#131 Uber and Out?
In a previous blogpost, I have written about global ride hailing company Uber’s woes in overseas markets such as China or Colombia. Just recently – on December 20th (2017), to be more specific – the European Court of Justice delivered a nice lump of coal to Uber for Christmas. The European Union’s highest court ruled that Uber will have to be regulated just like any other transportation company. Uber’s argument that they are not providing transportation services, but only an exchange platform or a marketplace that connects supply and demand, didn’t fly with the judges. That doesn’t necessarily mean that Uber’s international expansion or its services will come to a grinding halt, but it’ll make the company’s operations much more complex. For one, transportation is regulated by individual countries, sometimes even down to the municipal level. This means that Uber will now have to deal with a large number of state and local government authorities who are most likely to apply the same rules to Uber that they apply to taxi operators or transportation service providers. That will make adoption among both drivers and riders slower, and it will put a dent into Uber’s growth. Some of Uber’s services have already been banned (for instance, Spain 2014, Germany 2015, Netherlands 2015, Sweden 2016) or suspended (for instance, France 2015), and in other markets Uber has no services at all after they were suspended (for instance, Hungary 2016) or simply never tried (for instance, Austria). And while the ruling only applies to EU countries, other countries in Europe and elsewhere around the globe may get inspired by the court’s decision. There may be even more far-reaching implications of the ruling for similar exchange platforms outside of ride hailing and ride sharing. This is a good testimony to the fact that a little longer than a decade after Thomas Friedman proclaimed that “The World is Flat”, barriers to international markets continue to exist.
February 11, 2018 @ 10:38 pm
Uber uses automated processes to recruit drivers and clients which has led to its success globally but at the cost of operating illegally. After many years of Uber sidestepping regulations as a technology company vs a transportation company, Uber has faced its first major legal and political barrier with the European Union Decision. Uber’s disruptive technology and venture capital have allowed it to bypass regulations and lawsuits that would have otherwise devastated traditional transportation companies. Uber had no chance in China where the government supports only local competition. Uber’s global strategy is to think globally but act locally. When Uber targets a new city, it finds a new team with a separate entrepreneurial manager. Uber’s strengths are that is a well-recognized brand, unlimited number of vehicles, no responsibilities toward employees, very little competition which allows it to have lower prices then traditional transportation companies. Uber’s weaknesses include a very unpredictable business model for the future and its technology can be easily duplicated. It also lacks a real connection with its drivers i.e. accidents, rapes. Long term costs for Uber drivers is high and the pay is low. Its opportunities include clients that are dissatisfied with traditional cab companies because of high prices and long waiting time. It can exploit new markets in countries like India where taxi services are inconvenient and expensive. Uber appeals to investors and as a result, Uber will have more money to operate. Uber’s threats include unhappy drivers with low profit margins, laws and regulations such as the European Union decision. Increased competition and the future of automated vehicles.
April 12, 2018 @ 8:42 pm
I think Uber is a great example how important platforms are in the digital age. Like stated in the post, they are “only connecting supply and demand”. However, as Uber was growing and expanding internationally with lightspeed, it’s impact on local transportation services was not negligible anymore by municipalities. Problems went their way towards the European Court of Justice and upcoming regulations were obvious and only a matter of time.
No doubts that Uber’s business model strongly relies on the driver-passenger connecting service and new regulations will have impact on their further growth. They might have underestimated the differences within the political situation and especially of the legal systems in north America to those in Europe. Uber used their first-mover advantage in Europe for a while but their approach was actually based on a legally unclear situation. Besides their modest chances that the European Court of Justice would rule to their favor, further political and social factors seem to be ignored. Respectful behavior during market entrance, regarding local regulation as well as considering the power of taxi and transportation unions might have brought up chances for agreements.
September 29, 2018 @ 6:05 am
At this point, I believe Uber is unstoppable. Uber will be everywhere regardless of national or local governments. They are not only investing heavily into its platform and information technology infrastructure, but they are also investing into any transportation that any consumer across the globe can find a way to integrate into their daily life, adapting its product for every possible need.
As of September 2018, Uber has decided to help solve a problem they helped create around the world; traffic congestion. Drivers are on the road carrying passengers, but also drivers are waiting to be hailed in the worlds busiest cites. Uber announced that it would spend $10 million to help cities all over the world combat this problem. Over three years they plan to entice more people to leave their personal cars at home, as well as using the funds to create congestion pricing plans the will charge drivers more for entering cities without a passenger at peak traffic times.
Uber is also diversifying into the electric bicycle market by acquiring a company called Jump. Uber has little experience with this type of transportation, so they will be entering a joint-venture with a company called VentureBeat to test the market in Sacramento, California. Copy cats are already popping up in New York City and Los Angeles, so they will need to fine tune their market entry strategies before expanding beyond Sacramento.
I do not believe that Uber’s troubles with national or local governments is near over. And I agree that their operations are much more complex than they would prefer because of it, but as Uber continues to grow a service that some consumers have grown to love, I believe they will continue to work through challenges down to the municipal level. With likely growing taxation of Uber, on top of investment by Uber into local infrastructures across the globe, I am guessing some cities will warm back up to the idea of allowing the ride-hailing service back in.
April 18, 2019 @ 7:16 am
In my opinion, this is not the first time Uber has encountered a government-level boycott on the world. The reason behind this is that Uber’s services have brought unfair competition to the local taxi industry. It relies on dozens of billion dollar venture capital, which will squeeze out competitors through predatory pricing. It is said that Uber began to illegally subsidize and cut fares in 2013 to affect taxi services. For example, Uber’s withdrawal from China market is closely related to its own native problems. There is no customer service call, and complaints can only be handled by email, making Uber China criticized by users and drivers.In China, users have become accustomed to dialing customer service calls at any time. Some people from Uber should listen to complaints and deal with problems quickly. However it didn’t happen. Uber emphasizes that customers don’t understand their products, but in my opinion I have to say that Uber does not understand China.
April 29, 2019 @ 1:36 am
Uber has definitely taken the world by storm, and even here in America I know there have been serious difficulties as well. Specifically in Vegas, when Uber first launched it was shut down real quick in Las Vegas. The taxi business out there is so incredibly relevant, lucrative, and monopolized that the city was not about to just let Uber walk in and single-handedly destroy the business that the Taxis had built. The important thing to consider is that one might think that a place like Last Vegas is really the absolutely perfect market for Uber considering all of the tourism where people not only don’t have their cars, but also are likely drinking and can’t drive themselves anyway. Now whether or not Uber predicted these serious roadblocks, I don’t know, but I could see how that barrier to entry in a domestic market could have easily been either missed or underestimated. However, Uber eventually was able to break through into that market, and just as the Taxi businesses predicted, Uber has entirely taken over the market and taxis are essentially irrelevant now.
https://onemileatatime.com/uber-already-shut-las-vegas/
https://www.tripsavvy.com/using-uber-in-las-vegas-4041359https://www.tripsavvy.com/using-uber-in-las-vegas-4041359
April 30, 2020 @ 11:37 am
I think Uber is a very good example of a failure to adopt a business concept that was initially developed for the US market and its regulations, to international markets. Through the attitude think global and act local, problems have arisen (especially in the legal area), which still leads to major and very costly problems for the company today. The problem areas range from the unresolved employment relationship of drivers to the business model itself. It sometimes even seems as if the immense investment of venture capital and capital inflows are blinding the management board to losses. Entering new markets and putting growth above all other rational indicators is too much of a 2010 and should be overtaken urgently. However, one should not blame the company entirely for the partly irrational roll-outs in various countries, but also admit that the company is a pioneer in the development of new employment relationships and market liberalization. It is up to each individual to decide whether to take a positive or negative view of this.
However, if the liberalization of the markets continues in the future, the long-term bet of the investors of Uber could pay off and would massively strengthen the value of the company.