NY Times: New Leadership Has Not Changed Uber

by Steven Hill, New York Times, March 26, 2018

The recent killing of a pedestrian by a self-driving Uber vehicle is the source of the latest negative headlines about this company. But there’s a much deeper problem. While the leadership has changed — Dara Khosrowshahi replaced Uber’s co-founder Travis Kalanick as chief executive last August after a series of scandals — the company itself has not evolved.

The problem with Uber was never that the chief executive had created a thuggish “Game of Thrones”-type culture, as Susan Fowler, an engineer, described it in a blog post. The problem was, and still is, Uber’s business model: Its modus operandi is to subsidize fares and flood streets with its cars to achieve a transportation monopoly. In city after city, this has led to huge increases in traffic congestion, increased carbon emissions and the undermining of public transportation.

Most customers who love Uber don’t realize that the company subsidizes the cost of many rides. This is likely a major factor in Uber’s annual losses surging from 2.8 billion in 2016 to $4.5 billion in 2017. This seemingly nonsensical approach is actually Uber’s effort to use its deep pockets to mount a predatory price war and shut out the competition. That competition is not only taxis and other ride-sharing companies, but public transportation.

Studies have found that half to 61 percent of Uber passengers in the United States say that they would have used public transportation, ridden a bicycle or walked, or not have made the trip at all, if Uber had not been available.

Thanks in part to Uber, people are turning away from forms of transportation that are better for the environment.

Recently I asked a colleague why he used Uber. He said that the bus would cost $2.25, and Uber would cost about $5. So I asked him, “What if the price for Uber was $10?” He said he would take the bus. So because he was only paying half the cost of the ride, he used Uber.

He’s not alone. Ridership on public transportation is down in nearly every major American city, including New York City (which recorded its first ridership dip since 2009). This is hurting the revenue that public transportation needs to sustain itself. Uber passengers and public transportation users alike now find themselves stuck in heavy traffic for far longer because of what’s been called “Uber congestion.” In Manhattan, there are five times as many ridesharing vehicles as yellow taxis, which has caused average speeds to decline by 15 percent compared with 2010, before Uber.

The company’s new leadership continues to deny that it is contributing to these ill effects. Mr. Khosrowshahi even insists that Uber can help solve congestion by adding a small number of electric cars, and that it could start using flying taxis in five to 10 years (which is preposterous — Uber doesn’t even have a prototype).

But a study of the effects of ride-sharing by researchers at the Institute of Transportation Studies at the University of California, Davis, found that ridesharing has resulted in a significant rise in the number of trips made and miles driven in an auto. The study also found that the vast majority of ride-sharing users (75 percent) still owned a car, and the small number who have eliminated their own vehicle (9 percent) have merely swapped it for someone else’s car — their ride-sharing driver’s. From an environmental standpoint, Uber is taking us backward.