The Washington Post: “Uber offloads troubled self-driving unit to startup Aurora”

The company is selling its self-driving division to start-up Aurora in a deal that values the ride-hailing giant’s autonomous vehicle unit at about $4 billion, according to the companies and people familiar with the matter. Uber executives have long pointed toward a future in which the company could automate its fleet, removing a huge portion of the costs that help prevent it from attaining profitability.

The sale represents the final chapter for an ambitious but troubled division that was left reeling after one of its vehicles was investigated in the first known pedestrian death involving a self-driving vehicle.

Uber has been the dominant player in the ride-hailing industry over the past decade, but the pandemic has strained its business and forced it to rely more on food delivery while cutting back on longer-term investments and experimental projects.

Faiz Siddiqui

Hardly surprising, considering how little progress Uber was making in the area and the broader context of the pandemic and economic recession. After cost cuts and several rounds of layoffs, and the realization that the home delivery business may be more lucrative for the near future, a speculative line of business with little prospect of success over the next five years at least was bound to be the next to go. In case anyone remembers, in early 2017 Uber also started a flying car initiative, Uber Elevate, which Uber is now selling to Joby Aviation.

Vice: “Proposition 22’s Victory shows how Uber and Lyft break Democracy”

Of the $203 million spent by the Yes on Prop 22 campaign, some $57 million was contributed by Uber and another $49 million by Lyft. By Wednesday morning, news of the results had rapidly increased the ride-hail companies shares prices and valuations by tens of billions of dollars in premarket trading. Uber saw a return on its spending of nearly 19,300 percent, while Lyft saw a more modest return of around 3,670 percent.

The methods through which this was achieved were, in a word, dirty. Yes on Prop 22 spent millions on misleading “progressive” voting guide mailers, sent out chief executives on media tours, and paid $85,000 to a firm run by the leader of California’s NAACP chapter in a bid to paint themselves as champions of racial justice. The campaign made misleading claims about wages and worker flexibility, and Uber and Lyft weaponized their popular apps to push Yes on Prop 22 propaganda to customers and drivers alike.

To recap: corporations with some of the most exploitative labor practices in existence wrote a law to crush labor, spent hundreds of millions of dollars to create propaganda to convince (or, failing that, mislead) voters, won, and saw massive returns on their spending as stock prices rose. This sort of flagrantly anti-democratic behavior is normal for corporations in America, where they are empowered to write their own laws and buy support for them among the public.

Edward Ongweso Jr

I am certainly no expert in American legislation, but this outcome sets a dangerous precedent for future regulation of tech companies. California’s Proposition 22 overturns both a 2018 State Supreme Court ruling and a 2019 state law that would require gig economy companies to employ drivers and pay for health care, unemployment insurance and other benefits. Instead of abiding by the law, a group of companies decided to fight it by aggressively campaigning for Proposition 22 through messages in their respective apps – and they were very much successful! A direct lobbying effort for direct democracy. While some Uber drivers filed a class action lawsuit against this unlawful pressure, I doubt it will make much difference now that the measure passed the vote.

Truth on the Market: “Is Amazon Guilty of Predatory Pricing?”

Notably for a piece of analysis attempting to explain Amazon’s business practices, the text of Khan’s 93-page law review article does not include the word “cash” even once.

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The problem with this argument should be immediately apparent. For the moment, let’s ignore the classic recoupment problem where new entrants will be drawn into the market to win some of those monopoly prices based on the new AVC that is possible. The real problem with his logic is that Sussman basically suggests that if Amazon sharply lowers AVC — that is it makes production massively more efficient — and then does not drop prices, they are a “predator”. But by pricing below its AVC in the first place, consumers in essence were given a loan by Amazon — they were able to enjoy what Sussman believes are radically low prices while Amazon works to actually make those prices possible through creating production efficiencies. It seems rather strange to punish a firm for loaning consumers a large measure of wealth. Its doubly odd when you then re-factor the recoupment problem back in: as soon as other firms figure out that a lower AVC is possible, they will enter the market and bid away any monopoly profits from Amazon.

Kristian Stout & Alec Stapp

Interesting counterargument in the antitrust discussion around Amazon. It basically states that Amazon has lower prices because it plans to be more efficient than the competition – and always investing into becoming more efficient, just as any model capitalist company should. They are cash-flow positive and the retail business in the US is overall profitable, so there are few arguments to sustain a case for predatory pricing. Of course, that does not mean Amazon is not engaging in other anticompetitive practices, such as discriminating against third-party sellers on its online store, and vertical integration.

Quartz: “The fundamental problem with Silicon Valley’s favorite growth strategy”

We live in a global, hyperconnected world. There is incredible value to companies that operate at massive scale. But those companies have responsibilities that go with that scale, and one of those responsibilities is to provide an environment in which other, smaller companies and individuals can thrive. Whether they got there by blitzscaling or other means, many of the internet giants are platforms, something for others to build on top of. Bill Gates put it well in a conversation with Chamath Palihapitiya when Palihapitiya was the head of platform at Facebook: A platform is when the economic value of everybody that uses it exceeds the value of the company that creates it.

The problem with the blitzscaling mentality is that a corporate DNA of perpetual, rivalrous, winner-takes-all growth is fundamentally incompatible with the responsibilities of a platform. Too often, once its hyper-growth period slows, the platform begins to compete with its suppliers and its customers. Gates himself faced (and failed) this moral crisis when Microsoft became the dominant platform of the personal computer era. Google is now facing this same moral crisis, and also failing.

Tim O’Reilly

Great article about the issues with Silicon Valley’s insistence of focusing on fast growth and scale above anything else. While Google is discussed in more detail, Facebook also fits the bill of a platform competing with its content suppliers – and it doesn’t even do that in a consistent manner. As for Uber and Lyft, both highlighted as examples of scaling gone wrong, the poor performance of their recent IPOs should serve as a warning for future companies to avoid these sort of tactics and focus on more sustainable growth strategies.

Bloomberg: “Lyft Confirms What We Know and What We Don’t”

Optimists can point to the fast rate of growth, which has outpaced the rate of cost increases. The negative 40 percent operating margin was a drastic improvement from a negative 76 percent margin in early 2017. The company seems to be getting better efficiencies from some its spending, and that kind of operating leverage may eventually allow Lyft to generate tidy profits.

On the pessimistic side, I was surprised at the scale of Lyft’s costs for items like insurance, credit-card payments and expenses to run its technology systems. Those costs eat up more than half of Lyft’s reported revenue, and it shows that on-demand rides may never have the type of high-margin profits that investors love in internet and software companies. This is a company that doesn’t have to spend to produce a physical product yet has the gross margins of a clothing retailer.

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But for me, this is the biggest unknown about Uber and Lyft: How big is this market? About 12 percent of people in a recent Deloitte survey said they use on-demand ride services such as Lyft at least once a week. That number decreased from an earlier survey. That relatively small share is either good news — Lyft and Uber have a large untapped market particularly outside of big cities — or a sign that even with the oodles of money that Lyft and Uber spend on subsidizing fares and marketing to attract drivers, the natural demand for on-demand rides isn’t that big.

Shira Ovide

It’s pretty remarkable for a company to warn it may not be able to achieve or sustain profitability in the future, when profit is the primary mission of any normal business. And the numbers shared so far don’t contradict this extraordinary statement: as Lyft was able to grow revenues, operating costs have grown at a similar pace. Maybe, just maybe, this means that public transportation is difficult, if not impossible, to run as a for-profit enterprise, and it should simply be a public service, funded by local taxes – a concept that will be hard to swallow for Americans.

The Atlantic: “Uber Health lets Doctors call Cars for their Patients”

The new Uber Health dashboard, which has been tested by a beta group of about 100 hospitals and doctors’ offices since July, will allow medical and administrative staff to either call an Uber to the office to drive a specific patient home, or to dispatch an Uber to the patient’s house, with the option to schedule it up to 30 days in advance. The patient need not have the Uber app or even a working smartphone: The dashboard comes with a printable sheet allowing a doctor to circle the incoming Uber’s car color and write down the license plate.

With the dashboard, the drivers would see the patient’s name and phone number. The patient would get a text when their car arrived; if they have the regular Uber app, it would not be billed.

Olga Khazan

I have generally been critical of Uber and their business practices, but this is one of their better initiatives. As some critics pointed out, the patient won’t get specialized care during the ride. On the other hand, the physician is responsible for scheduling the ride, so you would think he or she would recommend an ambulance when the situation calls for it. As a side-note, even if this service is currently US-only, I’ve been using Uber as an ambulance service for a couple of months, driving my mother to the hospital for exams and chemotherapy, so there’s definitely potential for something similar in the rest of the world.

The New York Times: “Your Uber Car Creates Congestion. Should You Pay a Fee to Ride?”

About 103,000 for-hire vehicles operate in the city, more than double the roughly 47,000 in 2013, according to the Taxi and Limousine Commission. Of those, 68,000 are affiliated with ride-hailing app companies, including 65,000 with Uber alone, though they may also provide rides for others. In contrast, yellow taxis are capped by city law at just under 13,600.

Now a new report finds that ride-hailing cars are often driving on the city’s busiest streets with no passengers — in effect, creating congestion without any benefits. The report by Bruce Schaller, a former city transportation official, found that more than a third of ride-hailing cars and yellow taxis are empty at any given time during weekdays in Manhattan’s main business district.

Winnie Hu

More evidence that ride-sharing is inefficient and increases congestion instead of easing it – and the same argument can be made about autonomous cars. The solution to slow traffic will never be ‘more cars on the roads’, but instead better public transport infrastructure.