Uber's business model is famously based upon supply and demand. While that sometimes gets the company in trouble (like when its rates spike after a terrorist attack), most people seem to accept the basic concept--pay more for a ride when transportation is scarce.

I wonder, though, if many people are aware that Uber is now going beyond charging more when rides are scarce. It's charging more if it knows you're desperate or if it thinks you'll be willing to pay more. As described by Bloomberg, Uber's new pricing

"Applies machine-learning techniques to estimate how much groups of customers are willing to shell out for a ride. Uber calculates riders' propensity for paying a higher price for a particular route at a certain time of day. For instance, someone traveling from a wealthy neighborhood to another tony spot might be asked to pay more than another person heading to a poorer part of town, even if demand, traffic and distance are the same."

While few people are likely to object to rich folk paying more than poor folk, Dave Sutton, of the public safety campaign Who's Driving You? points out that

"Uber's new pricing scheme weaponizes its access to data against customers. It could be used to overcharge airport passengers late at night, the less-privileged in transportation deserts, sick people receiving medical treatment, or disabled individuals requiring assistance."

Since Uber is both highly secretive and prone to ethical "flexibility," it's hard to believe that the company won't price-gouge and profiteer when it's given the opportunity to do so.

Indeed, and true to form, Uber is apparently keeping the details of its pricing scheme secret from its drivers, thereby allowing Uber to capture the lion's share of the gouge.

The new pricing scheme risks alienating its customers, according to the Bloomberg article:

"They could really lose the trust of the riders," said Glen Weyl, a senior researcher at Microsoft Corp. who is studying Uber with the company's cooperation. Microsoft is an investor in Uber. "It's a very dangerous moment for them, but there are good economic reasons to do it."

Those economic reasons? Uber lost $2.8 billion dollars last year. It has to do something, after all, to justify its valuation of $69 billion.

Published on: Jun 12, 2017
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