https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2837639
Discussed on HN: 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.
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://www.gurufocus.com/economic_indicators/4226/sp-500-op...
It's not like people were very happy about their "disruption" of the job market to begin with.
Isn't this just describing a market? If I am trying to buy something (in this case a driver's services), I will first buy the cheapest?
That imbalance is what people hate. It's part of why people hate car salesmen. And a large part of why people hate most salesmen.
There are some people that are loyal and don't mind paying slightly more. Or don't want the overhead of having multiple apps. Let them pay more.
This is essentially the same thing as coupons and sales. The people that take the effort to find and clip coupons and plan their shopping accordingly pay less. I don't bother so I pay more. I'm fine with this.
What is the bigger problem? Some democratic principle of everyone pays the same?
Again, Uber has 10% operating margins.
Now it's not-really-employees with magical floating prices and people accept it because "computer".
You spend 10 years price dumping and being unprofitable to the tune of being 20 billion dollars in the red.
Customers are attracted by your price dumping because you offer cheaper rides than competition which has to deal with pesky insignificant things like labor laws, employees, inventory etc.
Did you create "customer surplus"?
Literally any educated adult whos ever read Marx, Engels, or Paul Sweezy.
literally anyone whos ever turned the lens of historical materialism on capitalism.
It's now more than I use to pay to take a cab and all the cabs are gone.....
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:
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.
I use uber a lot, I’m in one right now. My partners phone consistently gets cheaper estimates.
Possibility: Develop a "loyalty" program where customers provide a member id like a phone number at checkout. Anonymous shoppers get the worst pricing. Everybody else voluntarily signs up for price discrimination disguised as rewards.
* This person is wearing a suit, I'm going to charge double
* This is a regular that always buys the same thing every week, I can charge 30% more without breaking his routine
* This one is buying the ingredients for a recipe to do tonight, I can charge double more on one product because she won't want to go to another grocer just for one missing item.
Or in economic terms it is doing price discrimination to turn the consumer surplus into profit for itself. I think it's obvious why consumers wouldn't like that. Although they can also do "this one is a cheapstake with lots of free time, I have to offer a 20% discount to keep him coming"
One major clothing retailer I worked with for 4+ years was big on promotions, particularly via direct mail. Those scratch-off coupons were not random; they were specifically targeted to individual customers based on their prior behavior.
For example:
- Customer A historically buys when they get a 30% coupon; test them with a 20% and see if they bite, but if not, give them the 30% and get some money.
- Customer B will always buy with almost ANY discount but never without one; give them the lowest one most of the time, but occasionally give them a higher one because it keeps them interested.
- Customer C will buy any time, but we need to keep them hooked so we send them the lowest one all the time.
---
I just don't know why people are surprised that this is happening at a bigger scale in app; it's baffling to me.
I don't see what the problem is.
Presumably people are fine with getting "ripped off" by Uber, otherwise they wouldn't keep using Uber and paying for it.
It's not like it's some free ad-supported product that's a scourge on society where all the costs are hidden.
I avoid Uber at all costs, other people are happy to rely on it. To each their own.
Fun fact, it's very easy for apps to see what apps you have installed on your phone.
If you only have Uber installed on your phone, see what happens with future pricing when you install Lyft, Curb, Waymo, etc.
You don't even need to ever use them. Just have them installed.
This sort of thing happens when you reach de facto monopoly status...
The problem is most people don't know. In my country you can't change the price for a given person. So if you don't know it's done, you can't change your behaviour (like do legal actions).
Betting it’s based on stereotypical appearance and language, not checking IDs.
A more charitable approach might be to charge an extra fee for foreign credit cards - that way you get to effectively upcharge tourists, while encouraging conversion to and payment by local currency, additionally saving yourself transaction fees in the process.
It's kind of reductionist to take that environment and that culture and just default to "giving the white guy the expensive menu is racism." You'd have to do that to probably 1500 people before you hit the person who has actually immigrated as opposed to a tourist.
It's an interesting dilemma. Personally, I prefer the version of price discrimination where you introduce high-margin premium value-adds that people can opt in or out of - alcohol or steak/lobster at a restaurant, rooms with views or additional packages at hotels, table service, etc, which can allow wealthier customers to subsidize less wealthy ones without necessarily compromising the core service. Though that's still a bummer when adding a view to a room is prohibitively expensive for something that cost the hotel nothing more to provide, and you feel like either you're getting screwed or you'll always have an alleyway view from your hotel.
I’m not sure why we should presume people are “fine” with this just because it’s something that happens.
Plenty of things happen in this world that are not “fine” and make people upset, but continue to happen because of market forces, lack of reasonable alternatives, something being the “least bad” option, etc.
I think one of the most glaring issues is that Uber has established dominance in the category, which gives them power of their users and allows them to implement pricing strategies that are user-hostile with less chance of repercussions.
They're fine with it because of the lack of real alternatives. There's effectively a duopoly with Lyft in most cities. Duopolies usually don't present every customer with at least some sort of solution that allows for both parties in the business transaction to gain value.
Which is why taxis were a regulated industry before some cokeheads in SV decided things needed to be "disrupted".
If someone creates the same or better service at a more reasonable price, the consumers will switch. There is no vendor lock-in for Uber and no monopoly.
I don't see anything illegal going on here, just good old business.
This one is getting to me more and more. When I grew up, you got the best deals as a regular customer. Nowadays it's the opposite. Loyalty is something that can be exploited. If you don't switch insurance regularly, you are paying way too much. If you stay at a job for longer, you get paid under market. If you use a service regularly, you get charged more.
I think it's really corroding society when loyalty and trust are viewed as an exploitable weakness.
The mom and pop store making $200k/yr revenue selling physical goods gives regulars a deal because if their $100/mo spend goes elsewhere it is a demonstrably negative business impact, and there are 2 or 3 other mom and pop stores close by. The owner's kids also probably go to school with the regular's kids or there's some similar relationship. Plus, even if they wanted to maximize profit - they probably don't based on the previous point - they simply don't have enough data points to figure out how exactly to do it.
The multinational corporation has billions or tens of billions in revenue, tens or hundreds of thousands of locations, and so many data points they can test any price discrimination scheme they want and get data almost instantly. But this by itself isn't a problem (IMO, certainly some here would disagree). The root of the problem IMO is that there's no relationship. The manager of the location has no power, the district manager is in a city an hour away, the people making these pricing decisions live in another state or country, and they are judged on making the graph go up and to the right. Their bonuses depend on it, their livelihood depends on it.
In the mom and pop scenario, the customer interacts with someone whose livelihood depends on them being happy and has the power to make sure they are. With the multinational, they interact with someone who doesn't give a shit if they're happy or not, and has no power whatsoever, and the lowest person with power doesn't have any idea who they are and is actively incentivized to screw them.
Uber's price discrimination is opaque. Even if they aren't doing dastardly things with it, people don't like feeling ripped off. We have no way of knowing when we are.
1. The existence and mechanism of coupon programs is visible instead of secret.
2. They are not based on creepy individualized spy dossiers.
But most big box stores have moved to digital coupons that are indeed customized based on their creepy individualized spy dossier on you. At our grocery store, my partner and I get different coupons or even different deals for the same items.
Hardly a new idea. And Uber didn’t create it, they just do it well.
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.
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.
I think Uber verifies driver quality/qualifications and vehicle roadworthy-ness?
FWIW, the oversight of Uber on drivers is part of the success of Uber. I'm not talking about their mistreatments of drivers, but the fact that as a consumer I have reasonable confidence that the driver has been doing a decent job so far and that if I have a problem with the driver, there'd be some consequences through Uber.
It's part of what allowed their success: from unaccountable taxi mafias to a service consumers can trust.
It's far from perfect of course but it's good enough that I'm confident enough using Uber (although I avoid it for other reasons) even in foreign countries. It's probably not impossible to achieve with a co-op, but it seems more difficult
This is my biggest problem with taxi service in the past. Unless they behave criminally towards you and you can go to police, you were at their mercy. Any cost had to be accepted, no idea how much it would cost upfront.
There were whole scam rings around that in some parts of Europe, taking foreign customers via very elongated roads to destination. Or a story from a colleague - taxi driver in Paris literally threw out a customer in the middle of highway since he didn't like his personal political views on famous french protests. In normal situation that would mean the taxi guy losing his 200k euro medallion, in reality of course nothing, zilch, nada.
As an aside, this is why I generally trust public transit more whenever it's an option. The worst case scenario is just so much less sinister when there are other people around than it is in a car alone with a stranger.
[0] once in a lyft in seattle, the other in a taxicab in barcelona. figuring I've taken about 100 lifetime solo car rides with strangers which is probably an overestimate.
How would uber know? They can’t unless someone reports the driver or gives them a poor rating.
Let me tell you about taxi cabs.
Everyone hated taxis because they were so unreliable and unaccountable for scamming you outside of a few dense cities like NY.
Essentially Taxi drivers are the random strangers over the apps with ratings and reviews from other riders showing clearly.
Instead, I do get comfort in knowing that there is a database timestamped entry linking myself with an Uber driver identifier. Should something happen, I could theoretically complain/give a lead so investigators can locate my murdered body. Random cab is more anonymous and feels more dangerous in unfamiliar territory.
Which is a surprising viewpoint for those of us who don't have the safety concerns others may have but when you think about it, it makes complete sense.
They use uber because uber killed anything else. That was the entire point of the ride price subsidies.
My guess is the real difficult part is maintenance and server costs. It's probably pretty expensive to run
And plenty of competitors have popped up. Any time you travel outside of the US you need to use the local app. Didi, gojek, grab
The idea is that drivers pay a flat fee per month and get to keep the entirety of the fare. I used it for a while but my desire to get somewhere fast outweighed my disdain for Uber as middleman. Eventually I went back to Uber/Lyft due to long wait times and unreliable pickups.
It is a lot more like "some guy giving you a ride" instead of a car service. My buddy initially pitched it to me as a cheap alternative to Uber for drivers that were banned from Uber. It is nice that they don't have surge pricing. Empower is somewhere in between the convenience and price of Uber and public transportation.
While it's availablity is very good, there are three competitors (one of which is uber) with better, more reliable availability so it's tough competition.
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.
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.
It will probably work for both sides, as the only people left are either ok with that or clueless, perfectly self selected.
In fact i just tested. Lyft discount notification came in after 2mins of doing the above.
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.
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.
But I suspect the false positives on this would be huge and if you felt so compelled could easily test while at your desk.
https://developer.apple.com/documentation/corelocation/clloc...
(Edit: annoyingly, the parentheses are part of the URL. I don’t know how to encode them to make HN’s link parser happy, so you may have to add them by hand if you follow the link.)
(Edit 2: fixed, duh--thanks @akovaski!)
Previous HN discussion here: https://news.ycombinator.com/item?id=43687696 Another forum discussion: https://archive.ph/wip/ck9CJ
> Before scheduling any notifications using this trigger, your app must have authorization to use Core Location and must have when-in-use permissions.
https://len-sherman.medium.com/how-uber-became-a-cash-genera...
I found the author's blog post more informative than the newspaper article.
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?
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.
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.
Edit: I'd love for this to be another thing to add to the list of reasons why Uber sucks. But this specific thing seems pretty normal and what absolutely any company would do in a similar circumstance.
And btw, the no one really knows the exact mechanism thru which you get bonuses cuz its a model trained on many inputs. Not accepting rides is just one part of the equation.
If I were trying to run an ethical pricing model, I would give bonuses to anyone driving in surge/prime hours; I wouldn't limit the bonuses to people that I think would drive in those hours cause that's bs
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-te...
Justin_K•6h ago
blendergeek•6h ago
Y-bar•6h ago
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•5h ago
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.