4 ms·

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.

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.
    - manfredo 6y ago

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.
  - manfredo 6y ago