Starting Monday, the East Coast will experience two days of blizzard-like winter storms. Hit hardest will be the coastal areas between Pennsylvania and Maine, New York City and Boston included. To prepare for the storm, Uber announced that it will cap its notorious surge pricing algorithm in the area, and all Uber proceeds will be donated to the American Red Cross for storm relief efforts.
It's not uncommon for companies to provide this type of goodwill response in the case of emergencies and disasters. Airbnb, for example, drops its fee for bookings in affected areas, and the company emails nearby hosts to see if they can help or offer accomodations for free. The New York Times and The Wall Street Journal also drop their paywalls during emergencies so that readers can stay informed and updated on any potentially life-threatening situations.
This is an unusual move for Uber, however. Since its inception, the competitive car-hailing company has implemented a surge pricing strategy where customers are required to pay sometimes upwards of six times the regular price to get a ride during peak hours. Although this may seem like a smart business algorithm driven by basic supple and demand, the tactic has been long criticized when implemented in emergency situations.
In fact, this recent cap on surge pricing came out of an agreement between Uber and New York's attorney general after the company capitalized by up-charging New York residents during Hurricane Sandy in 2012.
Uber customers in San Francisco faced similar surge pricing when they braved their own massive storm back in December. A few days later, Uber's surge pricing received international criticism in the media when it kicked in during Sydney's 17-hour hostage crisis. Responding to these high-profile screw-ups, critics have called Uber's surge pricing unethical and have brought into question whether companies even have an obligation to act morally in these situations.
Even in non-life-threatening scenarios, surge pricing has become a consistent source of bad PR for Uber. During this last New Year's Eve, once one of the service's most trafficked nights all over the world, Uber drivers in San Francisco reported far fewer rides than anticipated based on past New Year's demand. Uber customers, it seems, are growing weary of surge pricing and getting conditioned to avoid the car-hailing service altogether during well-known peak times.
As the surge pricing system becomes counterintuitive, with potential customers automatically forgoing the service during would-be-lucrative peaks, it makes sense for Uber to reconsider that particular strategy. If not out of the goodness of its heart, then definitely as it starts affecting its bottom line.