Uber has created many public relations disasters for itself during the last year, from suggesting to dig up opposition research on journalists to intentionally calling for and then cancelling rides on competing ride services. But one problem that they have consistently faced—and failed to find a solution to—is the public’s reaction to surge pricing during emergencies.
That issue returned Sunday night with Uber reportedly increasing rates fourfold and requiring a minimum $100 fare in Sydney, Australia where a gunman is holding 13 people hostage in an apparent terrorist attack. That has set off a predictable reaction on Twitter:
Uber likes playing the villain http://t.co/rGwYZqzpTR— Anthony De Rosa (@AntDeRosa) December 15, 2014
"AWESOME", said the Uber CEO, "Yet another opportunity to demonstrate our incredible levels of evil" http://t.co/tfeBxhQfXD— John [the] B[aptist] (@johnb78) December 15, 2014
I’m one of the few people here who doesn’t think Uber is actually doing anything wrong. A terrorist attack will understandably cause many people to try to get home at the same time and make many drivers fearful to go on the road. Raising rates will deter some people from using the service while incentivizing more drivers to get on the road. That’s simple supply and demand. Uber almost certainly earns higher profits as well.
Critics are right that this isn’t a fair system—the rich will be able to get home easily in the case of a terrorist attack and the poor won’t. But you also have to look at the alternative. If rates stayed the same, fewer drivers would go on the road and wait times would increase. It would be harder for everyone to get home. People will differ on which they value more: economic efficiency or fairness. But there is an economic rationale behind Uber’s moves.
We are all concerned with events in CBD. Fares have increased to encourage more drivers to come online & pick up passengers in the area.— Uber Sydney (@Uber_Sydney) December 15, 2014
Yet, we have seen time and time again that the public becomes furious when Uber uses surge pricing in emergencies and there’s nothing Uber can do about this. In the end, this becomes a massive public rations nightmare for the company. It’s hard to imagine that Uber’s increased profits from surge pricing outweighs the reputational damage they sustain from it.
This is further evidence of what Vox’s Matt Yglesias has termed Uber’s “asshole problem.” Uber—and its CEO Travis Kalanick— simply does what it wants and doesn’t care how it looks. That could work when the company was an upstart. But now the public watches its every move and it must act more responsibly. “Uber is a major company,” Yglesias writes. “And it’s time to start acting like it.” That includes a plan for limiting the public backlash during emergencies when surge pricing automatically clicks in. Clearly, they haven’t made that plan yet.
Update: Uber responded to criticism quickly, making all rides free and even refunding passengers who paid the higher rates earlier. Still, they could have avoided the initial public backlash by having a plan originally.
Uber Sydney trips from CBD will be free for riders. Higher rates are still in place to encourage drivers to get into the CBD.— Uber Sydney (@Uber_Sydney) December 15, 2014