Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Tag: Uber

Uber’s Finally Profitable & Workers and Customers Will Pay Back Its Losses Fast

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On July 25, 2025

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Uber started in 2009. It incurred losses every year until 2023 except for a profit in 2019 which was due to selling subsidiaries in various countries. Numbers before the IPO are difficult to obtain, but it lost 31.5 billion from 2016 to 2022. Let’s assume a loss of equal to funding during the pre-IPO period, so 24.7 billion. This seems reasonable, since Uber never made a profit during the period.

So we’ll estimate Uber’s total losses at 86.2 billion from 2009-2022.

In 2023 Uber made a profit of 1.9 billion and in 2024 it made a profit of a little under ten billion. Prices for rides on Uber are between ten to twenty percent higher than taxi rides, rising to as much as 50% higher during surge pricing periods (when there’s the most demand.) Driver’s on average, get paid less than taxi drivers used to.

So–the workers get less, the customers pay more.

The strategy, as many people noted, including myself, was for Uber and Lyft to drive taxis out of business by undercutting their prices. Uber and Lyft didn’t need to make a profit, while taxi companies did. Once they had gained dominant market share, they raised prices and took oligopoly profits.

Everyone knew this was the play, and that people were getting subsidized rides now (Uber was much cheaper than taxis in the early years) in exchange for getting fucked over later. Well we’re now in the sandpaper condom period of “ride sharing”, where investors earn back their investment by hurting everyone else.

This should never have been allowed. Uber and Lyft violated massive numbers of laws and were just allowed to do so thru non-enforcement. The end result was obvious and it’s here now: worse wages, higher prices and less ability to regulate the industry.

This sort of stupid is why everything keeps getting worse. Every part of the “sharing economy” (which is no such thing) has made the lives of ordinary people worse. AirBnB in particular helped drive the rise in rental prices in hundreds of cities.

All that most tech-bro firms do is find a place where there isn’t market power, and try to add it. Same with Private Equity, which buys up entire industries in order to form oligopolies and monopolies, as it’s doing in the housing market now.

Market power always means more money for a few rich people and higher prices and worse income for everyone else involved in any given industry.

Welcome to the tech-bro future and remember, Soylent Green is people and so are high profits, always.

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The Lyft and Uber Endgame: Oligopoly Prices, Impoverished Workers

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On April 2, 2019

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The problem with ridesharing is simple.

Lyft and Uber are losing a lot of money.

They are doing so to increase market share: To drive taxis out of business.

That they are losing money, and the fact that they are highly valued means that they, and all their investors, expect that they will eventually stop losing money and start making it hand over fist.

In other words, having driven their competitors largely out of business, they will now raise prices.

Once they are an oligopoly, they will charge oligopoly prices.

They may be slightly lower than taxi prices in the end, because unlike taxi owners and drivers they don’t have to pay the capital costs (obviously not using that term in the way Silicon Valley does) of their vehicles, and they can pay near-starvation wages to drivers as long as the job market at the bottom end remains loose (ie. for the forseeable future. Despite the unemployment rate, the truth is, it’s still hard to get jobs near the bottom).

In other words, Uber and Lyft will squeeze additional profits out of their drivers and provide a very small decrease in prices (perhaps).

This, in manufacturing, is known as dumping: Providing something at less than the cost in order to drive competitors out of business, with the intention of then raising prices later. It’s generally illegal, though often not enforced, just as the simple fact is that most of what Uber and Lyft have done is straight up illegal–against most municipal tax regulations and much labor law.

So we’ll get cheaper rides, for now, in exchange for accepting an oligopoly which crushes it workers and provides little price benefit (and a lot less safety), later.

Doesn’t seem like much of a deal, or progress.

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The Market Fairy Will Not Solve the Problems of Uber and Lyft

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On April 14, 2016

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Image by Admit One

Image by Admit One

Here is the thing about Uber and Lyft (and much of the “sharing economy”).

They don’t pay the cost of their capital.

The wages they pay to their drivers are less than the depreciation of the cars and the expense of keeping the drivers fed, housed, and healthy. They pay less than minimum wage in most markets, and, in most markets, that is not enough to pay the costs of a car plus a human.

These business models are ways of draining capital from the economy and putting them into the hands of a few investors and executives. They prey on desperate people who need money now, even if the money is insufficient to pay their total costs. Drivers are draining their own reserves to get cash now, but, hey, they gotta eat and pay the bills.

This sharing economy shit works in a shitty economy. In a good economy, where people have what they need, it doesn’t work.

The cab company model, with medallions and so on, was exploitative. It wound up charging customers too much, but it did cover its own costs–mostly. Uber and Lyft charge too little and siphon too much of what they charge back to themselves.

The model which made sense was the model of car-sharing, where company-owned cars could be used by those who had bought memberships in the company. This meant that the actual cost of the cars had to be covered. It was far cheaper than cabs, but not as cheap as Uber or Lyft (and you had to drive yourself). Something like that, but with drivers, could have worked.

For that matter, Uber- and Lyft-style apps could work with regulated wages sufficient to pay costs in particular markets.

The market will not miraculously produce a capital-replacing living wage. If it should do so in any particular market, that is happenstance; luck, not social physics.

This is a social action problem; a race to the bottom issue. It makes sense, individually, to race to the bottom.  Company execs and investors get rich, consumers get cheaper rides and drivers get money they need. But this isn’t win, win, win. It’s a long con. And not a very long one, either.

The cheaper wages paid to drivers, and thus the cheaper rides, also drive business with capital structures which make social sense out of business. They can’t compete with, “Drive your car into the ground, make less than minimum wage.”

Because it is a social action problem, what needs to be done is to take a game which leads to some people winning while destroying capital and people and move it to a game where everyone wins and capital and people are not destroyed. This can only be dealt with socially, by government.

“Thou shalt pay at least the capital replacement cost + a living wage for the market and shall take only an additional X percent for providing your app. If thou dost not we shall toss thine ass into prison.”

That is the social solution. It is not “The Market Fairy of supply and demand will make sure that fair, sustainable solutions always occur. All praise the Market Fairy.”

Until we stop pretending the Market Fairy is going to solve social action problems, we won’t actually solve those problems.

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France Arrests Uber Executives

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On June 29, 2015

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To recap: French Taxi drivers went on strike, beat cars with metal baseball bats, and damn near shut down Paris’s airport.

As a result, France arrested two French Uber executives. It has also been seizing the cars of Uber drivers.

Unions work. Violence, done smart, works.

(French truck drivers, when they want something, will en-masse park their rigs in the middle of the street, shutting down traffic, etc.)

You receive good wages only when there is a tight labor market. That can be generally, or it can be “your profession/group in specific.” (Professional associations are just upscale unions who pretend they aren’t, unions being declasse.)

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French Taxi Drivers Receive Concessions Through Violence

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On June 25, 2015

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There are only two conditions under which labor receives a decent wage:

  1. It is in short supply generally (there is not enough and companies must generally compete for it).
  2. It is in short supply in a specific job category, because other people aren’t allowed to horn in (due to unions, guilds, medical degrees, law associations, taxi medallions, etc.).

I bring you now to the French Taxi riots over Uber:

“They’re beating the cars with metal bats. This is France?? I’m safer in Baghdad.”

70 vehicles were damaged, seven police officers injured and 10 arrests made on Thursday, when 30 legal complaints were filed against UberPop.

and…

France’s interior minister, in a bid to halt a day of sometimes violent protests by taxi drivers angered by Uber’s low-cost UberPop service, said Thursday that the app-based business must be shut down. He said orders would be given to seize vehicles.

This is what works. This is the only thing that has ever worked worth a damn. Unions drove higher wages in the industrial era, and unions were violent. Period. End of goddamn sentence. They went toe-to-toe against strike breakers, they fought  police when necessary, miners even once fought the army on a mountain.

You will only have a good lifestyle when you have the POWER to insist that you get a good slice of the pie.

POWER.

Thus endeth the sermon on the brutally obvious.

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