settlements, which KU has invested in. The students are in dire need of logistical support, that's why we started a fundraiser at our workplace for a power generator." The action by Just Eat couriers in the Danish capital is by no means the first by gig workers since the Israeli war in Gaza began last October, with the International Alliance for App-Based Transport Workers (IAATW) organising an international boycott of Chevron-owned gas stations due to its role in the Israeli occupation. Read more here.
- UK LABOUR PARTY CONFIRM CLIMB-DOWN ON SINGLE WORKER STATUS: The Labour party in the UK has confirmed changes to its manifesto which water-down promises on workers' rights, including in relation to a 2021 commitment to create a 'single worker status' that could have a significant effect on the gig economy. In the UK, there is a third status between employed and self-employed called 'limb-b', which provides workers with some employment rights, like minimum wage and statutory holiday pay, but they don't get protection against unfair dismissal nor statutory sick pay. Critics say limb-b creates a second class of worker. Uber ridehail drivers are currently employed under limb-b. Labour is widely expected to win the General Election set to take place later this year and has been seeking to increase its appeal to big business by rowing back on workers' rights pledges, with the FT first reporting last August that the single worker status commitment was under review. On Thursday [9 May], FT journalist Jim Pickard posted details of the changes, with the new text stating Labour will "move towards" a single worker status following consultation. The 'i' newspaper reported on Friday that a number of Labour MPs are unhappy with the part cosying up to British food delivery platform Deliveroo, which has been given significant access at party conference and other fora to step up its lobbying efforts. Kim Johnson, Labour MP for Liverpool Riverside, said: “The evidence of the growing engagement with and influence of companies such as Deliveroo is deeply concerning to many in the party and the movement.”
Have we missed something important? You can help keep us informed by sending information to GEP@BraveNewEurope.com. |
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- The IWGB union and Notes from Below are organising a joint event with Galo, a courier strike movement leader from Brazil, and striking couriers from London. The event will be held on 15 May at Common Room, Pelican House, 144 Cambridge Heath Road in London, 7-8.30pm. Click here for details and to get a ticket.- The IWGB is also organising a protest outside Deliveroo's AGM in London on 23 May. See here for more.- From 22-30 May, the elections for worker representatives to the French 'social dialogue' system in the platform economy, called The Social Relations Authority for Employment Platforms (ARPE), will take place.
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The Gig Economy Project is a media network for gig workers and we welcome contributions from workers, writers, academics, activists - anyone who wants to stand up for workers' rights in the gig economy.
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