Uber’s war on the world spells its doom?

March 02, 2017 | 11:30

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Uber’s recent technology moves, including first self-driving and now flying cars, have earned it a fair share of sceptics who doubt their feasibility and, consequently, how long Uber as a company will last if proceeding in this direction.

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However, technology may not be the factor that will bring about the company’s downfall, but the bad relationship with authorities, drivers, and employees.

Legal run-ins

On February 23, taxi associations in Hanoi and Ho Chi Minh City asked authorities to raise taxes applicable to ride-hailing companies Uber Vietnam Ltd. and GrabTaxi Co. Ltd., “to ensure fairness.”

Ta Long Hy, chairman of the Ho Chi Minh City Taxi Association, said that Grab and Uber pay a 3 per cent value-added tax on their revenue, while traditional taxis pay 10 per cent plus 20 per cent corporate income tax. He also said these two now have a lot more vehicles than traditional taxi companies.

Do Quoc Binh, chairman of the Hanoi Taxi Association, agreed and added that the government should suspend the pilot project of Uber and Grab to evaluate their effects on tax collection, the environment, and urban traffic in Hanoi.

It is not clear how the authorities would respond to this plea from traditional taxi companies. There has been no information yet whether the Vietnamese government is inclined towards raising taxes for Uber and Grab.

Either way, tax would be a lesser worry for Uber, as its services are still illegal in Vietnam and the company so far still refuses to cooperate with the authorities and take the appropriate steps to make them legal.

On February 12, the Ministry of Transport (MoT) rejected Uber BV’s application for Uber Vietnam to join a ride-share trial scheme because of its insufficient legal foundations.

MoT received the firm’s proposal for this trial scheme in late 2016. The scheme is about applying information technology to support the management and connection of commercial passenger transportation by contract.

“Uber BV’s authorisation of Uber Vietnam’s developing the trial scheme and proposing the ministry approve the scheme is not enough of a guarantee to tie down Uber BV’s responsibility for implementation of the scheme,” MoT said in Document No.634/BGTVT-VT sent to Uber Vietnam.

Moreover, for such a long time the company has failed to update its business license to include providing taxi services. The document explained that the business lines of Uber Vietnam registered in its licence cover management, consulting, as well as market research and public opinion polls, but not transport services.

If Uber Vietnam is authorised to build, propose, and implement the trial scheme, this firm needs to add the business line to its licence, while directly building, signing, and taking responsibility for business contracts with transportation units, and contracts supplying connection services with passengers in Vietnam, according to the MoT document.

Meanwhile, Grab’s similar project received approval in January 2016 and is to be carried out over a two-year trial period. The GrabCar project was submitted to MoT in August 2015 by GrabTaxi Co., Ltd.

There is no announcement from Uber yet as to how it is going to respond to the refusal. However, Uber encountered the same in Taiwan and the company halted operations there as a response.

Uber announced on February 2 that it is halting operations in Taiwan, claiming an “impasse” with authorities that deem the ride-hailing app illegal.

Entering Taiwan in 2013, the company had never been legal there. Then in January, Taiwanese authorities hiked the maximum possible penalty for Uber drivers to NT$25 million ($813,000 – the highest in the world), and the Taiwanese Transport Ministry said it was preparing to charge the firm NT$230 million ($7.5 million) in penalties and would issue an order to halt its operations.

Mistreatment culture

Today Uber has been embroiled in another controversy when a video was leaked of CEO Travis Kalanick arguing with his own Uber driver over the company’s treatment of drivers.

In the video, reportedly dated February 5, Kalanick was riding in the back seat with two other people. When the ride ended, Kalanick told the driver, identified as Fawzi Kamel, that the company is “reducing the number of black cars in the next few months.” In turn, Kamel asked Kalanick of the changes in Uber’s pricing policy that upset him. “You’re raising the standards and you’re dropping the prices,” Kamel said, adding that the price started at $20.

The pair discussed the state of the ride-hail market for a bit, then Kamel said, “People are not trusting you anymore. I lost $97,000 because of you. I’m bankrupt because of you ... You keep changing every day.”

Kalanick denied in obscenities that the prices for Uber’s high-end service, Uber Black, have fallen that much. Then he said, “Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!” then got out of the car and slammed the door.

Kamel’s complaint is not uncommon. Many drivers reported that Uber’s decreasing of fares attracted a different kind of customers that the drivers had to serve at a lower pay.

In January, Uber agreed to pay $20 million to settle claims that it grossly misled how much drivers could earn on Craigslist ads.

Not only in a bad relationship with drivers, Uber also has a beef with employees. On February 19, a former employee asserted that she had been sexually harassed and was then ignored when she told the human resources department. Afterwards, another report of sexual harassment surfaced, along with tales of belittlement of female employees as well as a toxic management culture verbal abuse and exploitation of employees.

With Uber getting on the bad side of governments, plus its bad reputation with drivers and employees that would make further hiring difficult, and the resulting recent mass unsubscribing from users, some are doubting whether Uber will survive.

Uber entered Vietnam in July 2014, but the service is still not legal. Between August 2015 and September 2016, the Ho Chi Minh City Department of Transport fined 263 Uber drivers for a total of VND884 million ($39,000). Among those, 95 failed to provide business registration papers, 85 lacked passenger transportation contracts, 39 lacked taxi signs, while the remaining 24 were found having no journey recorders installed.

On its website, Uber Vietnam claims that a driver will earn 80 per cent of the fares, which may amount to VND40 million ($1,750) in total monthly income. In a document released in March 2016 at a press conference in Hanoi, Uber Vietnam said that it had created more than 10,000 jobs in Vietnam in the past 12 months.

Others, meanwhile, started doubting earlier, as Uber was reported by Bloomberg as losing at least $1.2 billion in the first half of 2016 and that an Uber ride looks cheap only because it may be at least 50 per cent funded by venture capitalists.