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Why is Uber so cheap, what problems await an Uber-based economy

What you should be aware of before coming up with an Uber clone

Why is Uber so cheap, what problems await an Uber-based economy

Friday June 09, 2017,

4 min Read

Uber is undoubtedly one of the most successful IT projects over the last decade. It conquered the world transportation market due to incredibly low prices and the convenient application for smartphones. Anyone can become a taxi driver until he or she has a suitable car and meets the simple requirements of the service! Uber conquered many cities, including London in which taxi is now an ordinary way of traveling around the city.

However, things are not as good as it may seem at first glance. The appearance of the service caused protests from taxi drivers and officials: Uber is already banned in several countries; in France, it came to the arrest of the head of the local division of the company!

You must be very cautious before, at the time and after the development process of an Uber-like application. Otherwise, it may cost you your business, to learn more how much does it cost to make an app like uber. Below are a few reasons for aggression against Uber.

#1 Too Cheap

The greatest haters of Uber are taxi drivers and companies. And it’s no wonder: by connecting drivers and customers, determining the prices and taking care of all the money transactions, the service almost replaces taxi stations. The simplified scheme of work allows Uber to reduce prices to an indecently low level and leave official taxi drivers out of work.

One can hardly find the country with Uber but without strikes. In Paris, such a strike ended with burned cars, brawls, blocked airports and angry tourists!

#2 Impossible to Prohibit

The concept is innovative for transportation services. It’s not regulated by legislations of most countries and is banned in dozens of cities around the world (or suspended until appropriate laws are developed)!

However, this does not interfere with the service. For example, in Paris, the budget option of the service called UberPop is prohibited since January 1, 2015, but you can call Uber in the city at any time! The point is that such a violation is quite difficult to prove: according to the concept of Uber, the passenger does not personally pay the driver but transfers money through the application to the owners of the service, and the latter pay the driver. In fact, Uber only provides information services and not engaged in the transportation.

#3 Do not Obey the Rules for Taxi Drivers

The service does not check its drivers and knows almost nothing about them. There are no GPS-sensors on cars. Uber doesn’t register cars in the taxi registry – that is, it does nothing of that official taxi drivers are obligated to do in many countries. Drivers do not need to undergo long and expensive training – they just have to report basic data, wait for approval, receive from Uber a smartphone with the application and start accepting orders!



#4 Not Responsible for Drivers

Uber treats drivers as freelancers or business partners, that is, the service not to deal with taxes, pay for gasoline and other expenses. In California, this position was found to be untrue and decided that Uber drivers should be considered full-time employees of the company with all reputable rights and duties.

#5 Knows too Much About Clients

Uber high-ranking employees have access to all their customers' personal data and information about where and when they travel. A special program is called "God View" (just like the cheat code in many video games) and allows managers to monitor any Uber user. For example, one of the leaders of New York Times openly admitted that he was following a journalist from Buzzfeed while she was going to his meeting.

The Challenges for the Uber-Based Economy

Legality. The most advantages of businesses like Uber based on pulling out a certain segment from the common set of products and services. That’s the base for such businesses: if they met all the requirements that regulators extend to market participants, they would not be as profitable as they are. It applies not only to the transportation market but also financial and retail.

The applicability of the model itself is rather limited. Actually, it can be used only in businesses based on repetitive and relatively simple actions.

Relatively low quality. With the growth of such services, there will be more and more cases of poor performance and lack of responsibility from the side of the company.

However, one can’t stop uberisation, and companies operating in completely different areas have already proved it. Much more interesting is to lead this process as you still have all chance to take your niche and make big money!

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