6 ms·

Note that although I used the original title of the article, I do feel it is a little sensationalist.

deleted 9y ago
[deleted]
iaw 9y ago
I think the author is painting this in the worst possible light. The UX is a little misleading but I could see this being an effort by Uber to pre-commit drivers as a means of reducing surge pricing. What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees.
- lightedman 9y ago
  "I think the author is painting this in the worst possible light." You should work for any sort of delivery or courier service. This 'worst possible light' is daily business for companies like Papa Johns and others that claim their drivers are merely 'contractors.' This is also quite illegal - you can not pay to work. It's literal extortion - you have to pay us in order to receive this amount of wage. No, the courts frown upon this.
  - PatientTrades 9y ago
    > This is also quite illegal - you can not pay to work You do know the offer is optional right? If a driver doesn't want to pay $115 for the 33% rate increase then they don't have to. Did you read that part? Also, many drivers could benefit from this especially if they drive full time in popular areas.
    - drewrv 9y ago
      There are all sorts of optional deals that are illegal.
    - lightedman 9y ago
      "You do know the offer is optional right?" You do know that such an offer is illegal, right? It is literally "If you pay us, we'll pay you more later on." It's the actual beginning of a Ponzi Scheme.
      - AnthonyMouse 9y ago
        > You do know that such an offer is illegal, right? Which law does it violate? > It's the actual beginning of a Ponzi Scheme. Your argument is of the form "Romans build roads, therefore people who build roads are Romans." Ponzi schemes don't have actual customers, which inherently leaves the people at the bottom of the pyramid holding the bag. Uber pays drivers from fares. There is no pyramid.
        lightedman 9y ago
        Uber's been running at a consistent loss. Ponzi Schemes don't have customers? There have been plenty of "multi-level marketing' businesses selling things like perfumes, knives, even candle wax, and have been ruled as Ponzi/Pyramid Schemes. It's the exact same behavior - pay us to make money.
        AnthonyMouse 9y ago
        > Uber's been running at a consistent loss. So do a million other startups. That doesn't mean the drivers don't get their money. > Ponzi Schemes don't have customers? The majority of the scam's revenue comes from payments from workers rather than sales to customers. > It's the exact same behavior - pay us to make money. Pyramid schemes have pyramids.
        lightedman 9y ago
        "Pyramid schemes have pyramids." Almost every business has a pyramid structure - that's literally basic business management for all but the most n00b of startups. It's the behavior that defines a Pyramid Scheme and this behavior matches it almost 100% to the definition. In fact there's a nice database of plenty of other companies acting EXACTLY like this and subsequently getting their butts handed to them in court - http://www.mlmlegal.com/legal-cases/Illinois_v_Unimax.php http://www.mlmlegal.com/legal-cases/Illinois_v_Unimax.php is one of my favorite cases to read because it very clearly demonstrates what Uber is doing here is illegal - just because you aren't required to do it or buy into it doesn't mean it isn't illegal in the first place.
    - viraptor 9y ago
      The higher rate is there to incentivise more people. The stable state is at the point where enough drivers opt-in that they all get to just the break-even point.
  - kingnothing 9y ago
    IANAL, but it's similar to how cabs, barbers, strippers, and other contractors operate.
    - dawnerd 9y ago
      They're renting space though. An uber/lyft driver isn't renting a medallion or a barber seat.
      - sokoloff 9y ago
        Salespeople pay for leads. Businesses pay for online clicks. Advertisers pay for eyeballs. I don't see this as a bright-line case.
        hydrogen18 9y ago
        Would you agree that none of those people pay their employer in that case? I certainly agree salespeople pay for leads, but it is usually an outside party supplying them.
        sokoloff 9y ago
        To keep it close to Uber, many cab drivers rent their cabs/medallions from the cab company. In the taxi (and Uber) case, I believe most of those are contractor relationships, not employee relationships.
        hydrogen18 9y ago
        Correct, but I could go rent the cab for a flat fee and just drive it around for my own personal wishes if I wanted to. They might put some restrictions on it (don't drive outside the city, no interstate) but otherwise I'd be fine. As far as medallions go, that is just the result of government regulation. Plenty of industries wind up being populated with nothing more than a bunch of rent seekers. The government sets up an artificial scarcity where there is none to control negative externalities. The fix is easy: require the license holder to be the one that actually uses it. No leasing to others. As far as I know, no one has done that for commercial licensing. Ironically for private licenses (fishing license, etc.) this is already the case.
- AnthonyMouse 9y ago
  > I think the author is painting this in the worst possible light. That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views. When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something. > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees. But in that case why would anyone take the deal? If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk.
  - jlarocco 9y ago
    > That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views. > When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something. That's an ad-hominem. If you're going to claim people are complaining just to complain then you need to support your case that this sleazy pay-to-play scheme isn't a sleazy pay-to-play scheme. Just because Uber is trying to fix something bad (surge pricing) doesn't mean their solution (this ridiculous scheme) isn't also bad. > > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees. > But in that case why would anyone take the deal? The first problem is that drivers have no way to know that until they've lost money on the deal. Uber has a team of accountants to figure out their expected returns while the average driver does not. Also, as others have pointed out, there's a conflict of interest for Uber because they control who gets called up, so they can avoid sending rides to drivers who are about to cross the threshold for a payout from this scheme. > If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk. It's not that simple, though. Since Uber controls who gets rides, they can make sure that some portion of drivers come out ahead using this scheme. When other drivers claim they lost money or just broke even, the "winning" drivers can chime in that the scheme worked great for them. The end result is confusion and uncertainty, so that nobody outside of Uber itself really knows one way or the other how it will turn out. With as many drivers as Uber has, they can probably fake it for quite a while.
- fgonzag 9y ago
  Or if they start heavily throttling your rides as you approach break even.
itronitron 9y ago
If this is research with MIT, then it would be interesting to see the IRB (Institutional Review Board) sign-off on this (assuming that they did.) This would raise a lot of red flags at most credible research institutions.

deleted 9y ago

[deleted]

iaw 9y ago

I think the author is painting this in the worst possible light. The UX is a little misleading but I could see this being an effort by Uber to pre-commit drivers as a means of reducing surge pricing. What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees.

lightedman 9y ago
"I think the author is painting this in the worst possible light." You should work for any sort of delivery or courier service. This 'worst possible light' is daily business for companies like Papa Johns and others that claim their drivers are merely 'contractors.' This is also quite illegal - you can not pay to work. It's literal extortion - you have to pay us in order to receive this amount of wage. No, the courts frown upon this.
- PatientTrades 9y ago
  > This is also quite illegal - you can not pay to work You do know the offer is optional right? If a driver doesn't want to pay $115 for the 33% rate increase then they don't have to. Did you read that part? Also, many drivers could benefit from this especially if they drive full time in popular areas.
  - drewrv 9y ago
    There are all sorts of optional deals that are illegal.
  - lightedman 9y ago
    "You do know the offer is optional right?" You do know that such an offer is illegal, right? It is literally "If you pay us, we'll pay you more later on." It's the actual beginning of a Ponzi Scheme.
    - AnthonyMouse 9y ago
      > You do know that such an offer is illegal, right? Which law does it violate? > It's the actual beginning of a Ponzi Scheme. Your argument is of the form "Romans build roads, therefore people who build roads are Romans." Ponzi schemes don't have actual customers, which inherently leaves the people at the bottom of the pyramid holding the bag. Uber pays drivers from fares. There is no pyramid.
      - lightedman 9y ago
        Uber's been running at a consistent loss. Ponzi Schemes don't have customers? There have been plenty of "multi-level marketing' businesses selling things like perfumes, knives, even candle wax, and have been ruled as Ponzi/Pyramid Schemes. It's the exact same behavior - pay us to make money.
        AnthonyMouse 9y ago
        > Uber's been running at a consistent loss. So do a million other startups. That doesn't mean the drivers don't get their money. > Ponzi Schemes don't have customers? The majority of the scam's revenue comes from payments from workers rather than sales to customers. > It's the exact same behavior - pay us to make money. Pyramid schemes have pyramids.
        lightedman 9y ago
        "Pyramid schemes have pyramids." Almost every business has a pyramid structure - that's literally basic business management for all but the most n00b of startups. It's the behavior that defines a Pyramid Scheme and this behavior matches it almost 100% to the definition. In fact there's a nice database of plenty of other companies acting EXACTLY like this and subsequently getting their butts handed to them in court - http://www.mlmlegal.com/legal-cases/Illinois_v_Unimax.php http://www.mlmlegal.com/legal-cases/Illinois_v_Unimax.php is one of my favorite cases to read because it very clearly demonstrates what Uber is doing here is illegal - just because you aren't required to do it or buy into it doesn't mean it isn't illegal in the first place.
  - viraptor 9y ago
    The higher rate is there to incentivise more people. The stable state is at the point where enough drivers opt-in that they all get to just the break-even point.
- kingnothing 9y ago
  IANAL, but it's similar to how cabs, barbers, strippers, and other contractors operate.
  - dawnerd 9y ago
    They're renting space though. An uber/lyft driver isn't renting a medallion or a barber seat.
    - sokoloff 9y ago
      Salespeople pay for leads. Businesses pay for online clicks. Advertisers pay for eyeballs. I don't see this as a bright-line case.
      - hydrogen18 9y ago
        Would you agree that none of those people pay their employer in that case? I certainly agree salespeople pay for leads, but it is usually an outside party supplying them.
        sokoloff 9y ago
        To keep it close to Uber, many cab drivers rent their cabs/medallions from the cab company. In the taxi (and Uber) case, I believe most of those are contractor relationships, not employee relationships.
        hydrogen18 9y ago
        Correct, but I could go rent the cab for a flat fee and just drive it around for my own personal wishes if I wanted to. They might put some restrictions on it (don't drive outside the city, no interstate) but otherwise I'd be fine. As far as medallions go, that is just the result of government regulation. Plenty of industries wind up being populated with nothing more than a bunch of rent seekers. The government sets up an artificial scarcity where there is none to control negative externalities. The fix is easy: require the license holder to be the one that actually uses it. No leasing to others. As far as I know, no one has done that for commercial licensing. Ironically for private licenses (fishing license, etc.) this is already the case.
AnthonyMouse 9y ago
> I think the author is painting this in the worst possible light. That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views. When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something. > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees. But in that case why would anyone take the deal? If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk.
- jlarocco 9y ago
  > That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views. > When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something. That's an ad-hominem. If you're going to claim people are complaining just to complain then you need to support your case that this sleazy pay-to-play scheme isn't a sleazy pay-to-play scheme. Just because Uber is trying to fix something bad (surge pricing) doesn't mean their solution (this ridiculous scheme) isn't also bad. > > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees. > But in that case why would anyone take the deal? The first problem is that drivers have no way to know that until they've lost money on the deal. Uber has a team of accountants to figure out their expected returns while the average driver does not. Also, as others have pointed out, there's a conflict of interest for Uber because they control who gets called up, so they can avoid sending rides to drivers who are about to cross the threshold for a payout from this scheme. > If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk. It's not that simple, though. Since Uber controls who gets rides, they can make sure that some portion of drivers come out ahead using this scheme. When other drivers claim they lost money or just broke even, the "winning" drivers can chime in that the scheme worked great for them. The end result is confusion and uncertainty, so that nobody outside of Uber itself really knows one way or the other how it will turn out. With as many drivers as Uber has, they can probably fake it for quite a while.
fgonzag 9y ago
Or if they start heavily throttling your rides as you approach break even.

itronitron 9y ago

If this is research with MIT, then it would be interesting to see the IRB (Institutional Review Board) sign-off on this (assuming that they did.) This would raise a lot of red flags at most credible research institutions.