After years of insisting that gig workers cannot under any circumstances become employees, Uber CEO Dara Khosrowshahi has finally admitted that the company could make an employment model work.
Khosrowshahi made the comments in a December “Virtual Fireside Chat” with a UBS analyst. Video of the meeting was obtained and reported on by Lee Fang, who points out in an article for the Intercept that the rhetoric falls flat when compared to what’s going on in the physical world.
The core of the video centers around questions raised by the European Union’s December proposal for a widely popular set of strict rules that would reclassify millions of gig workers as employees. This would be a shot to the heart of the gig economy, which for a decade now has relied on weaponizing weaknesses in labor laws to exploit workers by minimizing their labor costs with sub-minimum wages while maximizing their workload through algorithmic overseers.
“We can make any model work, we really can, because our marketplace is incredibly flexible. There's a lot of demand for our technology, our service, our brand, our safety, our reliability,” Khosrowshahi said. “So any model can work economically for us—this is about what our drivers want and what couriers want, and they want flexibility, so we would very much prefer it because they prefer it.”
This contradicts earlier assertions by Khosrowshahi. Ahead of California’s vote on Proposition 22, the ballot measure his company successfully introduced to carve out labor law exemptions for its workers, Khosrowshahi wrote a blog post insisting that out of Uber’s 1.2 million pre-COVID workforce, about “926,000 drivers would no longer be able to work on Uber going forward.” This doesn’t sound like making “any” model work.
Despite his admission that Uber could make an employment scheme work, Khosrowshahi downplayed the EU proposal in the UBS call and insisted Uber’s preferred model would eventually win.
“This is the beginning of essentially a process where the EU consults with its states and there is a ton of dialogue and we've already had dialogue with the EU before anything is finalized—and these regulations are usually finalized on a state by state level,” Khosrowshahi said.
“We are championing the IC+ model,” Khosrowshahi added, referencing the lobbying campaign seeking to codify permanent exemptions from labor laws in order to suit Uber’s business model. “I think that model in the end is going to win. And I think that dialogue with regulators will make that apparent on the ground and this is a long process, a multi-year process where on the ground you talk to regulators.”
Uber’s process up to now, however, has not been to merely dialogue with regulators. In the past few years, it has consistently threatened to leave regions poised to regulate it or fight long battles in court to overthrow labor laws.
In 2020, Uber threatened to suspend services in California if it didn’t get its way on the Proposition 22 ballot crafted to carve out an exemption from a California state law requiring gig workers to be reclassified as employees. At the same time, it was filing appeals challenging the state law in case its court ballot failed. In Britain, Uber fighting to extend its temporary license to operate in London and a court-ordered reclassification through appeals for years. In 2022, the day after Brazilian President Jair Bolsonaro signed into law bills that made it mandatory for app-based companies to provide accident insurance for drivers, provide PPE, and provide financial assistance, Uber announced it would suspend its delivery service in Brazil by March.
California, Britain, and Brazil contain Uber’s largest markets and provide significant revenues—a willingness to suspend services or fight long legal battles against reclassification in them suggests that Uber cannot make “any” business model work. In fact, Uber claimed in its IPO documents that its business would be "adversely affected if Drivers were classified as employees instead of independent contractors."
There are a few ways to read this. One way is that Uber had a change of heart and realized it can afford to allow gig workers some of their basic rights. Another is that Uber is desperate and eager to say anything to keep investor confidence up amid increased regulatory pressure. The reality is most likely somewhere in between.
In the chat with UBS, Khosrowshahi points to Spain, which in May ratified a law that reclassifies delivery couriers as employees and where Uber works with “fleet partners” who employ couriers—not unlike Amazon’s delivery company model which contracts small firms to employ couriers. Khosrowshahi maintains that “even with Spain, we've proven that a fleet employment model works and it not only works, it grows and it grows at margins that are close to our long-term margins.”
More than a decade into its existence, however, no model has managed to provide consistent profits for Uber—after all, the company has racked up over $30 billion in losses. In December, the company sold off the last of its moonshot projects that for a decade were held up by both former CEO Travis Kalanick and current executive Khosrowshahi as the future of the company. In this UBS chat, Khosrowshahi admitted it was looking to selling off its stake in DiDi, which in the past provided a juicy on-paper profit that boosted its profitability estimates but is currently dragging Uber’s finances in the midst of China’s regulatory crackdown on tech.
“For years we've been advocating that workers on our platform deserve flexibility and more benefits. We're glad Vice has finally taken notice. Our message has been simple and consistent: We should listen to drivers. Poll after poll shows that drivers overwhelmingly prefer to remain independent contractors — because it allows them to work wherever, whenever, and on any platform they want,” Uber spokesperson Noah Edwardsen told Motherboard.
“In Europe, Accenture, Good Work, Oxford Economics and the latest studies from Copenhagen Economics (based on a survey of 16k European couriers) as well as Compass Lexecon also make it clear the #1 reason people choose platform work is for the flexibility to earn money while balancing other commitments, and that they would prefer to remain independent,” they continued. “This is why we believe the best answer is to provide new benefits, while ensuring drivers and couriers keep the flexibility they value.”
This is why, of course, Uber instituted a quota system in New York City that was so flexible drivers had to sleep in their cars to meet it. Or why Uber consistently hikes fares and cuts driver pay despite constant strikes and labor actions. Uber has always been committed to flexibility and independence—for itself.