I mentioned earlier today Aaron Gordon's evisceration of Uber's and Lyft's business model. It's worth a deeper look:
The Uber and Lyft pretzel logic is as follows: Drivers are their customers and also independent contractors but cannot negotiate prices or any terms of their contract. Uber and Lyft are platforms, not transportation companies. Drivers unionizing would be price-fixing, but Uber and Lyft can price-fix all they want. Riders pay the driver for their transportation, not the platforms, even though the platforms are the ones that set the prices and collect the money and allocate it however they want, often such that the driver does not in fact receive much of the rider’s fare.
There is a version of Uber and Lyft that might be profitable even if drivers are employees, but it is a much humbler one. It is one that uses the genuine efficiencies of app-based taxi hailing—the very ones Uber and Lyft claim is their actual secret sauce other than widespread worker exploitation—to get a smaller number of drivers more customers for each of them.
Exactly. If Yellow Cab in Chicago had created an app to find and direct taxis, it would be just as good as Uber or Lyft, but it would cost consumers more to use because taxi fares are regulated. That would be OK by me.
I can't wait to see the effects of California Assembly Bill 5 on the two companies.