Uber CEO Travis Kalanick
This weekend, as a gunman took customers at a Sydney cafe hostage, Uber quadrupled prices for Australians fleeing the area, setting fares at a minimum of $100 Australian dollars (about $80 in the United States). And though the San Francisco-based company backtracked within an hour by providing free rides, at this point, a catastrophically bad response to a crisis is to Uber what three yards and a cloud of dust is to Ohio State: The only play in the playbook.
But how many times can the fast-growing company run the same "screw up first, apologize later" play?
This wasn't the first time that Uber’s surge pricing system has caused the company PR headaches. Last summer, it came under criticism for doubling prices during Hurricane Sandy. After New York Attorney General Eric Schneiderman went after the company under a 1979 price-gouging law that passed during a heating oil crisis on the East Coast, Uber agreed to limit what it charges during emergency situations. But the price cap only covers natural disasters—and in any case, the agreement only applies to the United States.
In the Sydney case, Uber quickly changed course, offering free rides to residents fleeing the area and refunding fares. In a post, the company said, "Uber Sydney will be providing free rides out of [downtown] to help Sydneysiders get home safely.” It also defended the pricing model as a way to attract drivers during times of increased demand, saying “surge pricing is used to encourage more drivers to come online and pick up passengers from the area.”
That’s the thing about surge pricing: It’s an entirely rational, and even reasonable, high-tech version of what every capitalist has done since the first caveman traded two blocks of wood for one sheep: Change prices based on supply and demand. It’s hard to find something deeply objectionable about the mechanism in and of itself. But Good Lord does Uber make it hard to admit that point. As Wired pointed out, “even though Uber didn’t intentionally do anything sinister, the company’s public image has grown so tainted in recent weeks and months, that the public actually believes it’s capable of doing something like this. And that’s an issue that’s much tougher to fix.”
Indeed, the events in Sydney are just one of many PR and policy setbacks that Uber has faced in the last month. Last week, an Uber driver was arrested in India on allegations that he had raped a customer. In unrelated news, the French government announced that it would be banning Uber’s low-cost service starting next year after taxi drivers blocked roads in protest of what they called unfair business practices. And last month, one of its executives suggested hiring a opposition research team to attack the credibility of PandoDaily’s Sarah Lacy, an outspoken critic of the company. Uber CEO Travis Kalanick later apologized, but not before a wave of outrage. In California, Uber faces lawsuits from San Francisco DA George Gascón in conjunction with his counterpart in Los Angeles over various concerns about the company’s business practices.
Over the weekend, the Washington Post ran a deep dive into Uber’s collision course with state and local policymakers in the United States, arguing that “Uber’s approach is brash and, so far, highly effective: It launches in local markets regardless of existing laws or regulations. It aims to build a large customer base as quickly as possible. When challenged, Uber rallies its users to pressure government officials, while unleashing its well-connected lobbyists to influence lawmakers.” As the Post noted, the company has relied on a well-funded corps of lobbyists—at least 161 in 50 cities and states—to fight back against regulations backed by the taxi industry and insurance companies. As CityLab notes, Uber’s strategy, while leading to great success in its competition with the taxi industry, has led to public safety concerns: “local regulations do more than write the rules for supply and demand; they're also there to protect the public interest, and it's in this area where Uber has been equally disruptive, in a negative way.” Which is all another way of saying, Uber sure looks bad, but if consumers aren’t demanding change, it will be up to the regulators.
What's next for the company? Don't be shocked if there's another scandal. The only thing more reliable than that is being able to find a quick and convenient Uber in downtown SF.