Sunday, January 31, 2016

Enjoy Your Uber While You Can

An obvious but rarely asked question is: whose cash is Uber burning? With investors like Google, Amazon’s Jeff Bezos and Goldman Sachs behind it, Uber is a perfect example of a company whose global expansion has been facilitated by the inability of governments to tax profits made by hi-tech and financial giants.

[...]

[T]his money is parked in the offshore accounts of Silicon Valley and Wall Street firms.

[...]

Some of these firms do choose to share their largesse with governments – both Apple and Google have agreed to pay tax bills far smaller than what they owe, in Italy and the UK respectively – but such moves aim at legitimising the questionable tax arrangements they have been using rather than paying their fair share.

[...]

While you might be tempted to ascribe the low costs of the service to its ingenuity and global scale – is it the Walmart of transport? – its affordability has a more banal provenance: sitting on tons of investor cash, Uber can afford to burn billions in order to knock out any competitors.

[...]

Uber’s game plan is simple: it wants to drive the rates so low as to increase demand – by luring some of the customers who would otherwise have used their own car or public transport. And to do that, it is willing to burn a lot of cash, while rapidly expanding into adjacent industries, from food to package delivery.

  Guardian
And once they have driven (literally) out the competition, the rates are going to rise, as sure as you're sitting here reading this.

I'm assuming they've addressed their drivers' grievances, but I could be wrong.  In France, they've generously offered to allow any taxi drivers who are being driven out of business a second job driving for Uber.  Once they've succeeded in driving them out of business, there may be no other work for them, and then...well, we call that 'over a barrel'.  I'm not sure why.  But I know that when you are 'over a barrel', you don't have any bargaining leverage.

...but hey, do what you want...you will anyway.

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