Flogging a Trojan Horse – Uber’s IPO
Uber doesn’t make any money, it never has made any money and it’s not entirely certain that they ever will. Since 2009, Uber has a net loss of more than $8 billion dollars. Yet, Uber’s IPO (initial public offering) on the stock market today (May 9th) is expected to be one of the largest in history. If estimates are to be believed, Uber could be valued somewhere in the region of $80 billion dollars.
How is this possible? How can a company that doesn’t make any money be valued so highly?
Well, Uber would want you to believe that they’re the next Amazon. It took Amazon about 7 years to turn a profit. In the years in between, they ruthlessly squeezed competitors out of the market by undercutting their prices. Fun fact: Bezos originally wanted to name Amazon ‘relentless.com’ (type this into your search bar and Amazon will still come up) and this name succinctly summed up his company’s approach.
In one instance, Amazon noted the success of a New Jersey-based diaper store and offered to buy them out. The diaper store refused so Amazon started to give away the same product for free, willingly losing about £1 million a day in the process, until the New Jersey outfit had no choice but to succumb to Bezos’s demands.
Uber is basically trying the same approach but are having very limited success. The current model is reliant on shareholders subsidising cheap rides in order to squeeze out the competition and establish a monopoly. Ever thought your Uber ride is too good to be true? Well, it is. Remember, they don’t make any money.
Unfortunately, it is unlikely that Uber will ever get there. They face stiff competition from other apps in the private transit game and have expanded into other fiercely competitive sectors such as food delivery and haulage. They have notoriously dodgy tax structures and have been embroiled a huge number of scandals – from sexual harassment to stealing corporate secrets, to bribery.
Finally, and most importantly, Uber is built off the back of huge labour exploitation. It comes as no surprise that Uber drivers across the world took strike action ahead of Uber’s IPO. Such protests are largely unprecedented in the global gig economy - uniting across borders in the face of corporate greed and precarious work.
According to analysis conducted by the Independent Workers of Great Britain, these workers can earn as little as £5 an hour and have faced long legal battles alongside the GMB union to be recognised as workers (and not classified as bogusly self-employed). Despite claims that “drivers are at the heart of our service”, Uber is still plying billions of pounds into driverless cars. “You’re at the heart of our service, until you’re not, which hopefully is as soon as possible”, would maybe be more apt.
So, all in all, Uber’s IPO is an auction of some perverse capitalist utopia – rampant labour exploitation packaged together with ‘pioneering’ technological innovation. It will enrich the already rich and workers will continue to survive on breadcrumbs. Yet Uber is the mere tip of the iceberg. The company is representative of a world where exploitative employers divide and conquer workers and venture capitalism wins out over patient long-term investment.
Unfortunately, there are no quick fixes for these structural problems. Finance must be made to serve the needs of society and not line the pockets of the already rich while workers and unions must be empowered to confront exploitative employers. In the meantime, we can call it for what it is - Uber is a scam.