comscore Rough patch for uber service's challenge to taxis | Honolulu Star-Advertiser

Rough patch for uber service’s challenge to taxis


SAN FRANCISCO » It’s Travis Kalanick versus the world, and recently the world seems to be winning.

Kalanick, who is brash and aggressive even by the standards of Silicon Valley, created Uber four years ago to blow up the traditional taxi business. In more than 60 cities, from San Francisco to Berlin, it is doing just that.

Anyone with a smartphone can use Uber’s software to get a ride. No more standing on the corner in the rain, trying desperately to conjure up something that is not there. For that achievement, Uber is valued at $4 billion.

Suddenly, however, Kalanick is a bit besieged. Uber is being sued by its drivers, who say it is stealing their tips. Competitors are pressing it from all sides. Celebrity riders like Salman Rushdie and Jessica Seinfeld have had gripes too, usually about pricing.

Much worse, there have been questions about the quality of the drivers, made more urgent after one in San Francisco hit a family in a crosswalk on New Year’s Eve, killing a 6-year-old. Her death has provoked the first wrongful-death lawsuit against Uber, which is expected to be filed on Monday.

Uber and its abundance of imitators represent a new stage for technology companies. These businesses directly insert themselves into the physical world, arranging on-demand transportation, meals or even clean laundry in exchange for a sweet commission. Unlike Facebook or Twitter, which thrive in the safe confines of cyberspace, these startups live on the streets.

That is a much messier place. Regulators, courts and city halls are struggling to define Uber. Is it a taxi company or a technology platform? Are the drivers, who often use their own vehicles, employees, as some are arguing in court, or "partners" – that is, freelancers – as Uber maintains?

Uber compares itself to the auction site eBay, connecting a buyer and seller but not liable for what happens between them. Regulating Uber, the company told the California Public Utilities Commission, would stifle innovation.

The commission, which oversees limousine companies, called Uber’s arguments "creative" but decided in September that it was a transportation company after all, subject to regulation. Uber is appealing. A spokesman for Uber said the company’s system of asking passengers for feedback meant Uber was self-regulating.

The issue is pressing because, as the company rapidly expands and Uber drivers flood the streets, the possibility of accidents increases. Who is responsible when something goes wrong?

The Uber driver who hit 6-year-old Sofia Liu and injured her mother and brother was arrested on suspicion of vehicular manslaughter.

"We have deactivated his Uber account," Uber said in a statement. But the company pointedly said the driver, Syed Muzaffar, did not have a passenger in his Honda Pilot at the time of the accident, and thus the accident had nothing to do with Uber.

Muzaffar’s lawyer said that was false and self-serving. "He was working for Uber," said the lawyer, Graham Archer. "He was waiting for a fare."

In a testy interview at Uber’s offices here, Kalanick declined to discuss the accident except in the most general terms.

"We work our butts off to go above and beyond what is expected even by the regulators, including insurance, background checks," he said. "And so it always comes back to, did Uber do something wrong?"

Some say the answer is yes.

The San Francisco Cab Drivers Association, which is losing drivers to Uber, prominently offered condolences to Sofia’s family on its website.

"Uber may be the next Amazon, but Amazon doesn’t have the same potential capability to leave a trail of bodies in the street," Trevor Johnson, a director of the association and a driver himself, wrote in an email.

Sofia was buried Thursday. Christopher Dolan, a personal injury lawyer representing the Liu family, spoke at the service with a message from the girl’s father, Ang Jiang Liu: "I intend to get justice for my daughter and hold Uber accountable."

Uber by its very nature distracts its drivers, the lawyer said in an interview.

"Cabdrivers who are looking for fares are scanning the streets," he said. "Uber drivers looking for fares are looking at their phones."

Uber’s safety and reliability was also called into question after a driver and a passenger here got into a verbal and physical altercation late one night in November. The police were called, but no arrests were made.

The tech website PandoDaily reported that the driver, Daveea Whitmire, had a history of clashes with the law, including a misdemeanor for resisting a public officer last spring. In October, his probation officer recommended revoking his probation. Whitmire, who had good reviews from his Uber passengers, could not be reached for comment.

Kalanick declined to comment about this episode, and shortly afterward, ended the interview. Last week, Uber told drivers here that they had to undergo new background checks.

Drivers who use their own cars are in an uncertain insurance position, said Kara Cross, general counsel for the Personal Insurance Federation of California. Many personal insurance policies do not cover commercial activity. Even the insurance that the California commission is requiring Uber to carry – a $1 million per accident liability policy – would take effect only if the Uber driver were legally at fault.

"If another driver is liable, the passenger would have to rely on that other driver’s insurance, assuming there is any," Cross said. Peter Ashlock drove a cab in San Francisco for 10 years in the 1970s and early ’80s, bringing home about $500 a week. For a few years, he even got health insurance. Two years ago he started driving for Uber. After gas and the company’s commission – usually 20 percent – he makes about $1,000 a week. Factor in inflation, and he has lost ground.

"I have freedom and flexibility now," said Ashlock, 65. "If I want to take a vacation I just take it. But there’s no union. There’s no community of drivers. And the only people getting rich are the investors and the executives."

David Krane, who last summer led a $258 million investment in Uber by Google Ventures, was full of admiration for Kalanick and what he called his "superpowers," including his attention to detail.

"I know very few chief executives that on New Year’s Day would answer 100 customer service inquiries in public," Krane said.

Those inquiries, on Twitter, were often about surge pricing, the much-discussed Uber feature that increases prices by multiples of three, four or more times normal on holidays, or during bad weather or rush hour. Surge pricing, Uber says, gets more vehicles on the road, but many riders do not seem to understand it.

Kalanick, 37, was his usual combative self on New Year’s in response to complaints about surge pricing. "2 confirmations and typing in surge price.. should ppl not take responsibility for their actions when drunk?" he posted on Twitter.

Drivers filed suit against Uber in August, saying the company told riders that the tip was included in the fare but that it was never remitted to the driver. Uber says there is no merit to the case, but a San Francisco judge ruled last month that it could go forward.

More drivers are constantly being solicited. Last week, Uber apologized for ordering a hundred cars from a New York competitor and then canceling. Uber’s goal was to get the drivers’ numbers and persuade them to work for Uber. "Too aggressive," the company conceded.

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