Uber and Lyft are shutting down in CA to avoid classifying drivers as employees, also promoting ballot measure to reverse the law

[TwinIon]

CA Assembly Bill 5 , which provides a framework for classifying workers as either independent contractors or employees, was passed last September. Under it's guidelines, Uber and Lyft drivers would need to be classified as employees. Recently, a judge rejected Uber and Lyft's legal efforts to delay the order, giving them until August 20th to comply with the order. Now, the companies say that they will shut down in CA for at least two months to retool their business in the state.

 

At the same time, Uber and Lyft have joined with Doordash to raise $100M to pass Prop 22, which would essentially add a rideshare exception to AB 5, allowing them to continue classifying drivers as independent contractors. They've been encouraging their drivers to speak out in favor of Prop 22, and Lyft has gone so far as to put lots of voting info in the app:

 

Pro-AB5 labor groups have so far raised $866k to fight against the proposition, but it's very unclear how CA voters currently feel about it.

 

 

 

 

In this country, for better or worse, we've somehow decided to tie all sorts of necessities to employment. So I think that the least we can do is either break that dependency and have the state provide people with sufficient healthcare and assistance to live, or we need to make sure that companies are meeting their end of the bargain and providing sufficient compensation to the workers their business rely upon. Ideally we do both, but for now, I think it's fine to force Uber and Lyft to properly care for their drivers.

 

 

Also, I find Uber and Lyft's warnings that prices could go up by 20% unmoving. As The Verge pointed out: "Uber lost over $16 billion in the three years running up to its IPO.  Since going public, it lost another $13 billion. By comparison, Lyft lost a measly $2.6 billion in 2019." These companies are unsustainable as they exist now. Prices were always going to rise, either when someone forced them to be sustainable or when one of these companies became entrenched in a monopoly position. If prices are going to go up, I may as well feel like the drivers are getting their fair compensation.

 

 

[Jason]

10 minutes ago, TwinIon said:

allowing them to continue classifying drivers as employees

 

I'm assuming you meant "as contractors".

[b_m_b_m_b_m]

I mostly don't really care what it costs tbh it's still cheaper than a DUI, and these workers deserve to not be screwed over by a money losing company (money losing by design). The only thing good about these companies is the app to summon the driver and their ubiquity. 

[CitizenVectron]

"We agree that labour rights are important, but we also agree that our companies should not be bound by them, because we will fire all of our contractors."

 

IMO Uber and Lyft should cease to exist. It's pretty obvious now that you either pay more and have a sustainable service (taxis) or you pay less and don't. The best solution would be to keep prices what they were before Uber, but add convenience through better apps, etc.

[Guest]

I have a hard time understanding what Uber and Lyft spend money on such that they are losing billions annually.

[CitizenVectron]

1 minute ago, sblfilms said:

I have a hard time understanding what Uber and Lyft spend money on such that they are losing billions annually.

 

In some places (my province included) they are required to purchase liability coverage for all drivers. I think they are also spending huge amounts on R&D, and also of course paying the drivers a cut.

[chakoo]

8 minutes ago, sblfilms said:

I have a hard time understanding what Uber and Lyft spend money on such that they are losing billions annually.

R&D is the bulk of it. The rest is in them not making much off the actual service itself. 

[SoberChef]

How exactly is it that these businesses are losing billions of dollars when they have so many drivers in the first place & they are both nearly ubiquitous with the mere idea of ride sharing? Furthermore, considering the individuals essentially pick & choose who/when/where/how they provide the service via the app as an independent entity initiating the point of contact with the service, that itself would not classify them as independent contractors? I feel perhaps some sort of middle of the road type of approach could be reached wherein if you work X number of hours/miles/days a week then that would force Uber/Lyft to initiate some sort of feasible insurance coverage upon that specific driver.

 

I have to go back however to that first sentence, how are these companies losing BILLIONS when they provide no real service themselves other than the app/platform. A 3rd party could be in charge of background checks (I'm not sure about how all of that works) while the individual fares are being split by some per-determined percentage (which didn't exist prior). Aside from that, I see that there would probably be a need for an IT department to ensure the apps run well at all times, yet aside from all of that...where's the cost of operating?

 

*EDIT* Wrote this prior to a previous post...but Research & Development of WHAT exactly? Should the "infrastructure" already exist between Google maps/GPS systems!?

[b_m_b_m_b_m]

Don't they also charge less per mile so as to put local cab companies out of business? 

 

Undercut and expand marketshare -> make up losses when you have no/little competition or IPO to unload shares of the founders/big investors. You know, tech company shit

[CitizenVectron]

6 minutes ago, SoberChef said:

How exactly is it that these businesses are losing billions of dollars when they have so many drivers in the first place & they are both nearly ubiquitous with the mere idea of ride sharing? Furthermore, considering the individuals essentially pick & choose who/when/where/how they provide the service via the app as an independent entity initiating the point of contact with the service, that itself would not classify them as independent contractors? I feel perhaps some sort of middle of the road type of approach could be reached wherein if you work X number of hours/miles/days a week then that would force Uber/Lyft to initiate some sort of feasible insurance coverage upon that specific driver.

 

I have to go back however to that first sentence, how are these companies losing BILLIONS when they provide no real service themselves other than the app/platform. A 3rd party could be in charge of background checks (I'm not sure about how all of that works) while the individual fares are being split by some per-determined percentage (which didn't exist prior). Aside from that, I see that there would probably be a need for an IT department to ensure the apps run well at all times, yet aside from all of that...where's the cost of operating?

 

*EDIT* Wrote this prior to a previous post...but Research & Development of WHAT exactly? Should the "infrastructure" already exist between Google maps/GPS systems!?

 

They spend huge amounts in autonomous vehicle tech. The stated goal is to eventually remove their drivers and just use automated cars. 

[chakoo]

Uber's sell to investor is their long term vision for a complete autonomous fleet and owning their entire tech stack around it. Where Lyft is planning to leverage the work done by others (Waze/Google). We're still years off from that happening but we are progressing eventually to that goal in a society where you won't really own a car anymore and will rely on AV to get around. 

[SoberChef]

6 minutes ago, chakoo said:

Uber's sell to investor is their long term vision for a complete autonomous fleet and owning their entire tech stack around it. Where Lyft is planning to leverage the work done by others (Waze/Google). We're still years off from that happening but we are progressing eventually to that goal in a society where you won't really own a car anymore and will rely on AV to get around. 

That sounds extremely disingenuous towards not only all auto makers, but also any and all individuals who appreciate vehicles & driving.

[Guest]

40 minutes ago, CitizenVectron said:

 

In some places (my province included) they are required to purchase liability coverage for all drivers. I think they are also spending huge amounts on R&D, and also of course paying the drivers a cut.

 

32 minutes ago, chakoo said:

R&D is the bulk of it. The rest is in them not making much off the actual service itself. 

So, is the actual business of taxi driving a loser too? I’ve noticed several cities have created their own municipal versions of these services that are very price competitive with Uber/Lyft. Just curious of the core business works.

[TwinIon]

5 minutes ago, sblfilms said:

So, is the actual business of taxi driving a loser too? I’ve noticed several cities have created their own municipal versions of these services that are very price competitive with Uber/Lyft. Just curious of the core business works.

Looking at Lyft's Q2 results, specifically for the six months that ended on June 30, if they killed off all R&D they'd still have lost $700M. Right now providing ridesharing service is simply not profitable for either Uber or Lyft.

 

Part of the idea of these ridesharing companies was that by leveraging technology to do all the dispatching, they could dramatically cut down on the overhead as compared to a traditional cab company. However, thus far that hasn't proven true at all. Compared to a traditional cab company, Uber/Lyft spend tons more on sales and marketing, lobbying, G&A, R&D, and even standard operations and support. 

 

Right now, I think it's impossible to tell how viable these companies are, mostly because of the insane amounts of VC funding that's keeping these guys alive. So much of their overspending is a result of how they're getting their money. If they suddenly had to function as a normal company, it's really hard to know how they'd work it out. Also, so much of their overspending is working towards goals so far away that it's hard to say what the actual market outcome would be.

 

Personally, I wouldn't put a cent in either one.

 

[Bloodporne]

I know this doesn't really contribute to the topic but both are essentially gone in my area on Long Island and I'm pretty close to NYC. I know Covid and all but the map literally only showed me two cars within maybe a 20+ mile radius last time I checked.

[DarkStar189]

3 hours ago, TwinIon said:

Looking at Lyft's Q2 results, specifically for the six months that ended on June 30, if they killed off all R&D they'd still have lost $700M. Right now providing ridesharing service is simply not profitable for either Uber or Lyft.

 

Part of the idea of these ridesharing companies was that by leveraging technology to do all the dispatching, they could dramatically cut down on the overhead as compared to a traditional cab company. However, thus far that hasn't proven true at all. Compared to a traditional cab company, Uber/Lyft spend tons more on sales and marketing, lobbying, G&A, R&D, and even standard operations and support. 

 

Right now, I think it's impossible to tell how viable these companies are, mostly because of the insane amounts of VC funding that's keeping these guys alive. So much of their overspending is a result of how they're getting their money. If they suddenly had to function as a normal company, it's really hard to know how they'd work it out. Also, so much of their overspending is working towards goals so far away that it's hard to say what the actual market outcome would be.

 

Personally, I wouldn't put a cent in either one.

 

Sounds like they will eventually lose enough money to call it quits, and Google or Amazon will swoop in.  Buy up all the research and data and suddenly have Google Taxi be picking people up

[Joe]

4 hours ago, sblfilms said:

 

So, is the actual business of taxi driving a loser too? I’ve noticed several cities have created their own municipal versions of these services that are very price competitive with Uber/Lyft. Just curious of the core business works.

 

This absolute douche regular at my dad's restaurant owns a taxi medallion in NYC. He basically use to brag about how it was his nest egg and he would flaunt his money on the regular at the restaurant. Once Uber got huge, he told us how his medallion lost 90% of its worth in the span of a couple of years. I like to think I'm not a bad person, but I definitely chuckled to myself when he told us this.

[Keyser_Soze]

Yellow Cab just needs to get an app.

[foosh]

4 hours ago, sblfilms said:

 

So, is the actual business of taxi driving a loser too? I’ve noticed several cities have created their own municipal versions of these services that are very price competitive with Uber/Lyft. Just curious of the core business works.

I think Austin had their own version as nonprofit. I think it also went out of business. It’s not a sustainable business. Ubers original goal was to undercut taxis and put them out of business then to jack up their prices. Along comes Lyft that ruined it for them. Both companies exist to make sure the other doesn’t make money.
 

the engineering resources are actually quite huge. A lot of the mapping tech is manually done. They have teams that optimize rides per metro.

[chakoo]

1 hour ago, DarkStar189 said:

Sounds like they will eventually lose enough money to call it quits, and Google or Amazon will swoop in.  Buy up all the research and data and suddenly have Google Taxi be picking people up

Google has no need. They have Waymo and Lyft partnered with Waymo for their future AV needs. Also last I heard, Waymo was a head of Uber who has been playing catch up since the pedestrian accident a while back. 

 

https://techcrunch.com/2019/05/07/waymo-and-lyft-partner-to-scale-self-driving-robotaxi-service-in-phoenix/

https://en.wikipedia.org/wiki/Waymo