My Thoughts on Uber

Tim Bajarin wrote a post on Techpinions about some problems with Uber from an ethical point of view towards their workers and customers.

I wrote the following comment on that article which sums up my position on Uber. I’ll put it in here also for the record.

I have always felt that Uber was not a product but a feature. Sooner or later, cab companies will adopt the cab hailing technology that makes Uber so convenient. Even regarding rates, electronic payment technologies will make variable pricing easier for traditional cabs.

For example, LINE (the extremely popular messaging service) has just introduced LINE Taxi, a Uber-like taxi hailing service. The interesting thing is that LINE will team up with Nihon Kotsu, the largest taxi company in Japan (3,300 taxis in Tokyo). This is an example of local taxi companies incorporating Uber-like hailing as a feature.

The reason why taxi companies could not create this technology themselves is rather evident, at least in Japan. Simply, the taxi industry is fragmented and is not profitable enough to develop, introduce and market the technology (the bottleneck is probably marketing). They don’t have access to the huge venture capital that Uber was able to obtain. Teaming up with LINE solves this problem.

As for the variable pricing that Uber offers, we have seen some of this happen in Japan in highway tolls and railway fares. It is reasonable to assume that as the technology becomes available to traditional taxis, they will also introduce similar flexible pricing schemes.

We also have to remember the effect the economy has on the taxi business. At least in Japan, the number of applicants for taxi drivers increase when the economy is bad and they have been laid-off from their previous job. My feeling is that the global recession was a large reason why Uber was able expand rapidly, and that if the economy recovers (maybe it won’t), they will have significant difficulty hiring drivers.

In fact, if you look beyond taxis and into other sharing apps, the sluggish economy is very likely a major driver of their popularity.