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Second study finds Uber used opaque algorithm to dramatically boost profits
- Justin_K 1y agoSadly, cab drivers did the same thing. Countless times I was given overpriced rates in times of need, like late night closing time.
- blendergeek 1y agoCab drivers dramatically boosted profits while decreasing driver pay? This goes way beyond increasing prices. Uber both increased prices and decreased driver pay at the same time. I used to driver Uber to make extra cash. They usually took about 16-17% and I made $25-30/hour (before taxes and expenses). Now they take more than 25% and I make $20/hour before expenses so I only drive when I want to have a bunch of conversations with random people
- Y-bar 1y agoCab drivers are by law (in much of Europe) required to have their prices stated on the window or inside the car, with surcharges clearly displayed. The driver must also have a valid id and license displayed inside the car. Are you sure you actually rode a taxi and not some illegal or almost illegal rideshare like Uber which has no such regulations? If I were you I would have taken a picture of the car with the license plate and then reported them to the authorities.
- grogenaut 1y agoThey have all of that. Then you get to the place and they hit some buttons and crazy opaque math happens and then you have a 30 minute fight with the dude. And the reader was always broken and no they can't break a 100 or a 20 or a 5 Up front pricing is way better. When I used to do cabs I'd always do upfront prices. $40 to the airport no meter includes tip. 50 ok sounds good. Let's go.
- t_mann 1y agoAlmost 10 years ago, Uber was hailed for creating consumer surplus [0] in similar studies: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2837639 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2837639 Discussed on HN: https://news.ycombinator.com/item?id=12478847 https://news.ycombinator.com/item?id=12478847 Who would have thought that they'd turn that research into algorithms that skim off surplus (from consumers and drivers)? [0] Consumer surplus: roughly, the benefit of all those consumers who got a lower price than what they would have been willing to pay. Especially prevalent when there's one price for all. So the natural enemy of consumer surplus is price discrimination, where suppliers try to extract close to the maximum amount they're willing to pay from each consumer.
- bko 1y agoI don't know, isn't the consumer surplus evidenced by people using the app? I wouldn't think of just blindly hailing a cab anymore, especially in a city that's new to me. It doesn't have to be the lowest possible price, the experience just has to be consistent. Log into the app. It already has my credentials and payment information stored. See the price, distance and time up front. Follow along the route while I'm driving. No money exchanged, no watching the meter or wondering if he's driving me around in circles. No fumbling for payment or pressure to tip. That's the value. In terms of price discrimination, they make more money on business travels or when it's crazy busy. The alternative is you can't get a cab. So I'm okay with it. Their operating margin is about 10% which is reasonable for a business. The S&P 500 operating margin is 12.22% And it's super easy to shop around. I always look at both Lyft and Uber and almost always go w/ Lyft as it usually has the lower price. What are people complaining about exactly? https://substack.com/home/post/p-163022654 https://substack.com/home/post/p-163022654 https://www.gurufocus.com/economic_indicators/4226/sp-500-operating-margin https://www.gurufocus.com/economic_indicators/4226/sp-500-op...
- dotandgtfo 1y agoI think the issue arises from them doing this on the supply side of the market as well. Discriminating offers to drivers in order to prioritise people willing to drive for less. Or just finding ways to pay people less through algorithmic means. It's not like people were very happy about their "disruption" of the job market to begin with.
- sleepyguy 1y agoI've noticed that a trip I've taken for years has increased significantly in price over the last 6 to 8 months. I used to pay around $17 to $20, but now the same trip costs approximately $25 or more. I spoke with the driver, and he mentioned that he still receives the same amount—$11.00—so it seems the extra cost is going to the platform, not the driver. It's now more than I use to pay to take a cab and all the cabs are gone.....
- mailund 1y agoThis has been a known strategy from Uber for a long time. Run at a loss to squeeze out the existing offerings, then dramatically increase prices once they've established a monopoly. Combine this with exploiting loopholes to get around local labour regulation or just outright ignoring it just because, giving them an unfair advantage over competitors that were operating more or less honestly. I wish I could say I was surprised they got away with it just because they were doing it through an app :shrug:
- mannykannot 1y agoDoing it through an app is what made it possible to turn each transaction into effectively a pair of opaque auctions with Uber holding all the information, but they got away with it because consumers really like low prices.
- i_k_k 1y agoI’m not a huge fan of Uber’s corporate policies in general, but help me understand what’s wrong with this. Isn’t this what any company would do: maximize revenue from customers while minimizing expenses to their suppliers? Most businesses don’t tells us how they do this. My grocer sells me a can of beans at some price. I have no idea how they arrived at that price, how much they paid their wholesaler, or that they may have a sale on beans next week. I buy or don’t buy beans based on whether I feel they’re worth the cost. And whether I feel like beans.
- kirykl 1y agoIf the retailer is in a monopoly position and the prices are not public it may be exploitative
- aunty_helen 1y agoYour grocer doesn’t sell the next person a can of beans at a different price though. Hey nice watch, we have a 50% on discount for you. I use uber a lot, I’m in one right now. My partners phone consistently gets cheaper estimates.
- abtinf 1y agoGrocers run coupons and promos to help achieve price discrimination based on purchase timing preferences.
- hermannj314 1y agoDoes Uber have a patent moat or is their moat the brand? For as much hate as they receive, I'm not sure why a driver-owned cooperative app has not emerged that takes no profit. Is there something like this we should all start using instead? There isn't much technological innovation in ride-sharing that the FOSS community couldn't solve. I'd love to work in this area.
- jnsie 1y agoA decentralized Uber is an interesting thought experiment. I imagine the processing power required is a big barrier to entry for the FOSS community.
- rightbyte 1y agoProcessing power? I don't think there is much processing power needed. Like, you only need to ping drivers in your vincinity.
- lurking_swe 1y agoUber offers a lot more than just locating a driver. It’s a platform that generates a recommended route for the driver, shows the progress of the route to the customer in realtime so they know the driver is going the right direction, it calculates fares (e.g. distance, surge pricing, etc), and has other features like “share my ride details with my spouse” for example…for security purposes. That’s just what i could think of off the top of my head and i’m not a product manager at uber. Things are NEVER as simple as they initially seem. Other thoughts: - at uber’s scale, payment processing alone likely takes up quite a bit of compute server side. You could outsource this to a 3rd party, but it’s still an expense as you scale. - how would a decentralized system work if something goes wrong during the ride? who does the customer call? Drunk driver, attempted rape, etc. list of things that can go wrong is long. - your platform/app would need to be smart enough to know where all the “proper” ride share pickup spots are at every airport. Not trivial! - how would you offer a feature to “reserve a ride” like uber does, if you only build an app that can find “nearby drivers”? food for thought. :) All im pointing out is this kind of product needs to be a platform and is likely not cheap to run. It’s not 90% client side. Unless you literally just want to reinvent the taxi concept, in which case maybe the 90% client side approach is feasible.
- daft_pink 1y agoI’m confused about how drivers are able to accept or not accept a ride based on price
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- AndroTux 1y agoI would assume they get a notification showing the amount they'll earn, and then they can either press "accept" or "deny." As a driver, you're an "independent contractor," so you're not forced to accept any rides. If you don't like the route/client/value, you can just not accept it.
- gremlinsinc 1y agoI drive for Uber sometimes I use an app where it'll automatically take an Uber and turn off Lyft and door dash.. when it meets a filter... for example: $1 per mile, 25 per hour avg, and over $5 minimum... you can manually accept ones less than the filter... but it pops up a thing with all this data so you can make a decision whether it's worth it and while driving it's nice it turns the rest off so you don't have bad stats when they send you an offer and you don't take it because you couldn't turn it off yet.... it's $18 per month but worth every penny! plus I just hit 1 button to login to every service... https://l.myst.ro/N0Q9/movhhjr5 https://l.myst.ro/N0Q9/movhhjr5 (disclaimer: aff Link.... you can just look for myst in the app store on Android (not sure about iPhone).
- AnotherGoodName 1y agoA suggestion: Install both Lyft and Uber (or whatever the second biggest ride app is in your area). I get regular notifications along the lines of "$20 off your next ride with Lyft/Uber" when i do this. I do not get these otherwise. It's pretty clear that to use a ride app you need to have at least 2 on your phone, otherwise there's no reason not to charge you exorbitantly since you've trapped yourself.
- macintux 1y agoOn an iPhone, there should be no way for one app to determine the other is installed. Are you using Android?
- AnotherGoodName 1y agoI am using an iPhone. I assume the difference comes from taking a break from one app over the other. They are probably noticing I'm not doing my usual routine (because the other app gave me a discount).
- JimDabell 1y agoThis can usually be done on iOS by testing custom URL schemes. When it became apparent apps were doing this, Apple changed it so that you need to declare at build time exactly which schemes you are looking for. This information is present in the app bundle, so anybody can download and inspect the Uber app to determine if they are doing this.
- _DeadFred_ 1y agoThis is why people hate modern tech companies. They don't optimize for efficiency and providing the best service, they optimize for profit in 500 different messed up manipulative ways. I don't want to have a 'social credit score' to manage while on vacation in the form of my AirBnB rating. I don't want to gamify between two apps to get a ride. But tech says 'do it or we'll exploit you'. Modern tech business models make you pay a tax to not waste mental energy on their BS games and it gets exhausting. So you stop and resent the companies for ripping you off/manipulating you. I hope that frustrations comes back to bite them and instead of being special darlings with regulation carveout's they become the most regulated industry.
- cameldrv 1y agoSlightly off topic, but Lyft has really creeped me out recently. The last three times I’ve landed at SFO, I’ve gotten a push notification on my iPhone from Lyft saying “welcome to SFO, get a Lyft.” It’s always come as we were taxiing to the gate. After the first notification, I turned off location services for Lyft and only do one time authorizations, and then close the app when I’m done, but I still get the push notification. How is Lyft figuring out that I just landed at SFO? FWIW it has not happened at any other airport.
- TriangleEdge 1y agoMy first thought was it could scan the WiFi names. I think there's many ways to determine location without GPS.
- cameldrv 1y agoApple restricts this as part of the location services permission though, and to clarify, it’s always happened very shortly after touchdown, just as we started to taxi, where probably the terminal WiFi is not in range. After thinking about it more, I think they somehow know what flight I’m on and are using flightaware or a similar service to know when the plane touches down. The question then is how they know I’m on the flight. They can do this if you share your calendar with them, but I don’t. The only thing I can think of is either the airline is selling them the data or they’re getting it from my credit card company. Airline flights are unusual on credit cards in that the entire itinerary is on your credit card statement, not just “American Airlines” or whatever.
- joe_guy 1y agoI wouldn't assume this is how it works. But it could know your time zone changes and assume departure/arrival times based on it not being able to ping a server, then link this between possible airports based on time zones then possible flights based on the times. But I suspect the false positives on this would be huge and if you felt so compelled could easily test while at your desk.
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- wslh 1y agoThe playbook is similar to other platforms (e.g. AdWords). Third party analysis are great but don't reach the final chain.
- cs702 1y agoThe author of the study has written a blog post with lots of data, analysis, and visualizations: https://len-sherman.medium.com/how-uber-became-a-cash-generating-machine-ef78e7a97230 https://len-sherman.medium.com/how-uber-became-a-cash-genera... I found the author's blog post more informative than the newspaper article.
- kjkjadksj 1y agoFeels like the new algorithm now is almost a flat dollar a minute plus surge. How I long for the days I could get most anywhere from $4-$7. The uber there and back from the airport can be more than the flight now (once surged to $120 one way for a 35 min trip).
- metadat 1y agoI've observed Uber surges to $180 for a 30 minute trip home from SJC. I was ready to sleep on the bench all night and have a friend come in the morning, but fortunately Lyft was only $47. In hindsight , TechCrunch Disrupt actually looks really disgusting.
- wagwang 1y agoUber/lyft pricing models are extremely unfair. They "purchase" marginal rides and marginal driver hours using bonuses and meaning those bonuses go towards riders and drivers who are the most price sensitive, like a mom who only drives if the money is good. But for the driver who drives 10hrs rain or sun, they rarely get bonuses because their hours are static.
- pc86 1y agoWhy is this unfair? If driver A needs to be incentivized to drive, and Uber needs more drivers, they should have to pay more. If driver B is driving no matter what why would Uber pay them more if not for retention or something?
- wagwang 1y agoYou're basically penalized for treating uber/lyft as a real job and having loyalty, ie. getting paid less for the same amount of work. You don't think that's unfair?
- pc86 1y agoIt's a bidding system. If nobody accepts a ride at $X, the offered price increases to $Y. Does Uber have a responsibility to maximize its employees' (in the general sense, not getting into the employee/contractor distinction) earnings? Does your boss or their boss have a responsibility to get you as much money as possible? Assume we're both drivers for Uber, you're willing to do a drive for $30 and I'm willing to do the same drive but not for less than $40. Is it unfair to me for you to take that job for $30, knowing that I won't get it? I'd argue it's not (even if you know I'm waiting for the price to go up), and if that's unfair it's hard to make an argument that it's unfair for Uber to run that system.
- maratc 1y agoFrom [0]: Uber invented a particular form of algorithmic wage discrimination; if its drivers are picky about which rides they accept, Uber will slowly raise the rates to entice those drivers—until they start accepting rides. Once a driver does accept a ride, "the wage starts to push down and down at random intervals in increments that are too small for human beings to readily notice". ... As anyone with a technical background knows, "any task that is simple, but time-consuming is a prime candidate for automation". This kind of "wage theft" would be tedious and expensive to do by hand, but it is trivial to play these games using computers. [0] https://lwn.net/Articles/1021871/ https://lwn.net/Articles/1021871/
- exiguus 1y ago> Uber chief tells French lobbying inquiry company’s culture has been transformed May 2023[1] This is even more funny, especially after they had to change the hole leader-ship team, the leaks and corruption investigations. And now the opaque algorithm. Just don't use uber. [1] https://www.icij.org/investigations/uber-files/uber-chief-tells-french-lobbying-inquiry-companys-culture-has-been-transformed/ https://www.icij.org/investigations/uber-files/uber-chief-te...
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