6 ms·

> The drivers are outside of Uber's business. Uber is a software and technology company, not a taxi service. That is some serious mental gymnastic.

by nostoc 6y ago

manfredo 6y ago
No, it's not. Is Apple in the business of producing records because it runs iTunes? No, it's in the business of software (and hardware), and some of that software is used to sell music. Trying to claim that a software service to run a marketplace to sell X is the same thing as actually running a business of building or doing X takes some mental gymnastics.
- gamblor956 6y ago
  It takes some seriously bizarre mental gymnastics to call Uber/Lyft "marketplaces" when they don't provide any of the hallmarks of a marketplace, such as the option to select between multiple "stores" (aka drivers) or let drivers compete by offering their own prices. Even more importantly, with an actual marketplace, you don't transact with the marketplace--you transact with the stores. And with respect to your Apple analogy: Apple doesn't claim to be in the business of making music, just selling it. Uber/Lyft do claim to be in the transportation/food delivery businesses, and it's literally all over their legally binding SEC filings that the provide to investors every few weeks. If it quacks like a duck, and it walks like a duck, and it swims like a duck, you can call it a digital platform all you like but it's still a duck.
  - manfredo 6y ago
    No, the Apple analogy is entirely accurate. Apple is in the music business. But it's not in the business of making music, it's in the business of selling music. Apple is in the music business in the same vein that a record shop is in the music business. Uber is in the personal transportation business, at a broader high level. It's in the business of operating a market for rides. Just like how a record store doesn't actually compose and record the music it sells, Uber isn't in the business of actually driving people around. That task is fulfilled by independent workers, who use the platform Uber and Lyft operate to find customers. Can you point out in said SEC filings where Uber says, "our company's primary business is operating motor vehicles to transport customers"? As in, actually driving their own cars? Because from what I've read they're very careful about describing their business as operating a marketplace for drivers to conduct their own businesses.
    - gamblor956 6y ago
      We agree that Apple is just selling music, not making it. We disagree on how analogy that applies to Uber. On its 10K, Uber identifies "gross bookings" as its primary revenue stream. Not "net bookings" or "commissions" or "marketplace fees." Gross bookings. Meaning that it treats all of the income from a ride as its own income, meaning that it's primary business activity is providing transportation services. The same is true for Lyft. If they want to claim to be technology companies that only make their money from marketplace fees/commissions, they're free to do so but they'll need to change their financial and legal filings to match (and possibly their fare structures as well, since there's a mismatch between what riders pay and what drivers actually get). The reason they haven't done so is because that amount would be a lot smaller than the gross bookings number, but they can't have it both ways.
      - manfredo 6y ago
        What impact does this have on the classification of drivers? When Uber takes $10 from a passenger for a ride, and contracts out a driver to transport the passenger for $8 then Uber has a booking for $10 and an expense of $8 for contracting out that ride. This doesn't change the fact that the driver is a contractor who sets their own hours and can drive for competitors. Yes, Uber and Lyft are involved in providing transportation services but their involvement is in connecting customers with transportation providers. Calling Uber and Lyft taxi companies makes about as much sense as calling an Expedia an airline. Expedia provides air transport, but through reselling the services of airline companies like Delta or Alaska. Uber and Lyft provide transport by reselling the services of independent contractors. Uber and Lyft are taxi companies as much as Expedia is an airline: they're not.
        gamblor956 6y ago
        It's a basic principle of contract law that parties can't agree to a valid contract if they don't know the basic fundamental financial terms of the contract, like say, the price. A driver does not know how much a passenger is paying for the ride. The passenger does not know how much the driver is receiving for the ride. Ergo, they cannot have formed a valid contract with each other. On the other hand, the passenger knows how much they are paying Uber, and the driver knows how much Uber is paying them. This indicates that the common relationship is Uber, and that the driver is acting as Uber's agent with respect to the driving services. This is supported by Uber/Lyft treating gross booking as their revenue. It is a long-standing principle of GAAP that if you are collecting money on someone else's behalf as their agent, it's not your revenue. If you are treating the money as your revenue, and their services as an expense, that indicates they are acting as an agent on your behalf with respect to the services/whatever that gave rise to the revenue. Because the driver is acting as Uber's agent, AB5 comes into play to determine whether they are an employee or independent contractor. I don't know why you're fixated on Expedia. Expedia is a reseller, which is a thing that has existed as a legal construct for over a century and has an actual meaning and requirements defined by law. Expedia doesn't resell services, it sells reservations/tickets/etc provided by third parties that represent a right to a specific performance of a specified service at a specified time and place by that third party. Importantly, once a transaction is completed on Expedia, the customer must generally seek customer service from the third party, not Expedia, because Expedia's role in the transaction is completed, and Expedia only provides relief if the third party will not, and that relief is limited to refunding the customer for the amount they paid Expedia. UberLyft don't sell services provided by third parties, they sell a service (transportation or food delivery), and it happens to be performed by third parties on UberLyft's behalf. In contrast to Expedia, none of the participants in the transportation or food delivery service get to select their putative counterpart to the transaction, or the financial terms of the transaction, and after the driver's part is concluded they usually have no further interaction with the passenger as customer service service issues are provided by UberLyft, not the driver. IOW, there are no hallmarks of a business relationship between the driver and customer.
- solidasparagus 6y ago
  Yes, Apple is absolutely a music publishing company (among other things) because it runs iTunes.
  - manfredo 6y ago
    It's a music publishing company as much as DoorDash is a restaurant. You use DoorDash to get food, but DoorDash is not the person actually making the food. Likewise Apple sells music, but said music is actually recorded and published by some other entity.
    - solidasparagus 6y ago
      Apple has Apple Music, a publishing division, where the head of it has the title Global Director of Music Publishing. It's kind of absurd to say that Apple isn't in the business of music publishing.
      - manfredo 6y ago
        If Apple has actually started publishing its own music then indeed Apple would be a music publisher. But has Uber done the same? Can you charter a car actually driven by Uber employees? As far as I am aware, Uber exclusively builds a platform to link passengers with independent drivers - who can and often do drive for competing services. Akin to what iTunes was before Apple started publishing its own music.
        solidasparagus 6y ago
        Your argument is circular. Uber drivers aren't employees because they are contractors. They are contractors because driving isn't Uber's core business. Uber's core business isn't driving because they don't have any drivers as employees. Uber buys cars and leases them to drivers, it offers full-time professional drivers through Black, it invests billions of dollars into self-driving cars, it offers delivery as a B2B service. Look at the Uber Eats advertising[1] - they aren't claiming to connect you to drivers, they are claiming to connect you to your customers. Uber's core business is clearly driving. [1] https://www.ubereats.com/restaurant/en-US/signup https://www.ubereats.com/restaurant/en-US/signup

> The drivers are outside of Uber's business. Uber is a software and technology company, not a taxi service. That is some serious mental gymnastic.

by nostoc 6y ago

> The drivers are outside of Uber's business. Uber is a software and technology company, not a taxi service. That is some serious mental gymnastic.

manfredo 6y ago

No, it's not. Is Apple in the business of producing records because it runs iTunes? No, it's in the business of software (and hardware), and some of that software is used to sell music. Trying to claim that a software service to run a marketplace to sell X is the same thing as actually running a business of building or doing X takes some mental gymnastics.

gamblor956 6y ago
It takes some seriously bizarre mental gymnastics to call Uber/Lyft "marketplaces" when they don't provide any of the hallmarks of a marketplace, such as the option to select between multiple "stores" (aka drivers) or let drivers compete by offering their own prices. Even more importantly, with an actual marketplace, you don't transact with the marketplace--you transact with the stores. And with respect to your Apple analogy: Apple doesn't claim to be in the business of making music, just selling it. Uber/Lyft do claim to be in the transportation/food delivery businesses, and it's literally all over their legally binding SEC filings that the provide to investors every few weeks. If it quacks like a duck, and it walks like a duck, and it swims like a duck, you can call it a digital platform all you like but it's still a duck.
- manfredo 6y ago
  No, the Apple analogy is entirely accurate. Apple is in the music business. But it's not in the business of making music, it's in the business of selling music. Apple is in the music business in the same vein that a record shop is in the music business. Uber is in the personal transportation business, at a broader high level. It's in the business of operating a market for rides. Just like how a record store doesn't actually compose and record the music it sells, Uber isn't in the business of actually driving people around. That task is fulfilled by independent workers, who use the platform Uber and Lyft operate to find customers. Can you point out in said SEC filings where Uber says, "our company's primary business is operating motor vehicles to transport customers"? As in, actually driving their own cars? Because from what I've read they're very careful about describing their business as operating a marketplace for drivers to conduct their own businesses.
  - gamblor956 6y ago
    We agree that Apple is just selling music, not making it. We disagree on how analogy that applies to Uber. On its 10K, Uber identifies "gross bookings" as its primary revenue stream. Not "net bookings" or "commissions" or "marketplace fees." Gross bookings. Meaning that it treats all of the income from a ride as its own income, meaning that it's primary business activity is providing transportation services. The same is true for Lyft. If they want to claim to be technology companies that only make their money from marketplace fees/commissions, they're free to do so but they'll need to change their financial and legal filings to match (and possibly their fare structures as well, since there's a mismatch between what riders pay and what drivers actually get). The reason they haven't done so is because that amount would be a lot smaller than the gross bookings number, but they can't have it both ways.
    - manfredo 6y ago
      What impact does this have on the classification of drivers? When Uber takes $10 from a passenger for a ride, and contracts out a driver to transport the passenger for $8 then Uber has a booking for $10 and an expense of $8 for contracting out that ride. This doesn't change the fact that the driver is a contractor who sets their own hours and can drive for competitors. Yes, Uber and Lyft are involved in providing transportation services but their involvement is in connecting customers with transportation providers. Calling Uber and Lyft taxi companies makes about as much sense as calling an Expedia an airline. Expedia provides air transport, but through reselling the services of airline companies like Delta or Alaska. Uber and Lyft provide transport by reselling the services of independent contractors. Uber and Lyft are taxi companies as much as Expedia is an airline: they're not.
      - gamblor956 6y ago
        It's a basic principle of contract law that parties can't agree to a valid contract if they don't know the basic fundamental financial terms of the contract, like say, the price. A driver does not know how much a passenger is paying for the ride. The passenger does not know how much the driver is receiving for the ride. Ergo, they cannot have formed a valid contract with each other. On the other hand, the passenger knows how much they are paying Uber, and the driver knows how much Uber is paying them. This indicates that the common relationship is Uber, and that the driver is acting as Uber's agent with respect to the driving services. This is supported by Uber/Lyft treating gross booking as their revenue. It is a long-standing principle of GAAP that if you are collecting money on someone else's behalf as their agent, it's not your revenue. If you are treating the money as your revenue, and their services as an expense, that indicates they are acting as an agent on your behalf with respect to the services/whatever that gave rise to the revenue. Because the driver is acting as Uber's agent, AB5 comes into play to determine whether they are an employee or independent contractor. I don't know why you're fixated on Expedia. Expedia is a reseller, which is a thing that has existed as a legal construct for over a century and has an actual meaning and requirements defined by law. Expedia doesn't resell services, it sells reservations/tickets/etc provided by third parties that represent a right to a specific performance of a specified service at a specified time and place by that third party. Importantly, once a transaction is completed on Expedia, the customer must generally seek customer service from the third party, not Expedia, because Expedia's role in the transaction is completed, and Expedia only provides relief if the third party will not, and that relief is limited to refunding the customer for the amount they paid Expedia. UberLyft don't sell services provided by third parties, they sell a service (transportation or food delivery), and it happens to be performed by third parties on UberLyft's behalf. In contrast to Expedia, none of the participants in the transportation or food delivery service get to select their putative counterpart to the transaction, or the financial terms of the transaction, and after the driver's part is concluded they usually have no further interaction with the passenger as customer service service issues are provided by UberLyft, not the driver. IOW, there are no hallmarks of a business relationship between the driver and customer.
solidasparagus 6y ago
Yes, Apple is absolutely a music publishing company (among other things) because it runs iTunes.
- manfredo 6y ago
  It's a music publishing company as much as DoorDash is a restaurant. You use DoorDash to get food, but DoorDash is not the person actually making the food. Likewise Apple sells music, but said music is actually recorded and published by some other entity.
  - solidasparagus 6y ago
    Apple has Apple Music, a publishing division, where the head of it has the title Global Director of Music Publishing. It's kind of absurd to say that Apple isn't in the business of music publishing.
    - manfredo 6y ago
      If Apple has actually started publishing its own music then indeed Apple would be a music publisher. But has Uber done the same? Can you charter a car actually driven by Uber employees? As far as I am aware, Uber exclusively builds a platform to link passengers with independent drivers - who can and often do drive for competing services. Akin to what iTunes was before Apple started publishing its own music.
      - solidasparagus 6y ago
        Your argument is circular. Uber drivers aren't employees because they are contractors. They are contractors because driving isn't Uber's core business. Uber's core business isn't driving because they don't have any drivers as employees. Uber buys cars and leases them to drivers, it offers full-time professional drivers through Black, it invests billions of dollars into self-driving cars, it offers delivery as a B2B service. Look at the Uber Eats advertising[1] - they aren't claiming to connect you to drivers, they are claiming to connect you to your customers. Uber's core business is clearly driving. [1] https://www.ubereats.com/restaurant/en-US/signup https://www.ubereats.com/restaurant/en-US/signup