Sky Views: Uber may not be around much longer

Sky Views: Uber may not be around much longer

Tom Cheshire, Technology Correspondent

It's easy not to like Uber. The taxi app plays fast and loose with laws - most recently it tested self-driving cars on the streets on California, despite being banned from doing so, and one of them ran a red light.

A report last year from the UK Government also painted a fairly grim picture of its drivers' conditions. Uber executives have bullied and harassed reporters.

But I've come round, for a couple of reasons. This first was being able to play Spotify from the back seat. Although a word of warning: blasting Blink 182 at full volume will negatively affect your Uber rating.

Second, I feel a bit sorry for Uber, because I'm not sure it's going to be around much longer.


This might seem a touching concern for a company that is supposedly valued at $62.5bn. And one at the vanguard of self-driving technology, with autonomous vehicles on the streets of Pittsburgh and Phoenix.

Its CEO Travis Kalanick has said that he loves the idea of replacing Uber's human drivers with robots.

But that's precisely the problem.

Google says it has managed to bring the cost of driverless technology - including the expensive laser sensors - down 90%.

It clearly wants to license its technology to - or partner with - manufacturers. Just like Microsoft did with Windows, it wants its platform to be on every machine, without setting up production lines itself.

Image: Google's driverless cars have covered 2.3 million miles already

Uber too has said it doesn't want to build cars, but to operate self-driving fleets of taxis.

The question is: why would anyone else want them to?

Last week, Ford announced it was shelving plans for a Mexican plant, in favour of investing more money in an existing production line in Michigan.

President-elect Trump predictably took the credit, but the interesting thing is what the car maker does at that plant. According to Reuters, Ford will by 2021 start making "a fully autonomous vehicle without a steering wheel or a brake pedal for use in ride services fleets" there.

Whose fleet? Well, why not Ford's?

Uber's technology in matching drivers with passengers is not unique. Its success has been in persuading both to sign up in so many numbers. It's done this by effectively subsidising rides with the billions of dollars it's raised from investors.

According to the blog Naked Capitalism, which has pored through the company's financial statements, Uber passengers only pay 41% of the actual costs of their trips. Uber picks up the rest, to stimulate demand, which gets more drivers on the platform, which drives existing competitors out of the business.

Companies like Ford - or Fiat Chrysler, or GM - all working on driverless cars - will be able to manufacture millions of cars. Uber won't.

Uber's advantage right now is the drivers it brings to the platform. Once they're gone, it's hard to see what it's got to offer.

Producing truly driverless cars at that sort of scale is the hard part. Connecting them to passengers via an app isn't.

It's a shift of business model for car makers - running fleets of driverless cars rather than selling them individually. But it's a lucrative one. And it doesn't need Uber in the middle. Instead of Uber, you'll open your Ford or Toyota app. Those cars might even run on Google software and hardware, but the automaker runs the fleet and gets the fares.

Uber's advantage right now is the drivers it brings to the platform. Once they're gone, it's hard to see what it's got to offer.

It's not quite farewell to Uber, though. Ford might aim to have a fully autonomous car ready by 2021. But regulations and the legal framework probably won't be anywhere ready by then.

Ironically enough, for a company that seems to take such delight in pushing laws as far as they can, slow moving regulation might be the thing that keeps Uber alive. For a while, at least.

Sky Views is a series of comment pieces by Sky News editors and correspondents, published every morning.