Trouble in Uber Paradise?
Unless you have been living under a rock the past five years, you have surely heard of the revolution in ride share transportation made popular by companies such as Uber and Lyft. Although the principal goal of these app-based services is transportation, the companies are still categorized as technology. This allows them to reap the benefits of often extravagant valuations, while at the same time avoiding the regulatory burdens imposed on transportation. Unfortunately for Uber, and other similar companies, all of this may be about to change. What begins as a lawsuit against Uber Spain in Barcelona during which a local cab company, Asociacion Profesional Elite Taxi, claimed the company was engaging in unfair competition due to lack of regulations has now begged the question: is Uber actually a technology company or should it be considered transportation?
In this localized case, the European Court of Justice has preemptively ruled that Uber absolutely be considered transportation, because they are in charge of paying the drivers, they set the pricing, and they impose conditions based on the drivers’ quality of work.
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This is only a single factor in the latest barrage of issues faced by the company. Not only does it open the door to similar claims around the world at every location where Uber currently does business regarding unfair competition, it could potentially be the beginning of the end for all successful app-based rideshare platforms. Uber recently posted a $708 million loss for the first quarter of 2017 which is definitely not good news for this ambitious and potentially profitable endeavor.
The company did, however, cut its loss from the previous quarter, which was upwards of $990 million. Investors don’t seem worried as of yet, and many point out the similarities in another hugely successful business venture (Amazon) which also posted huge losses in the first couple decades before becoming the unstoppable force it is now. If this is indeed Uber’s goal, then kudos to them for their forward thinking, but amidst rumors of the company going public and the potential shift to the transportation industry, there is still cause for concern.
Only time will tell what the future of Uber holds, but here at A1AutoTransport, we can’t help but root for a fellow “transportation” company that revolutionized the passenger transport industry.