Uber’s Unintended Burdens

Christopher S. Tang and Jochen Wirtz

Chapter 19 in Services Marketing:People, Technology, Strategy, 2021, pp 553-558 from World Scientific Publishing Co. Pte. Ltd.

Abstract: On August 13, 2020, On August 13, 2020, Uber chief executive officer (CEO) Dara Khosrowshahi explained that Uber is backing Proposition 22 that would exempt it from Assembly Bill 5 (AB5), a California law that would require Uber to treat its drivers as employees with benefits effective January 1, 2020. To win over California voters, Uber and Lyft were considering to shut down their services “temporarily” in California as a means to appeal to voters who vote on Proposition 22 in the November ballot.Given Uber lost over $8 billion in 2019 and was expected to lose $6 billion by October 2020, the AB5 law was expected to increase Uber’s operating cost dramatically. Also, it would be a major blow to Uber and other gig economy (e.g., Uber Eats, Grubhub, Deliveroo) if other states in the United States and other countries were to propose labor laws similar to AB5. In that case, Khosrowshahi’s premonition that Uber may never be profitable when it filed for an initial public offering (IPO) in 2019 would come true. Was this law to become the beginning of the end for Uber?

Keywords: Services Marketing; Service Operations; Marketing; Consumer Behavior; Positioning Services; Service Process; Pricing; Revenue Management; Service Environment; Service Advantage; Customer Relationships; Customer Loyalty; Complaint Handling; Service Recovery; Service Excellence; Service Quality; Service Productivity; Service Leadership (search for similar items in EconPapers)
JEL-codes: L8 M3 M31 O14 (search for similar items in EconPapers)
Date: 2021
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