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Going to Defcon this weekend? I'm giving a keynote, "An Audacious Plan to Halt the Internet's Enshittification and Throw it Into Reverse," on Saturday at 12:30pm, followed by a book signing at the No Starch Press booth at 2:30pm!
https://info.defcon.org/event/?id=50826
Bezzle (n):
1. "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it" (JK Gabraith)
2. Uber.
Uber was, is, and always will be a bezzle. There are just intrinsic limitations to the profits available to operating a taxi fleet, even if you can misclassify your employees as contractors and steal their wages, even as you force them to bear the cost of buying and maintaining your taxis.
The magic of early Uber β when taxi rides were incredibly cheap, and there were always cars available, and drivers made generous livings behind the wheel β wasn't magic at all. It was just predatory pricing.
Uber lost $0.41 on every dollar they brought in, lighting $33b of its investors' cash on fire. Most of that money came from the Saudi royals, funneled through Softbank, who brought you such bezzles as WeWork β a boring real-estate company masquerading as a high-growth tech company, just as Uber was a boring taxi company masquerading as a tech company.
Predatory pricing used to be illegal, but Chicago School economists convinced judges to stop enforcing the law on the grounds that predatory pricing was impossible because no rational actor would choose to lose money. They (willfully) ignored the obvious possibility that a VC fund could invest in a money-losing business and use predatory pricing to convince retail investors that a pile of shit of sufficient size must have a pony under it somewhere.
This venture predation let investors β like Prince Bone Saw β cash out to suckers, leaving behind a money-losing business that had to invent ever-sweatier accounting tricks and implausible narratives to keep the suckers on the line while they blew town. A bezzle, in other words:
Uber is a true bezzle innovator, coming up with all kinds of fairy tales and sci-fi gimmicks to explain how they would convert their money-loser into a profitable business. They spent $2.5b on self-driving cars, producing a vehicle whose mean distance between fatal crashes was half a mile. Then they paid another company $400 million to take this self-licking ice-cream cone off their hands:
Amazingly, self-driving cars were among the more plausible of Uber's plans. They pissed away hundreds of millions on California's Proposition 22 to institutionalize worker misclassification, only to have the rule struck down because they couldn't be bothered to draft it properly. Then they did it again in Massachusetts:
Remember when Uber was going to plug the holes in its balance sheet with flying cars? Flying cars! Maybe they were just trying to soften us up for their IPO, where they advised investors that the only way they'd ever be profitable is if they could replace every train, bus and tram ride in the world:
Honestly, the only way that seems remotely plausible is when it's put next to flying cars for comparison. I guess we can be grateful that they never promised us jetpacks, or, you know, teleportation. Just imagine the market opportunity they could have ascribed to astral projection!
Narrative capitalism has its limits. Once Uber went public, it had to produce financial disclosures that showed the line going up, lest the bezzle come to an end. These balance-sheet tricks were as varied as they were transparent, but the financial press kept falling for them, serving as dutiful stenographers for a string of triumphant press-releases announcing Uber's long-delayed entry into the league of companies that don't lose more money every single day.
One person Uber has never fooled is Hubert Horan, a transportation analyst with decades of experience who's had Uber's number since the very start, and who has done yeoman service puncturing every one of these financial "disclosures," methodically sifting through the pile of shit to prove that there is no pony hiding in it.
In 2021, Horan showed how Uber had burned through nearly all of its cash reserves, signaling an end to its subsidy for drivers and rides, which would also inevitably end the bezzle:
In mid, 2022, Horan showed how the "profit" Uber trumpeted came from selling off failed companies it had acquired to other dying rideshare companies, which paid in their own grossly inflated stock:
At the end of 2022, Horan showed how Uber invented a made-up, nonstandard metric, called "EBITDA profitability," which allowed them to lose billions and still declare themselves to be profitable, a lie that would have been obvious if they'd reported their earnings using Generally Accepted Accounting Principles (GAAP):
Like clockwork, Uber has just announced β once again β that it is profitable, and once again, the press has credulously repeated the claim. So once again, Horan has published one of his magisterial debunkings on Naked Capitalism:
Uber's $394m gains this quarter come from paper gains to untradable shares in its loss-making rivals β Didi, Grab, Aurora β who swapped stock with Uber in exchange for Uber's own loss-making overseas divisions. Yes, it's that stupid: Uber holds shares in dying companies that no one wants to buy. It declared those shares to have gained value, and on that basis, reported a profit.
Truly, any big number multiplied by an imaginary number can be turned into an even bigger number.
Now, Uber also reported "margin improvements" β that is, it says that it loses less on every journey. But it didn't explain how it made those improvements. But we know how the company did it: they made rides more expensive and cut the pay to their drivers. A 2.9m ride in Manhattan is now $50 β if you get a bargain! The base price is more like $70:
The number of Uber drivers on the road has a direct relationship to the pay Uber offers those drivers. But that pay has been steeply declining, and with it, the availability of Ubers. A couple weeks ago, I found myself at the Burbank train station unable to get an Uber at all, with the app timing out repeatedly and announcing "no drivers available."
Normally, you can get a yellow taxi at the station, but years of Uber's predatory pricing has caused a drawdown of the local taxi-fleet, so there were no taxis available at the cab-rank or by dispatch. It took me an hour to get a cab home. Uber's bezzle destroyed local taxis and local transit β and replaced them with worse taxis that cost more.
Uber won't say why its margins are improving, but it can't be coming from scale. Before the pandemic, Uber had far more rides, and worse margins. Uber has diseconomies of scale: when you lose money on every ride, adding more rides increases your losses, not your profits.
Meanwhile, Lyft β Uber's also-ran competitor β saw its margins worsen over the same period. Lyft has always been worse at lying about it finances than Uber, but it is in essentially the exact same business (right down to the drivers and cars β many drivers have both apps on their phones). So Lyft's financials offer a good peek at Uber's true earnings picture.
Lyft is actually slightly better off than Uber overall. It spent less money on expensive props for its long con β flying cars, robotaxis, scooters, overseas clones β and abandoned them before Uber did. Lyft also fired 24% of its staff at the end of 2022, which should have improved its margins by cutting its costs.
Uber pays its drivers less. Like Lyft, Uber practices algorithmic wage discrimination, Veena Dubal's term describing the illegal practice of offering workers different payouts for the same work. Uber's algorithm seeks out "pickers" who are choosy about which rides they take, and converts them to "ants" (who take every ride offered) by paying them more for the same job, until they drop all their other gigs, whereupon the algorithm cuts their pay back to the rates paid to ants:
All told, wage theft and wage cuts by Uber transferred $1b/quarter from labor to Uber's shareholders. Historically, Uber linked fares to driver pay β think of surge pricing, where Uber charged riders more for peak times and passed some of that premium onto drivers. But now Uber trumpets a custom pricing algorithm that is the inverse of its driver payment system, calculating riders' willingness to pay and repricing every ride based on how desperate they think you are.
This pricing is a per se antitrust violation of Section 2 of the Sherman Act, America's original antitrust law. That's important because Sherman 2 is one of the few antitrust laws that we never stopped enforcing, unlike the laws banning predator pricing:
Uber claims an 11% margin improvement. 6-7% of that comes from algorithmic price discrimination and service cutbacks, letting it take 29% of every dollar the driver earns (up from 22%). Uber CEO Dara Khosrowshahi himself says that this is as high as the take can get β over 30%, and drivers will delete the app.
Uber's food delivery service β a baling wire-and-spit Frankenstein's monster of several food apps it bought and glued together β is a loser even by the standards of the sector, which is unprofitable as a whole and experiencing an unbroken slide of declining demand.
Put it all together and you get a picture of the kind of taxi company Uber really is: one that charges more than traditional cabs, pays drivers less, and has fewer cars on the road at times of peak demand, especially in the neighborhoods that traditional taxis had always underserved. In other words, Uber has broken every one of its promises.
We replaced the "evil taxi cartel" with an "evil taxi monopolist." And it's still losing money.
Even if Lyft goes under β as seems inevitable β Uber can't attain real profitability by scooping up its passengers and drivers. When you're losing money on every ride, you just can't make it up in volume.
Image: JERRYE AND ROY KLOTZ MD (modified) https://commons.wikimedia.org/wiki/File:LA_BREA_TAR_PITS,_LOS_ANGELES.jpg
CC BY-SA 3.0 https://creativecommons.org/licenses/by-sa/3.0/deed.en
Iβm kickstarting the audiobook for βThe Internet Con: How To Seize the Means of Computation,β a Big Tech disassembly manual to disenshittify the web and bring back the old, good internet. Itβs a DRM-free book, which means Audible wonβt carry it, so this crowdfunder is essential. Back now to get the audio, Verso hardcover and ebook:
http://seizethemeansofcomputation.org
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Rideshare magnates Uber and Lyft announced on the afternoon of March 15 that both corporations would suspend all service in Minneapolis, Min
By Lev Koufax
Uber and Lyftβs attempts to defeat the minimum wage law arenβt about sustainable business, and they arenβt about protecting the consumer. The cynical decision to withdraw from Minneapolis is simply about keeping the Minneapolis drivers at poverty wages while maximizing profits for rideshare shareholders as much as possible.
Anya is live and ready to show you everything. Watch her strip, dance, and perform exclusive shows just for you. Interact in real-time and make your fantasies come true.
β Live Streamingβ Interactive Chatβ Private Showsβ HD Quality
Anya is LIVE right now
FREE
Free to watch β’ No registration required β’ HD streaming
Even though the circumstances are partly embarassing, partly infuriating, Autumn doesn't hate this ridesharing thing as much as she thought she might have. Sure, she has to work almost twelve hours in a day to make anywhere near what she'd worked her way up to at AlleyCatz, but she can pick her own hours.
Except outside of certain hours, the money is shit.
At least she can be a little more anti-social and just deliver food on days she just doesn't feel like dealing with people.
Except the money is, again, shit compared to driving people around.
And that's all moot when the app that controls all of it isn't actually working most of the damned time.
"Augh," she says as whoever it is strolls up, fiddling with her phone. "I'm so sorry, the app's bugging out really bad tonight, what's the address again?"
For the second time in two weeks, my friends and I had an assigned Uber/Lyft see us, abruptly speed off, and cancel the ride.
As much as I try to rationalize both of these events, there is one screaming primary factor: we are outwardly queer. In neither case was space an issue. Both were relatively short rides.
One ride was me and one other friend trying to get back to our dorm from the airport. The driver saw us wave him down, he began to pull over, then suddenly peeled away. As we were waiting for a replacement, we saw him pull back around and pick up other travellers while also shooting a glare at my friend. We simply laughed it off after a long travel day.
Today, my friends and I spent a day out for our 3-day weekend. We had walked to our destination from the train station, but we decided to order a rideshare to get back to the station since we were tired. The assigned car pulled up but never fully pulled over, which we assumed was because he was trying to find a better space to pull over. We followed him down the road and approached the car, where he then - and this is the best way to describe it - angrily shooed us off then cancelled the ride.
None of my friends or I have ever had an experience like this before. Granted, we didnt use rideshares much on our own prior to college but we still find this jarring. We are in the Bay Area for crying out loud.
I'm primarily posting this because I'm curious if others have had experiences like this before, and if it's becoming more common for those who are maybe more well versed in rideshares lol. But then this turned into a bit of a vent so apologies.
