Uber The Colonist

It seems that Silicon Valley is at last waking up to what Uber really is.

  1. “Monopoly as the Uber Business Model”
  2. “Understanding That Unregulated Monopoly Was Always Uber’s Central Objective”

I am a bit disappointed that it took this long for Silicon Valley to see this, but I suppose better late than never.

Over a year ago, I wrote this;

The question is will Uber be a sustainable business? Will it raise prices after venture capital runs out and there is no competition left? If they are forced to employ their drivers as employees and if they have to also pay for their driver’s cars, which is quite possible long term, can they still maintain current prices? If Uber becomes a monopoly, will they be any better than the regulated monopolies before them for both the drivers and the customers? I have serious doubts on this, and unless Uber discloses the sustainability of its business, commits to future low prices and the welfare of its drivers, I think that strictly regulating Uber makes a lot of sense. The last thing that you want is for Uber to kill your local taxi industry, and replace it with one which is just as expensive (potentially more) and where all the profits are funnelled to a Silicon Valley company far away. This is why we have anti-trust laws, for example, and this is why we regulate industries (like the public transport, mail, health and food industries) that directly affect the welfare of our citizens.

The point that I want to emphasise is that if the US is killing itself as a result of its relaxed views on anti-trust and disdain for regulation, then so be it. I do not mind the world’s largest superpower shooting itself in the foot.

I am however not OK with how the US is exporting this to other countries. If Uber is killing local taxi industries in developing nations, preventing the deployment of public transport by providing an artificially cheap option, and in general making these countries dependent on the US for basic needs, then I see this as a new form of colonialism. This is what Gandhi fought against with the Swadeshi movement.

And we should also note that this is not restricted to Uber. One could argue that the stagnation of tech in developed countries has caused Silicon Valley giants to search for growth in the developing nations, and their huge resources are allowing them to use predatory, money-losing tactics. It’s just that since the US is inherently an inwards-looking country and nowhere near being truly cosmopolitan, they don’t realise how much damage they’re causing.

Just see how much China’s Internet has prospered by shutting out Silicon Valley.

If Silicon Valley wants to earn money in developing nations, I see no problem in doing so. However, they must compete on equal terms. They must earn profits. For example Apple is OK because even in developing countries, they charge the same price (which turns out to be super-premium in these places). Apple does not drive out local competitors, but encourages them to copy and provide the same features at lower prices (again, look at China). Local cheap competitors thrive because of Apple.

Predictions For 2017: Autonomous Driving Reality Check

I am planning a series of posts where I make predictions for 2017. I will put each prediction out one by one, and I will only pick those that have a strong implication for how we think about tech and innovation in general. I will also try to pick those that are likely to actually happen in 2017, rather than something that will happen eventually. That is to say, I will make it possible to check if the prediction was correct at the end of 2017.

Serious autonomous driving fatalities

In 2016, we saw a Tesla owner killing himself in a self-driving car. We also saw Uber self-driving cars running red lights in San Francisco.

Tesla managed to wiggle out of the problem by putting the blame on the driver, who may have been watching a Harry Potter movie instead of being ready to resume control of the vehicle. Uber managed to put the blame on the driver, by saying that the driver was actually in control of the vehicle at that time (which frankly sounds rather unconvincing).

In 2017, more companies will put their self-driving cars into public roads. Fierce competition and investor pressure will mean that some companies will even do this prematurely, before the technology is truly ready. In effect, it is likely that we see something like the Titanic crashing into an iceberg. That is, we will see companies hastily putting autonomous cars onto roads before they are ready, possibly with more fatal consequences. For the sake of prediction, I would say that we will see at least two fatalities by June.

What will subsequently happen is very politic and depends on the huge lobbying power of the large tech companies. There will no doubt be a move towards regulation, but on the opposing end, we will also see an eagerness from governments to embrace the promise of innovation. It is difficult to predict which way the scales will tip.

Uber Is Clearly Not For the United States

When I hear of all the talk of Uber coming out of the United States, I am struck with a sense of disbelief. I cannot understand why the Americans, who at least in my impression seem to think that buses are very undesirable or even dangerous in certain cities, have suddenly come to love public transportation.

Luckily, there are statistics for this. The Flowing Data website compiled data from the United States Census Bureau’s 2013 American Community Survey and created a great interactive map in addition to the following chart.

NewImage

The vast majority of Americans go to work driving alone in their cars. Although there is a bit of carpooling, any mode of public transport is very, very rare. Really, there isn’t any surprise here.

The United States is very obviously not the ideal market for an taxi-like service. Uber is only skimming a very small portion of the transportation market; one that taxi-drivers used to own.

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.