The Australian Competition and Consumer Commission said he would examine controversial contract provisions Uber required restaurants to accept when selling food through the Uber Eats delivery service. Restaurants complained about contract terms that said they, and not Uber, were responsible for late deliveries — though they thought it was Uber, and not them, that caused delays and was better positioned to make sure deliveries were on time.
Then-CEO Kalanick indicted in South Korea for violating transportation law
Then-CEO Travis Kalanick was indicted in South Korea in December 2014 for violating that country’s transportation law. South Korea’s Ministry of Land, Infrastructure and Transport said that Uber’s provision of paid transportation using unregistered vehicles was “clearly illegal activity,” and that this was the basis of the indictment.
Multiple competition regulators questioned Uber-Grab deal
Reviewing Uber’s proposed sale of its Southeast Asia business to Grab, the Competition Commisison of Singapore (CCS) announced that it is looking into the transaction.
Broadly, CCS said the proposed transaction would bring “substantial lessening of competition in relation to the chauffeured personal point-to-point transport passenger and booking services market in Singapore.” CCS therefore required Uber and Grab to maintain their pre-transaction pricing, policies, and products, and not to exchange any confidential information.
After CCS’s statement of concern, Malaysia’s Land Public Transport Commission also announced that it would examine the proposed transaction. The Philippines’ anti-trust agency, the Philippine Competition Commission, then stated similar concerns: “There are reasonable grounds that the said acquisition may likely substantially lessen, prevent, or restrict competition.”
Coverage from TechCrunch and prior critique from the author of this site.
Overlapping investor SoftBank sought to reduce competition
As Uber announced its sale of Southeast Asia assets to Grab, some flagged the overlapping investor that facilitated the transaction. In particular, SoftBank (a Japanese investment firm) held shares in both Grab and Uber. Owning part of both companies, SoftBank stood to profit no matter which one prevailed in the markets where both operated — but stood to lose if the firms engaged in continued competition with each other.
Furthermore, SoftBank specifically sought to broker peace between Grab and Uber: When investing in Uber in December 2017, SoftBank sought a discount exactly because it could influence Uber’s competitors across Asia.
Similar concerns arose from SoftBank holding shares in both Uber and Ola, a ride-hailing competitor in India. Discussing those overlapping holdings, SoftBank told the Economic Times of India: “we are hoping that we make peace between them at some point.” Such a “peace” could raise competition concerns in so far as it entailed competitors agreeing not to compete.
See Edelman’s critique of SoftBank’s role as well as economist Martin Schmalz’s tweet on the impact of cross-ownership.
Poised to sell Southeast Asia assets to Grab
Uber announced plans to sell its Southeast Asia assets to Grab, the dominant ride-hailing firm in that region. This transaction raised competition concerns because Grab and Uber jointly controlled the overwhelming majority of ride-hailing service in the region. The transaction thus created an effective monopoly for Grab — allowing the company to charge higher prices and fees, to the detriment of both drivers and passengers.
Sold Chinese assets to Didi
Rather than continuing to compete with Didi Chuxing, the dominant ride-hailing service in China, Uber sold its Chinese assets to that firm — essentially ending competition in ride-hailing in that country.
This transaction raised several concerns. One, Didi and Uber jointly controlled the overwhelming majority of ride-hailing service in China. The nearest competitor had just 3.3% market share as of the time of the transaction. The transaction thus created an effective monopoly for Didi — allowing Didi to charge higher prices and fees, to the detriment of both drivers and passengers.
Two, as part of the transaction, Uber received 17.5% ownership of Didi, and Didi in turn held an investment in Lyft. So the Didi-Uber deal made Uber a part owner of its biggest US competitor.
Australian study finds drivers paid below applicable minimum wage, concludes “exploitation”
Jim Stanford of the Centre for Future Work (Australia) analyzed payments to UberX drivers in six Australian cities. He found that drivers earn less than would be required under the applicable Australian wage requirements. After deducting Uber’s fees, applicable taxes, and the cost of vehicle and maintenance, the study found driver pay of A$14.62 per hour, well below the national statutory minimum wage (A$18.29) and less than half the weighted-average minimum wage including casual loading and penalty rates for evening and weekend work that would apply to similar waged employees in Australia (Modern Award #MA00063 for Passenger Vehicle Transportation). The study finds that this underpayment adds up to hundreds of millions of dollars per year in Australia alone.
The study notes that Uber’s prices are well below taxis, and asks how Uber gets the cost advantage that allows it to offer notably lower prices. Finding similar technology — drivers driving cars — the study concludes that underpayment of UberX drivers has been essential to Uber’s growth.
The study also criticized Uber’s right to change its contract with drivers at any time (which it suggested might violate Australia’s Competition and Consumer Act regarding fair contracts), Uber’s monitoring of driver performance through online ratings (which may not be reliable and are vulnerable to bias), that driver vehicles lack certain safety equipment regularly installed on taxis, that drivers work excessive hours, and that Uber seeks to provide excess capacity which can harm both drivers and congestion.
The study was particularly pointed in its assessment of who gains and who loses in Uber’s model: “The effective transfer of wealth from Uber drivers to the company’s owners (some of whom are billionaires)… is an especially galling distributional outcome.” The study’s conclusion is that Uber’s labor practices are “negative and exploitive.”
Study: Subsidising Billionaires: Simulating the Net Incomes of UberX Drivers in Australia and introduction
Banned in Delhi after driver allegedly raped passenger
Uber was temporarily banned in Delhi, India in December 2014 after a driver allegedly took a passenger to a secluded area and raped her. The decision followed mounting accusations that the company had failed to conduct proper background checks on drivers.
Possible bribery in China, India, Indonesia, Malaysia and South Korea
Uber’s attorneys are investigating the possibility of improper payments in Asia, including what Bloomberg calls “suspicious activity” in China, India, Indonesia, Malaysia and South Korea.
In one incident in Jakarta, Indonesia, an Uber employee is said to have “decided to dole out multiple, small payments to police in order to continue operating there.” The company’s head of Indonesia approved the expense report — and was later placed on leave and left the company.
In another instance, Uber contributed tens of thousands of dollars to the Malaysian Global Innovation and Creativity Centre, a government-backed entrepreneur hub. Soon thereafter, the Malaysian government passed laws favorable to Uber. Lawyers are assessing whether this was a quid-pro-quo or otherwise improper.
Tracked driver activity on Grab
Uber sought information about the drivers and activity of Grab, Uber’s major competitor in Southeast Asia. To do so, Uber’s Surfcam program connected to Grab servers to figure out how many drivers were connected and where they were.
Bloomberg describes legal concerns associated with Surfcam:
Surfcam raised alarms with at least one member of Uber’s legal team, who questioned whether it could be legally operated in Singapore because it may run afoul of Grab’s terms of service or the country’s strict computer-crime laws, a person familiar with the matter said.
Nonetheless, Bloomberg reports that the creator of Surfcam is still working for Uber, having moved from Singapore to Uber’s European headquarters in Amsterdam.
See also the “Hell” program whereby Uber tracked data from Lyft.