Pixel Envy

Written by Nick Heer.

Uber and Lyft Are Counting on Automation

Aaron Benanav, the Guardian:

One might assume that misclassifying drivers as independent contractors enables rideshare companies such as Uber to make exorbitant profits. The reality is far weirder. In fact, Uber and Lyft are not making any profits at all. On the contrary, the companies have been haemorrhaging cash for years, undercharging users for rides in a bid to aggressively expand their market shares worldwide. Squeezing drivers’ salaries is not their main strategy for becoming profitable. Doing so merely slows the speed at which they burn through money.

The truth is that Uber and Lyft exist largely as the embodiments of Wall Street-funded bets on automation, which have failed to come to fruition. These companies are trying to survive legal challenges to their illegal hiring practices, while waiting for driverless-car technologies to improve. The advent of the autonomous car would allow Uber and Lyft to fire their drivers. Having already acquired a position of dominance with the rideshare market, these companies would then reap major monopoly profits. There is simply no world in which paying drivers a living wage would become part of Uber and Lyft’s long-term business plans.

I’m not sure about you, but I find it pretty revolting that a bunch of venture capital dorks gave bottomless funding refills to these companies as they illegally expanded operations and blew up the livelihoods of drivers around the world on the off chance they can build cars that drive themselves and, until they can figure out how to do that, exploit drivers — some of whom used to be taxi drivers that they put out of work — by often paying less than minimum wage.