Uber’s operations team sent a controversial-sounding text message to San Diego drivers on Valentine’s Day, The Verge reports.
The message, which was overheard by a passenger via the car’s loudspeaker, could be interpreted to mean that Uber purposely withheld vehicles to drive up demand at the expense of customers. Worse, it said Uber did so to make its own earnings higher.
UberX is very close to SURGE. It’s Valentine’s Day! People will be out all night and we didn’t activate new drivers to make earnings even higher this weekend.
Uber’s surge pricing has been a source of controversy for years but CEO Travis Kalanick says it’s the only way his company can manage supply and demand on busy days. Recently Uber made its surge pricing more apparent to customers. It now asks them to type in the surge price multiple before they can accept a ride and a new feature will alert customers when surge pricing has ended.
Still, the text message seems to confirm the conspiracy theory that Uber manipulates surge pricing to take advantage of customers. Some passengers have paid hundreds of dollars to go a few miles on exceptionally busy nights. The big hole in this theory is that although the surge might temporarily juice Uber’s revenues, its long term sales are dependent on having more drivers available in more neighborhoods as soon as possible. In fact, Uber has also been criticised for recruiting new drivers too aggressively.
Uber spokesperson Andrew Noyes confirmed the text message was sent by Uber’s Operations Team. But he says it was poorly worded and the context was misconstrued by both The Verge and the passenger.
Specifically, the word “to” in the text message should have been “so,” which changes the meaning of the text message.
The text, Noyes says, was meant to alert Uber drivers that demand was high and surge pricing was about to kick into effect. As a result of that user-driven demand (not demand artificially created by Uber), each driver’s earnings would be higher.
Given Noyes’ explanation, the text Uber sent should have read something like this:
Valentine’s Day is a high-demand day for UberX, and we are very close to SURGE. People will be out all night. New drivers haven’t been activated yet, so your earnings will be even higher this weekend.
“The message was a poor choice of words by the local team but its clear purpose was to get more supply on the system, not less — to keep surge pricing down and the numbers speak to that,” says Noyes. “Only 3.1% of all Valentine’s Day trips in San Diego had surge pricing. The average Valentine’s Day trip price was 2% more expensive or $US0.26 more expensive on average. In addition there were 306 drivers onboarded in the 2 weeks leading up to Valentine’s Day.”
Noyes explained the bit about not activating new drivers to The Verge:
“[Noyes] explained the text simply noted that Uber did not onboard as many San Diego drivers as they could have that week because in the two weeks prior, a very large number of new drivers were added to the system,” The Verge’s Ben Popper writes. “Earnings had been low, and the company wanted to reward new drivers with a strong holiday paycheck.”
Noyes says Uber has never purposely made surge pricing kick into effect.
Whatever the intent of Uber’s text, it’s another bout of unfortunate press for the already controversial tactic.