Researchers Accuse Uber of Using Opaque Algorithm To Dramatically Boost Its Profits (theguardian.com) 28
"A second major academic institution has accused Uber of using opaque computer code to dramatically increase its profits at the expense of the ride-hailing app's drivers and passengers," reports the Guardian:
Research by academics at New York's Columbia Business School concluded that the Silicon Valley company had implemented "algorithmic price discrimination" that had raised "rider fares and cut driver pay on billions of ... trips, systematically, selectively, and opaquely". The Ivy League business school research — which is based on an analysis of "tens of thousands of trips ... as well as an analysis of over 2 million ... trip requests" — follows a similar academic paper based on 1.5m UK trips that was published last week by the University of Oxford. The British study found that many UK Uber drivers were making "substantially less" each hour since the ride-hailing app introduced a "dynamic pricing" algorithm in 2023 that coincided with the company taking a significantly higher share of fares...
[Len Sherman, the US report's author] added: "Since implementing upfront pricing, Uber has increased rider prices, has cut driver pay, has increased its take rates, and, of course, has greatly improved its cashflow during the period covered by this study...." The Columbia paper, which focused on 24,532 trips made by a single US Uber driver, concluded that the introduction of the new algorithm had allowed Uber to "significantly increase its take rate — the per cent of rider fares net of driver pay captured by the company — from about 32% at the start of upfront pricing to upwards of 42% by the end of 2024". Last week's University of Oxford research found that, since the launch of dynamic pricing, Uber's median take rate per UK driver had "increased from 25% to 29%, and on some trips ... is over 50%".
Thanks to Slashdot reader votsalo for sharing the news.
[Len Sherman, the US report's author] added: "Since implementing upfront pricing, Uber has increased rider prices, has cut driver pay, has increased its take rates, and, of course, has greatly improved its cashflow during the period covered by this study...." The Columbia paper, which focused on 24,532 trips made by a single US Uber driver, concluded that the introduction of the new algorithm had allowed Uber to "significantly increase its take rate — the per cent of rider fares net of driver pay captured by the company — from about 32% at the start of upfront pricing to upwards of 42% by the end of 2024". Last week's University of Oxford research found that, since the launch of dynamic pricing, Uber's median take rate per UK driver had "increased from 25% to 29%, and on some trips ... is over 50%".
Thanks to Slashdot reader votsalo for sharing the news.
Water is (Score:1)
Re:Water is (Score:5, Funny)
Ad their analysis proves Uber is taking everyone for a ride.
Re: Water is (Score:2)
Business works to increase profits. News at 11. (Score:3, Insightful)
Why does it surprise people when a business -- whose sole purpose in existing is to make profits -- figures out a way to make more profits? Maximizing profits is the primary goal of a smart business. That's what it does.
It's YOUR job as a consumer to choose to do business with them OR THEIR COMPETITOR depending on who has the best value proposition for YOU.
Making a profit, or increasing profit isn't evil or wrong. Choosing their competitor isn't either.
Re:Business works to increase profits. News at 11. (Score:4, Insightful)
This is more a problem for the drivers than the riders. The big problem is the opacity across competing platforms. If drivers knew their cut of ride fares for both Uber and Lyft, they could choose the one that earned them more money. However, the opacity prevents that and decreases competition.
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Pretty much every ride-share driver I've known is working for both Uber and Lyft simultaneously. You should be able to avoid Uber on principle without any impact to yourself, if (like me) you don't want to give business to Uber just because of their track record as a crap company.
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The issue is that Uber is hiding how it prices its services, which means consumers (and drivers) can't make an informed choice.
If Uber were totally transparent about its pricing, I'd agree with you.
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I guess I'm confused.
When go to order an Uber, it tells me how much it will cost before I commit to buying. I can look at the price and either buy, or not buy.
Is that now how it works for you?
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When go to order an Uber, it tells me how much it will cost before I commit to buying. I can look at the price and either buy, or not buy.
How would you feel if you find out that if I order an Uber for the exact same ride as you, I may get a better price, because Uber's algorithm has decided that you are willing to pay more than me. Same with the drivers.
Or how would you feel if an online store would show me better prices than you, because it figures out that you are willing to pay more than me.
According to the article, this is what Uber does:
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Or how would you feel if an online store would show me better prices than you, because it figures out that you are willing to pay more than me.
Amazon and Wal-Mart (and many others) already do this. They look at the specs of your PC, your address, etc and build a wealth profile on you. Then they charge you more or less based on what they think you are willing to pay. UBER is not unique here.
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I haven't seen that to be the case as I typically arrive at Amazon with no cookies whatsoever (firefox temporary container tabs ftw.) Logging in lowers the price in some cases, though only while I have an active prime subscription (which I only get when it's discounted and will save more on shipping than what prime itself costs, and then I cancel right after.)
Regardless, Amazon generally rips you off, which is one reason I typically don't use it. When it comes to dive gear, I always get a better price at my
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How would you feel if you find out that if I order an Uber for the exact same ride as you, I may get a better price, because Uber's algorithm has decided that you are willing to pay more than me. Same with the drivers.
This isn't even remotely new, and if you think it is, then you've simply gotten complacent just seeing a price in a store and thinking that's the price. If you don't like the price, you always have other options. Maybe another store is having a sale, or maybe wait a month and the same store has a sale. The only new thing here is you've got an algorithm setting it instead of a salesman, and salesmen often don't budge either. Unless it's near the end of the month, fiscal quarter, etc, and they've got quotas t
Re: (Score:1)
When go to order an Uber, it tells me how much it will cost before I commit to buying. I can look at the price and either buy, or not buy.
How would you feel if you find out that if I order an Uber for the exact same ride as you, I may get a better price, because Uber's algorithm has decided that you are willing to pay more than me. Same with the drivers.
Or how would you feel if an online store would show me better prices than you, because it figures out that you are willing to pay more than me.
Airlines do that shit all the time! So do hotels. They've done it for DECADES. It's the way the world works.
Why wouldn't a merchant charge as much as it thought someone is willing to pay?
The real questions are: did I get what I wanted to buy? Was I charged the price I agreed to? What does what you pay have anything to do with what I pay? I'm not a party to your transaction - how is it any of my business?
If I got a better deal than you, should I demand to be charged more?
People would be a lot better off if
Re: Business works to increase profits. News at 11 (Score:2)
Is that now how it works for you?
Except for the obfuscation, which you ignore.
Let us say for one moment that the pricing system is so arbitrary and fucked up, the amount of money they syphon from their workers changes by the second. The worker noticed he is getting paid less for the same route and decides no ride for you. Ubers greed now affects you.
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Why does it surprise people when a business -- whose sole purpose in existing is to make profits -- figures out a way to make more profits? Maximizing profits is the primary goal of a smart business.
raising prices in response to demand has always been their openly stated core business model, which makes sense and is legit. cutting driver pay does not make any sense and doesn't seem legit.
A business maximizing profits... (Score:2)
Say it ain't so! I'm just so SHOCKED a business would find ways to increase profits while decreasing expenses. It's like the article writer thinks Uber exist to provide jobs. That's not why businesses exist! They exist to provide a service for as much money as possible so that the person(s) that put up the capital sees returns on their investment.
Anything else you ascribe to business is just fluff and totally secondary to why business exist at all. It is most certainly not to employ people.
The battle between labor and corporate (Score:3)
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Haha, Uber is just an unregulated taxi service. This is the logical conclusion. (Well, aside from your use of a racially loaded term...)
Uh yeah is anyone surprised (Score:3)
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But in a lot of places the cabs are now cheaper than an uber.
If that's true, and if Uber isn't providing something else to make the extra money worth it to you, then ... take a cab instead?
Ride sharing would be great if... (Score:2)
...the software was open source and all profits went to the drivers
Anything that's investor owned will be tuned to maximize profits
Uber is a company I'll never use (Score:2)
They have a long track record of treating everyone, employees, customers, etc. as "fodder" for their algorithmic profiting.
I'd rather walk miles than call Uber.
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It's unsurprising that Uber is going down this
Monopoly - Kill It (Score:5, Insightful)
Increasing prices relentlessly while squeezing both labor and consumer is exactly what monopolies do. Bust it.
The situation is particularly ironic since the whole idea behind ride share - originally - was that the taxi system creates a sort of hidebound, extractive, and overly expensive monopoly system that needs to be "disrupted" by the "move fast and break things" crowd in order to usher us into the technoutopic future where such things can't exist.
Instead it has created a monopoly breathtaking in extent compared with what came before - from local to literally global monopoly - with just the exponentially worse problems on every front one would expect from such a monstrosity.
Just kill it.
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Pretty sure ... (Score:2)
... that nobody held a gun to your head and made you take an Uber. Or drive one.
If you think your money is worth more to you than that Uber ride, then ... don't exchange your money for the ride.