Brief: Oops, we shortchanged drivers out of millions of dollars, says Uber

Uber CEO Travis Kalanick. Photo credit: TechCrunch

The news

• Uber has admitted its app miscalculated the cut for drivers and shortchanged them for two-and-a-half years. It has noticed this in commissions taken from 50,000 drivers in New York, who will be paid US$45 million in back pay with interest.
• The app calculated commissions for Uber on a pre-tax sum, whereas its terms of service stipulate calculating it after taxes are deducted.

Why it matters

• This is the second time this year that Uber has had to admit to miscalculating earnings for drivers. It earlier acknowledged underpaying drivers in Philadelphia, during a lawsuit hearing. So the problem could be more widespread than revealed so far.
• This also shakes users’ trust in algorithmic calculations of fares in ride-hailing apps. Uber recently launched a new version of its app which calculates fares based on a customer’s “willingness to pay” instead of just time and distance.
• This is the latest in a litany of mess-ups for Uber, threatening its dominance in ride-sharing. A US federal judge recently referred to criminal prosecutors a lawsuit against Uber by Google’s Waymo for trade secret theft in self-driving technology.

See: Meru strikes while the iron is hot, as Uber flounders

Source: The Wall Street Journal