In just over 11 years since its founding in March 2009, Uber transformed from a start-up to a company that has $65.6 billion in market cap as of October 9, 2020. Uber used technological innovation to create a new economy in ride-sharing, allowing drivers to earn more money on the side by being able to work their own hours and riders to go through a more efficient process in finding a ride from point A to point B. The creation of the Uber app to connect drivers and riders permanently disrupted the taxi industry, and also added value to society as a whole.

Stakeholder Analysis

Key stakeholders at Uber include the drivers (employees), riders (customers), investors, regulators, and competitors, which include traditional taxicab services and other ride-share companies like Lyft. The drivers are directly affected by rate changes dictated by the corporate office and also make the company what it is today. Without the sheer number of people willing to sign up to be drivers, it would be impossible for Uber to exist. The next group of stakeholders are the riders or customers who pay for Uber’s services. Without the riders, Uber would not be able to operate; riders/customers determine the demand of the market. The riders are also directly impacted by the decisions that Uber makes, such as rate increases per ride and surge pricing. Thirdly, the local economies benefit from the service of Uber because it is a source of additional income for drivers, especially those who are lower-middle to middle class. Additionally, the customers stimulate the economy by paying for Uber rides.

Regulators are responsible to enforce the rules and regulations that Uber must follow. There are entire divisions of government tied to Uber, or more generally the ride-sharing industry, and how Uber performs. These are the groups that are fighting to classify drivers as employees and to make sure that Uber is following the safety regulations needed to be in the public transportation space. 

Next, the investors and corporate employees of Uber are important stakeholders. The investors can be considered the original stakeholders because they provide capital to the firm to keep it liquid enough; their only concerns are making a profit on their returns. Substantial investors have a voice in making management decisions to ensure that the company is going in the right direction. 

Corporate employees are stakeholders because they make these management decisions and handle the day-to-day operations. There are many different departments in charge of updating the app, providing cybersecurity, doing financial analysis for the investors, and providing customer support. These two groups of people have a direct stake in the success of Uber. 

Finally, Uber’s last stakeholder is its competitors, specifically Lyft and the taxi industry. The competition is directly tied to its performance, but in different ways. Although Uber holds the leading market share of 71 percent (as of August 2020), Lyft is the main competitor in this industry. Lyft tries to emulate and improve on what Uber was able to do, so Uber must constantly be aware of news from Lyft.

Because both Lyft and Uber operate in the same ride-share industry, the state of this industry determines its overall performance. Even though they are competing for market share, they both need this industry to be successful. The taxi industry is also looking to update its business model and take back its share. The taxi industry failed and did not act fast in integrating technology, which ultimately led to its decline. If taxicab operators do not find a way to lower their prices to compete with the ride-share services, Uber and Lyft will run them out of business. The taxi industry can be viewed as a stakeholder of Uber because it needs to conduct a competitive analysis of Uber to be able to compete.

Ride-Sharing Industry Issues

As successful as Uber has been so far, it has not come without controversy. Two very big issues that plague not only Uber but the industry itself are employee rights and surge pricing. First, Uber and the industry overall have been criticized for the treatment of their drivers. Drivers are technically classified as independent contractors instead of employees, and as such they are not eligible for benefits, including health care or paid time off. “Uber has affirmed that all drivers on its platform are partners and must be considered as independent contractors. However, the company has faced various legal proceedings across the world wherein authorities belonging to different legal fields have argued that the drivers should be qualified as employees” (Reis and Chand, 2020). There have also been cases brought forward by drivers who have stated they earn less than minimum wage and are ultimately not being compensated properly for their time. “Under new rules, which [went] into effect in January 2019, companies are required to pay drivers $26.51 an hour in gross pay, or $17.22 after expenses. This may be slightly higher than the $15 minimum wage that (New York City) requires all employers to adhere to by the end of next year, but is still considered to be as equivalent because drivers are independent contractors. About 85 percent of ride-hailing drivers currently make less than the minimum.”

Second, the ride-sharing industry has come under fire for “surge pricing,” which is when pricing is determined based on the number of drivers available and the number of riders requesting rides. During times of low supply of drivers, such as New Year’s Eve or during a hurricane, prices have been known to skyrocket for the riders. While some people have argued that this is a supply-anddemand issue, others are opposed to this pricing strategy because of the greed behind it.

Controversy at Uber

There has been no shortage of ethical and legal issues that Uber has faced. Since 2013, Uber had had at least one major ethical scandal every year related to passenger safety, security of drivers, and privacy issues. The first scandal was in 2013, only four years after the company was founded. In September 2013, a passenger accused an Uber driver of choking her. The driver was accused of grabbing her out of the car by her throat because she was kissing her husband (Moss, 2013). In 2014, an Uber driver who was accused of assault was found to have a criminal record. The driver had felony and misdemeanor charges and at least one felony conviction involving prison time (Taylor, Kate). These two examples bring into question the validity of Uber’s background checks as the company is potentially putting passengers at risk.

In 2015, French taxi drivers slammed Uber as “economic terrorism” because Uber’s low prices and flexible hours were not in line with French law (Taylor, Kate). When operating in other countries, it is important to understand their laws and regulations and act in a way that does not violate their laws. In 2016, Uber paid $28.5 million to end a lawsuit about safety ads (Taylor, Kate). Uber was accused of misleading customers about safety practices and agreed to refrain from using superlatives when describing background checks. In 2017, a female engineer who used to work at Uber published a blog post about sexual harassment and gender inequality at the company, and Travis Kalanick—the original cofounder and CEO of Uber—was caught fighting with an Uber driver on camera (Taylor, Kate). Here, the CEO’s bad behavior is setting up a bad culture for the rest of the organization. When employees cannot look up to their CEO and other leaders in the company, they are less likely to follow company rules and regulations, creating a toxic work environment for all. In 2018, an Uber self-driving car killed a pedestrian, and over 100 U.S. Uber drivers had been accused of sexual assault or abuse of passengers (Taylor, Kate). Over the years the accusations of the sexual assault cases have been rising, which makes one question how much Uber is doing to protect its drivers and its riders. These sexual harassment and assault cases may have been due to the leadership of Kalanick at the time. 

Uber addressed its social responsibility and its environmental impact by creating Uber Pool. Uber Pool allows people to share rides for a discount. These shared trips means less environmental impact per person while creating affordable means of transportation for people. Also, Uber is working on a pilot project to go green by offering rides in all-electric or hybrid cars in Paris and Lisbon by 2025 (Uber.com, Sustainability). These are two ways in which Uber is acting toward the betterment of the community. 

Uber specifically found itself in the middle of a corporate scandal back in 2017 when the sexual harassment allegations came to light. These claims then shed light on a number of other issues happening at Uber, highlighting deep problems of company culture at the firm. All of these complaints ended up with employees being fired, as well as the forced resignation of the CEO and a few other executives. Uber faced a huge backlash from the public, who started a movement called #DeleteUber. “Hundreds of thousands of customers deleted the ride-hailing app and deactivated their accounts ‘within days’ of the campaign’s launch across social media.” This brings into consideration some of the challenges that firms are beginning to experience with the pressure to be ethically responsible in this age of technology. Because technology allows information to be spread rapidly, companies are constantly being monitored by the public.

Uber has always classified its drivers as contractors, which excludes them from being eligible to receive benefits such as health care or retirement funds. 

This, in turn, allows the company to save tremendous amounts of money. Uber also pushes all of the cost of owning and insuring the vehicle out onto the driver as well. As a defense to this strategy, Uber has continually claimed that it is just connecting riders with drivers and taking a fee for doing so. In previous cases, after factoring in depreciation on the vehicle, it has been said that drivers are earning less than minimum wage without the possibility of benefits. 

Additionally, Uber was accused of entering new markets and testing local governments to see if the company will be shut down or intentionally trying to stall new regulation. The following is an extended quote from a news article in 2017 that I believe summarizes the issue. “On September 22, Uber . . . hit a major roadblock in Britain. Transport for London [TfL], the capital’s main transportation agency, which regulates the taxi cab industry, refused to renew the license that allowed Uber to operate in the metropolitan area. In a statement, TfL said that Uber demonstrates a ‘lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications.’” Additionally, the taxi industry has stated that Uber is using a loophole to avoid regulations, and the drivers are operating illegal taxi cabs. This, in turn, has driven down the cost of the medallions for cabs and even forced some of them into bankruptcy. Finally, after all of the scandals Uber has faced and after Travis Kalanick resigned as CEO, Dara Khosrowshahi became the new CEO in 2017. Khosrowshahi knew that he needed to make major changes to the corporate culture and work to fix its unethical image. So the issue then stands: Has Uber been able to rebrand the company toward prioritizing corporate social responsibility since then?....

Questions for Discussion

1. What are the sources of Uber’s continuing problems to “normalize” into a respectable company?

2. Who are Uber’s stakeholders, and what are the main issues each faces?

3. Describe Uber’s issues from an ethical perspective.

4. What does it mean for Uber to be a “sharing economy” company, and how does this type of company have any responsibilities to be ethical beyond what other companies have? Explain.