News is breaking today about ridesharing giant Uber responding to enforcement efforts by Australian regulators.
Specifically, as mentioned in a report by Rod McGuirk for the L.A. Times, Uber is to pay a $19 million fine based on fishy behavior that Australian antitrust officials have seen fit to focus on.
The charge actually has two components: First, there is a cancellation note that was stuck on to the accounts of many Uber passengers after they had decided to cancel an Uber ride.
The note, officials say, was deceptive in that it suggested there might be a cancellation fee.
“Between at least December 2017 and September 2021, more than 2 million Australian customers who attempted to cancel within that five-minute window were warned: ‘You may be charged a small fee since your driver is already on the way,’” McGuirk writes. “The cancellation message has since been changed to: ‘You won’t be charged a cancellation fee.’”
Then there was also a set of ride comparison estimates where officials contend that Uber’s characterization of rival costs was always high.
“The algorithm used to calculate the fare ranges inflated the taxi estimates,” McGuirk reports. “The actual taxi fare was almost always cheaper than Uber’s lowest estimate. Uber had not ensured that the algorithm was accurate, the commission said. Uber apologized for the taxi fare estimate ‘being higher than it should have.’”
As for Uber stock, although it’s slightly up from February and March lows, it’s only about half of what it was a year ago – where April 2020 values neared $60 per share, Uber is currently around $32 per share.
Analysts also suggest this company may be in hot water long-term as well, from the impact of blockchain and its inherent validation.
“There may actually be a serious challenge to Uber itself on the near horizon and– as buzzwordy as it may be –blockchain could be the next big disruptor, an enabling technology for a revolt by the oppressed masses,” writes Howard Tullman at Inc.com. “I won’t try to explain blockchain technology here. Suffice it to say that blockchain’s success and staying power so far suggests the strong likelihood that it can be the basis for a relatively simple, decentralized, and low-cost information sharing and payment system– one that’s both secure and stable and universally accessible.”
Take stock of this ride-sharing company’s woes if you have related investments.
