Researchers Accuse Uber of Using Opaque Algorithm To Dramatically Boost Its Profits

'A second major academic institution has accused Uber of using opaque computer code to dramatically increase its profits at the expense of the ride-hailing app's drivers and passengers,' reports the Guardian:

Research by academics at New York's Columbia Business School concluded that the Silicon Valley company had implemented 'algorithmic price discrimination' that had raised 'rider fares and cut driver pay on billions of... trips, systematically, selectively, and opaquely'. The Ivy League business school research — which is based on an analysis of 'tens of thousands of trips... as well as an analysis of over 2 million... trip requests' — follows a similar academic paper based on 1.5m UK trips that was published last week by the University of Oxford. The British study found that many UK Uber drivers were making 'substantially less' each hour since the ride-hailing app introduced a 'dynamic pricing' algorithm in 2023 that coincided with the company taking a significantly higher share of fares...

[Len Sherman, the US report's author] added: 'Since implementing upfront pricing, Uber has increased rider prices, has cut driver pay, has increased its take rates, and, of course, has greatly improved its cashflow during the period covered by this study....' The Columbia paper, which focused on 24,532 trips made by a single US Uber driver, concluded that the introduction of the new algorithm had allowed Uber to 'significantly increase its take rate — the per cent of rider fares net of driver pay captured by the company — from about 32% at the start of upfront pricing to upwards of 42% by the end of 2024'. Last week's University of Oxford research found that, since the launch of dynamic pricing, Uber's median take rate per UK driver had 'increased from 25% to 29%, and on some trips... is over 50%'.


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