Why Uber embodies all the vices of Silicon Valley

Exorbitant valorization for a fragile economic model, aggressive and sexist corporate culture, questionable ethics against the backdrop of suspicion of technology theft, slings drivers who denounce a precarisation of work … Uber embodies more than any other company associated drifts to the “disruption” of Silicon Valley.

Rarely will a company have chained the devastating “bad buzz” with so much consistency. Since the beginning of the year, Uber, the world’s number one VTC, is in the spotlight. The extent of its financial losses, the precariousness of its drivers, its aggressive corporate culture or its questionable ethics stifle observers.

To the point that the company headed since the end of August by Dara Khosrowshahi, following the ousting in the spring of its founder and historical CEO Travis Kalanick, has become the symbol of the excesses associated with the “disruptive” model of Silicon Valley. The multiplication of polemics, which undermine its image, even contributes to fueling a more general movement of societal and political challenge of these technological giants. As much in the United States, where one begins to speak openly of regulation of all-powerful Gafa, than in Europe, where the European Commission does not hesitate to steal them in the feathers with savage fines.

An exorbitant valuation despite a wobbly economic model
Regularly, analysts wave the specter of the “bubble” around new technologies, remake of the Internet bubble of the early 2000s. Snapchat, WeWork or Twitter (before its stock market crash) are often singled out for their valuation deemed disproportionate . Valued more than 68 billion dollars (!) In April 2017, making it the largest unicorn in the world (unlisted startup valued over a billion dollars), Uber raises many questions about its economic model.

Colossus with clay feet, Uber has already completed 18 fundraisers and has raised more than $ 11 billion since its inception in 2009, according to data compiled by Crunchbase. But the company burns cash at lightning speed to finance its international expansion and resist competition. The profitability ? A distant dream. Will she ever reach it? The question arises so much the technological barriers are weak in this economy of the platforms, allowing the multiplication of similar services, in particular Lyft in the United States and Didi Chuxing in Asia.

Thus, even if the turnover of Uber continues to grow ($ 2 billion between August and October this year, against 1.66 billion three months earlier), the company also digs its losses. On November 28, it revealed that its net loss reached $ 1.46 billion for the third quarter of 2017 alone. It was already at $ 1.06 billion in the second quarter.

By being the first to exploit a market failure (the hegemony of taxis, too slow to adapt to the digital revolution) and creating a new tool for urban transport (an application for connecting drivers and private individuals to to move easily and at unbeatable prices), Uber has become the pioneer of a new use promised to continue. This has allowed it, so far, to obtain without problem funding from investors with very deep pockets (the public investment fund of Saudi Arabia, Tata Capital …). The latest is the Japanese giant Softbank, which is preparing to invest a staggering $ 10 billion. But for the first time, the valuation of Uber falls: according to Bloomberg, Softbank would like to buy Uber shares on the basis of a discount of 30%, which would reduce its valuation to just over $ 48 billion that’s 20 billion less than last spring.

Dara Khosrowshahi wants to get Uber on the stock market by 2019. But the CEO has some work to do by then to convince of the viability of his business model, if he wants to avoid a destiny to Twitter or Snapchat on the steps.

Symbol of job insecurity
The honeymoon between Uber, long praised for the revolutionary service brought to the consumer, and the rest of society, is well and truly over. From now on, the company embodies less the troublemaker who jostles well-established lobbies than a new form of job insecurity in the digital 21st century.

As for other companies in the so-called collaborative economy (like the Deliveroo meal delivery platform), tensions crystallize around the status of drivers. Uber considers them as self-employed, paid for by the task, who in return enjoy the freedom to work when they wish. But a growing part of them believe that Uber actually practices a disguised wage-earning, maintaining an economic dependence, and thus contributes to the precariousness of work.

Since 2014, the company is regularly attacked on the subject. It has just lost on appeal, in the United Kingdom, a very symbolic trial. On November 10, the London Labor Court confirmed that Uber had to consider its drivers as employees, and therefore pay them at the minimum wage and pay them time off. The decision could be a precedent for the 50,000 drivers working for the company in the country. Uber has announced its willingness to appeal again.

Feeling the wind turning, the company has implemented in several countries (France and the United Kingdom in particular) insurance to protect its drivers in case of accident. The legislation also adapts, as do the provisions vis-à-vis independent workers of the El Khomri law, which will impose new “social responsibilities” on Uber-type platforms. But the claims of Uber drivers or Deliveroo bike drivers threaten the very essence of the business model of these platforms, now facing the question of their sustainability.

Hidden hacking, suspicion of technology theft: a questionable ethic
In terms of ethics, the giants of Silicon Valley are increasingly singled out: Google and its anti-competitive practices that annoy the European Commission, Apple and the working conditions of the workers who make the iPhone in Asia, the raid of Gafa on personal data, their report to the tax …

Uber is also far from irreproachable. In early March, the California giant has admitted to using secret software, nicknamed “Greyball”, to circumvent the regulations deemed “hostile” to its activities. For example, Uber used, among other things, information collected through its application to identify law enforcement officials responsible for taking its drivers in the act in cities where its activities were prohibited or restricted. The hidden device allowed the application to reveal ghost vehicles or to reveal none to prevent the police from boarding the VTC …

Worse, Uber has also hidden massive piracy of 57 million accounts in 2016. He is suspected of bribing foreign officials, or theft of technology. In February, Waymo, a subsidiary of Alphabet (Google) in the Autonomous Car, filed a complaint against Uber because one of its former managers, Anthony Levandowski, downloaded in 2015 thousands of confidential documents before founding his own company, Otto, bought in 2016 by Uber. The engineer then integrated the department dedicated to the autonomous driving of the company. In May, the US court ruled that Uber “knew or ought to have known” that Lewandowski held these documents, and ordered him to return them to Waymo. But Uber dismissed him soon after, saying he had refused to cooperate.

A shocking revelation, on November 27, has aggravated Uber’s case. In a letter sent to the judge of the case, a former engineer, Richard Jacobs, says the group had put in place a system to retrieve information about its competitors and regulators. Information stored on secret computer servers. According to Jacobs, Uber has provided training to his executives, advising them to use ephemeral e-mail (where the text disappears once read) to protect and destroy “sensitive” communications.

This information led the judge to postpone the trial, which was to be held on December 4, without giving a new date:

“I can not believe a word from Uber’s lawyers in this case, if only half of this letter is true, it would be an injustice for Waymo to go to trial,” he said. .

A sexist and aggressive corporate culture
The permanent balance of power between Uber and his drivers and the suspicions of some ethically dubious practices reveal that Uber is aggressively dealing with his business, which is even found in his own corporate culture.

Again, this is a recurring phenomenon in Silicon Valley: formatted to “disrupt” and conquer a sector by upsetting the balance in place, many startups “darken”, favoring the end means. A state of mind that reflects the personality of visionary leaders, but that permeates throughout the company. This aggressive culture is reinforced by the fact that the medium of the tech is one among itself. A profile – the arch-graduated white man from a favored social background – is ultra-dominant in manpower and leadership positions, while women and ethnic minorities are even less represented than in other sectors of the economy.

Uber, created and worn by the whimsical Travis Kalanick, embodies this culture. Since the beginning of the year, testimonials have poured in from former employees, including women who tell their work under constant pressure and a “bros” mindset (a term Americans use to describe camaraderie). virile) who skids quickly to sexual harassment. In February, on her blog, a former engineer, Susan J. Fowler, described this situation at length and denounced the complicit inaction of human resources. This testimony opened a Pandora’s box in all of Silicon Valley, and resulted in the exclusion of Travis Kalanick. A first, again.

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