eDebate1

AlexanderSheehy
RussHammersmith
CourtneyChan
JunTakemoto
CynthiaMartinez

UberCon

ProblemDefinition
CompanieslikeUberandAirBNBshouldberegulatedattheStateLevelformany
reasons.Uberencouragesdriverswithoutcarsandwithbadcredit,tosignupforsubprime
loanstogetacar.Uberdoesnotconformtomanylaborlawsnotpayingitsworkersovertimeif
theyworkmorethan40hours/week.Ascontractorsvsemployees,UBERdriversalsoarenot
reimbursedforoutofpocketcostsrelatedtodoingbusiness.Ontopofallthis,Uberdoesnt
recognizethesameregulatorypracticesasregulartaxicabs.Thisputscustomersanddriversat
risk.
AccordingtoIRS,Ifyouareanindependentcontractor,youareselfemployed.Youare
notanindependentcontractorifyouperformservicesthatcanbecontrolledbyanemployer
(whatwillbedoneandhowitwillbedone).
Historical/LegalContext
In2009,GarrettCampandTravisKalanickfoundedthecompanyUber.Thisisntthe
onlytimewheresomeonehasproposedtheideaofotherwaysforpeopletogetaroundwithout
aTaxi.DuringtheGreatDepression,thesameissuecameupwheredriverswouldtake
passengersaroundwithoutalicense.Whenitstartedtobecomeaproblemagain,the
governmenthadtodoareregulation.Thisissuealsocametobeinthe70sand80swhen
Americahadderegulation.NowthatUberhasbeengrowingandcausingproblems,the

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governmentistryingtoregulatedrivers,butarehavingtroublebecausetheprocessesare
mostlybytheinternet.
Someofthefactorsthataffectthisissuearepredominantlyfocusedontaxidrivers.
Becausetaxipricesarehigh,averageagesareincreasing,faresareconfusing,and
accessibilityislimited,thedrivespassengerstodesireUberdriversmoreoften.Theseveral
problemsthatcausesUbertogetbannedarethedriversnotobeyingthesamerulesand
regulationsthatnormaltaxidriversfollow.Uberdriversdonthavetopaytaxesorlicensingfees,
endangerpassengers,causemoretraffic,maybeuntrained,unlicensed,uninsured,and
sabotagecompetitors.
SeveralincidentscausedbyUberdrivershascausedthegovernmenttoreregulatelaws
forpublictransportationinmanycitiesaroundtheworld.Somecountrieshaveevenbannedthe
existenceofUbercars.In2013inSanFrancisco,anUberdriverranovera6yearoldand
injuredherotherfamilymembers.In2014,therewereacoupleofincidentswhereUberdrivers
havebeencaughtdrivingpassengerswithoutalicenseoroperatingcarsillegally.In2015,in
Delhi,awomanclaimedtoberapedbyanUberdriver,andinMilan,Uberwasbannedbecause
ofallegedunfaircompetitionwithtaxidrivers.Theseeventsandproblemshavecausedother
cities,suchasSanFrancisco,NewYorkCity,WashingtonD.C.,Seattle,Boston,andChicagoto
alsothinkaboutchanginglawsforUberdrivers.
Stakeholders
ThepeopleinvolvedwithandaffectedbythepotentialchangesareUbersinternal
stakeholdersandexternalstakeholders,whichincludethecompanyUber,independent
contractors(Uberdrivers),customers(possiblyUberriders),taxidrivers,taxicompanies,
investors,andthelocaleconomy.Theinternalstakeholdersarethepeopleinthecompanywho
benefitfromthedevelopmentofthecompany.Theexternalstakeholdersaretheindividualsand

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organizationsthatarenotinvolvedwithhowthecompanymakesdecisions,butarestillaffected
bythecompany.Inthiscase,thecompanyUber,independentcontractors,andinvestorsare
theinternalstakeholderswhilethecustomers,taxidrivers,taxicompanies,andthelocal
economyaretheexternalstakeholders.
ThecompanyUberwillhavetoadjust,alter,andfollowbywithnewpoliciesif
considered.AccordingtoananonymousUberdriver,hesaid,Uberhasrepeatedlyarguedthat
theyareanappbasedtechnologyplatform,connectingridesanddrivers.However,financing,
owning,andmanagingafleetofcarsmakesthemidenticaltoataxicabcompany.
(Fredrickson,2015)
.AccordingtoLawFuelEditors,Ubervetsthedriversandtheircars,hasa
comprehensivesetofguidelinesfordriverbehavior,setsprices,discouragesthedriversfrom
acceptingtips,negotiatescancellationcharges,butdoesnotguaranteethatdriverswillreceive
suchcharges.

Uberdriversareconsideredindependentcontractors,similartofreelancers,but
notemployees.AccordingtoIRS,
Ifyouareanindependentcontractor,youareselfemployed.
Youarenotanindependentcontractorifyouperformservicesthatcanbecontrolledbyan
employer(whatwillbedoneandhowitwillbedone).Uberdriversdontseemtobeprotected
byminimumwagelaws.
Withnewpotentialchanges,Uberdriverswillworkasemployeesrather
thanindependentcontractors,sothattheywillgetpaidovertimeandbeprovidedthebenefits
theyaresupposedtobereceivingthesamewayemployees(commonlawemployees)do.
However,Uberdriverswillnolongerbeabletoworkanyhourstheywantorwheneverthey
want.Thecompanywillbeinfullcontrolwithwhatwillbedoneandhowitwillbedone.The
companywillhavetherighttocontrolhowtheservicesareperformed.Thebenefitofthisisthat
Uberdriverswillreceivepossiblehealthcoverage,securedincome,andworkerscompensation.
Thecustomersareusuallythepassengers,thepeoplewhotakeridesfromUberdrivers
(independentcontractors).Uberdriversnotreceivingbettertreatmentandlivablewagesaffects

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notonlythem,buttheridersaswell.Uberdriversnotworkingasemployeesputscustomersat
risk.ThetaxiindustryopposesUbersayingthatUberisnotfollowinglocaltransportationand
safetyrules.Uberisdestroyingthetaxiindustry,whichaffectstaxicompaniesanditstaxi
drivers.ManyTaxiCabsaresittingoncompanylotsduetodecreaseddemand.Toronto
councillor,GiorgioMammolitiheldanantiUberrallyfortaxiworkers.TheantiUberrallyargued
thatlegalizingridesharingwoulddestroythetaxiindustry.Taxisoperateunderdifferentrules
thanUberdoes.Accordingto
ArlingtondriverTeguwazeGabreselassie,hesaid,

Wecanjoin
withthecompaniestofightagainstUberbutonlyifthecompaniespushforlawsthatrespectour
rightstoo.(Liss,2015).Uberis40%lesscheaperthantaxicabs,makingUbermuchmore
desirableandconsiderabletocustomers.WhileUberdriversinvesttomaintaintheirown
vehiclestoworkforUber,Taxicabcompaniespayforallvehiclerepairs.UnlikeUber,Taxicab
driversarecoveredbyWorksmensCompensation.
Investorscontinuetopourmoneyintothecompanydespiteitscurrentunprofitability,
drivingitsvalueto$51billion(HuffingtonPost,2015).ManyofUbersinvestorsareCEOsand
celebrities.WiththerecentissuesUberhasbeenfacingthesepastmonths,thismightdrive
investorsaway.Atthistime,investorsarenotgoingtobetoohappywiththepotentialchanges.
Thelocaleconomyisaffectedbyvariousways.Forexample,howUberistakingthejobs
awayfromtaxidrivers.Uberisconsideredthebadboyfortheeconomy.Itmightbegoodfor
consumers,butnotsogoodforpeoplewhowantsecuredfulltimejobs.Uberdoesnotinvestin
communitiesandmoneyisbeingkeptawayfromothercountries.
CompetitiveAnalysis
U.S.industriesandeconomiesaremostfamiliarwithhightechanddisruptive
technologies.Othercountrieshavenotadvancedasquicklyorbroadly.Whilelessadvanced
countriesdohavesomehightechindustry,ithaslessadoptionandthereismoreofa

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separationbetweennewandoldwaysofdoingthings.Withtheadvancedformsof
communicationsthattheInternetbrings,comesnewopportunityaswellasnewstruggles.
InEritrea,theleastconnectedcountryontheplanet,only1percentofitspeoplehavea
landline,and5.6percenthaveamobilephone(Bloomberg).Withsuchlittlemarketpenetration,
aplatformlikeUberwouldbarelyworkthere.Lessthan1percenthaveaninternetconnection,
whichisnotsurprisingthatitcostsabout$200amonth(Bloomberg).WhileEritreamaybean
extremecaseinonedirection,wehavetheU.S.whosepercentageofInternetuserswasnear
90%in2013(Google).TherearesomecountriesthathavenumbersneartheU.S.,mostof
EuropeandAustralia.Howevermostothercountrieshavefarlesspercentage.Theaveragefor
theWorldwas38%in2013(Google).AreaslikeSouthAsiaandtheSubSaharanpartofAfrica
bringtheGlobalaveragedownsignificantly.
ThetraditionalalternativetoserviceslikeUberaretaxis.Whensomeoneneedsaride
frompointAtoB,itsassimpleasmakingacalltothelocaltaxiservice.Anoperator/dispatcher
picksupthephone,takesdowntheinformationandrelaystheinfotoadriverbase.Verysoona
relativelynearbyandavailabledriverwouldheadtowardsyoutopickyouupandtakeyou.In
moredenselypopulatedurbanareas,itscommonforthetaxistostaynearpopularstreetsand
destinations,suchasairportsorbars.Thatwaypassengerscanwalkrightupandhailthecab.
Traditionaltaxisareavailableeverywhere,allovertheworld.
Uberhasmanyonlinecompetitors,butnonecomeclosetoitsvolumeandprofits.The
mainplayersareCurb,LyftandSideCar.Curbisdifferentinthatitonlyoffersridesfrom
professional,licenseddrivers.Like,realtaxisandchauffeurs.Thatmaybeappealingsosome
customersandnottoothers.LyftandSideCararebasicallythesameasUber,justnotas
popular(Zacks).
EconomicFactors

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Thequestiontoanswerhereisthatisthisnewsharingeconomythatuberhascreated
destroyingthevalueoftheformaleconomyorisitcreatingsomethingfromnothing?The
questionalsoliesisthataretheytakingawayjobsfromhardworkingpeopleorarethey
creatingnewjobs.FourinfiveuberdriverswereemployedbeforebecominganUberdriver
severaldriversuseubertosupplementtheirincomeratherthanrelyondrivingcompletely.If
Ubersfreelanceeconomycontinuestogrowthenthetaxiindustrywouldceasetoexistinthe
nearfuture.ThemarketvalueofUberaloneis41billionaccordingtothearticleTheFutureof
WorkintheUberEconomy.Alotofthemoneythatgoesthroughthisneweconomyis
untaxed.Incertainareastherearerestrictionsandregulationsplaced,butinmanyothersthere
isnot.Ifrevenuefromsharingservicescontinuetogountaxedthenthegovernmentwillface
revenuelosses.InthecaseofAirBnBanissuethatariseswouldbetoreevaluateexcisetaxes,
sincemanyofthepeoplewhoprovidethetemporarylodgingdonthavetopaytaxesthereare
externalexpendituresthatthegovernmentwouldbemissingoutonhadtheybeenunderthe
sameregulationsashotels.Anothereconomicissuewouldbewhetherornotthepeoplewho
workinthesharingeconomywouldbeconsideredemployeesorindependentcontractors.As
startedearlierwhenpeoplearentemployeestheydontreceiveanybenefitsfromtheemployer
andthisishowUbergeneratesalotofitsrevenue,byavoidinghavingtopaytheirdriversand
givethembenefits.
TechnologicalFactors

th
OnJuly15
,Ubersnewestprivacypolicywentintoeffect,whichallowsthecompanyto

collectboththeircustomerslocationdataandcontactinformation,evenwhentheappisjust
runninginthebackground.Whatsmoreisthat
every
Uberemployeehasunrestrictedtothis
customerdata.ByusingafeatureknownasGodView,employeesareabletotrack

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customersinrealtime.AsforwhatUbermaydowiththedatathatscollected,theprivacy
policystatesthatthecompanymay:
1. Accessyourcontacts,andsendcommunicationstototheminconnectionwithyouruse
ofcertainfeatures,suchasreferrals,invites,splitfarerequests,orETAsharing
2. AllowthirdpartiestosendyousolicitationsthatUber
thinks
willbeofinteresttoyou
3. Shareyourtripandlocationdatawiththirdpartiesincludingyouremployer
4. Providedetailsaboutyouraccountandtravelhistorytolawenforcementofficials,
governmentauthorities,orotherthirdparties,ifUber
believesyouractionsare
inconsistentwith
theiruseragreements,termsofservice,orpolicies.

JoeBahgat

Uberhasinsistedthattheycaredeeplyfortheprivacyoftheircustomers&drivers,and

thataccesstoanduseofthisdataispermittedonlyforlegitimatebusinesspurposes.However,
therehavealreadybeeninstancesinwhichthisdatahasbeenabused.

In2014,complaintsbegantosurfacethataccusingUberdriversofassaultingtheir

passengersbothverballyandphysicallyinvestigationsintooneoftheaccuseddriversrevealed
thattheyhadacriminalrecord.AccordingtoanarticlefromtheWashingtonPost,UbersSenior
VicePresident,EmilMichael,proposedusingthecompanysdatatoinvestigateandtrackthe
livesofnewsjournalistwhocriticizedthecompany.AccordingtoareportfromBuzzfeedNews
reporterBenSmith:

Overdinner,[Michael]outlinedthenotionofspendingamilliondollarstohirefourtop

oppositionresearchersandfourjournalists.Thatteamcould,hesaid,helpUberfightback
againstthepresstheydlookintoyourpersonallives,yourfamilies,andgivethemediaa
tasteofitsownmedicine.

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AccordingtoanarticleonDailyTech,manyjusttookthisasajokeinbadtaste.Butin

Decemberofthatyear,inresponsetothesuggestionthatMichaelscommentsimpliedtheuse
ofGodViewfortrackingpurposes,Uberstatedthatwhilethatwasnotthecase,therehave
beenincidentswhenemployeeshaveusedGodViewinviolationofcompanypolicies.Uber
acknowledgedthatoneoftheiremployeeshadusedGodViewtoaccessareporterslocation
logtwice.Accordingtothem,thefirsttimewastypicalcustomerserviceandproper,asthe
employeewasrespondingtothereporter'scomplaintthattheyweren'treceivingnotifications
fromtheirrequestedride.Thesecondtimeaccesshappenedwhenthereporterwasrunning
30min.latetoameetingandsaidshewasusingUbertogettoit.Theemployeelatertoldher
whatheddone.Uberwrotethattheyregarded[theemployees]judgementinstancetobepoor
anddisciplinedhimaccordingly.However,Uberprovidednodetailsonhowitdefinesabuseor
howitsworkingtostopit.
Recommendations
Severalcoursesofactionshouldbetaken,suchasthegovernmentshouldimposemore
taxregulationsontherevenuethatisgeneratedthroughthesharingeconomy.TheUber
companyshouldtreatworkersasEmployeesinsteadofContractors.Theyshouldalsobe
requiredtofollowsamestandardsandregulationsascompaniesthatoffersameservices.
Pros&Cons
Thereareseveralbenefitstotheseactionsthatshouldbetaken.Havingstricter
regulationsfortheUbercarswouldkeepthecustomerssafer.Imposingmoretaxregulations
wouldproducemoretaxrevenue.IftheUbercompanyweretotreattheirworkersasemployees
insteadofcontractors,therewouldbemoreemployeerightsandbenefits.Alloftheseactions
wouldalsokeepsafaircompetitionintheeconomyfortaxisandothersimilarcompanies.If

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Uberdidimposemoretaxregulations,thedownfallsarelessrevenueforUberandAirNnband
thattherewouldbehigherpricesintheshortterm.

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Resources

McAlone,N.(2015,June22).Uber'supdatedprivacypolicyrevealsitcantrackyourlocation
evenifyouexittheapp.RetrievedSeptember23,2015,from
http://www.businessinsider.com/ubersoonabletotrackyourlocationevenwhenappisclosed
andgpsturnedoff20156

Bahgat,J.(2015,July10).berPolicyUpdatesRaisesPrivacyConcerns.RetrievedSeptember
23,2015,from
http://abovethelaw.com/2015/07/uberpolicyupdatesraisesprivacyconcerns/

UbersPrivacyWoesShouldServeAsaCautionaryTaleforAllCompanies.(n.d.).Retrieved
September23,2015,from
http://www.wired.com/insights/2015/01/uberprivacywoescautionarytale/

Timberg,C.,Scola,N.,&Peterson,A.(2014,November18).Uberexecutivestirsupprivacy
controversy.RetrievedSeptember23,2015,from
http://www.washingtonpost.com/business/technology/uberexecutivestirsupprivacycontrovers
y/2014/11/18/d06078366f6111e4ad123734c461eab6_story.html

Mick,J.(2014,December18).UberAdmitsEmployeesAbused"GodView"LocationTracking.
RetrievedSeptember23,2015,from
http://www.dailytech.com/UberAdmitsEmployeesAbused
GodViewLocationTracking/article37010.htm

Mick,J.(2014,November19).UberExecThreatensto"SpendMillions"toStalkFemale
ReporterandHerFamily.RetrievedSeptember23,2015,from
http://www.dailytech.com/Uber
ExecThreatenstoSpendMillionstoStalkFemaleReporterandHerFamily/article36907.htm

Fredrickson,C.(2015,Sept14).It'sNotJustUber:WhytheTaxiIndustryNeedsanOverhaul.
RetrievedSeptember23,2015,from
http://prospect.org/article/itsnotjustuberwhytaxiindustryneedsoverhaul

Liss,J.(2015,Jan27).
UberandtheTaxiIndustrysLastStand.RetrievedSeptember23,
2015,from
http://www.thenation.com/article/uberandtaxiindustryslaststand/

LawFuelEditors.(2015,Sept23)TheLegalQuestionofUberDriversasIndependent
Contractors.RetrievedSeptember23,2015,from
http://www.lawfuel.com/thelegalquestionofuberdriversasindependentcontractors

Goldman,Henry.(2015,July14)LawFuelEditors.(2015,Sept23)TheLegalQuestionofUber
DriversasIndependentContractors.RetrievedSeptember23,2015,from
http://www.bloomberg.com/politics/articles/20150714/uberdriversarefreelancersnotemploy
eesnycofficialsays

HuffingtonPost.(2015,Sept03).
UberisaMoneyLoser.RetrievedSeptember23,2015,from
http://www.huffingtonpost.com/moneytips/uberisamoneyloser_b_8083180.html

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IRS.(n.d.)IndependentContractorDefined.RetreivedSeptember23,2015,from
http://www.lawfuel.com/thelegalquestionofuberdriversasindependentcontractors