Should Uber make UberEATS a separate app

A recent ruling from the UK joins a series of similar rulings: Uber must treat its freelance drivers like permanent employees in essentials. What will happen to the Uber business model? And what does that mean for other companies?

The news concerns Great Britain, but it sounds similar to comparable reports from the last few months: The transport service provider Uber has announced in a corporate announcement that it will treat its contractual partners (= drivers) in the UK like employees. This was preceded by years of litigation that ended in the Supreme Court - with a defeat for Uber.

In February the highest court in Great Britain ruled that the around 70,000 Uber drivers in the UK were not free contract partners, but employees of the company. This gives them a number of benefits, such as the right to a minimum wage, paid vacation and pension benefits. They are not yet given the same status to permanent employees, for example in the case of parental leave or a right to severance pay.

Turning away from the original idea

Courts are making such decisions more and more frequently. Not only Uber is affected, but also its main competitor Lyft. The former Uber business idea that a car owner who happens to be driving somewhere can take someone along and earn a little extra income has now become a well-structured taxi competition. The vast majority of Uber's contractual partners are not casual drivers, they earn their living with it. However, despite all the flexibility in terms of time, they are pretty much tied to the company they drive for, and cannot set prices themselves, for example. And so there are always decisions like the current one.

After all, it is also a political question whether a state would like to have a service sector in which the state's rules no longer apply - the courts are apparently increasingly seeing things differently. With this, however, the business model of the sharing economy is at stake, or more precisely, that of the intermediaries who live from arranging orders for service providers and at the same time dictating the rules of the game to them.

Suspicion of bogus self-employment

These models are under suspicion of bogus self-employment worldwide, and this suspicion does not affect just Uber alone.

For example, it is often questionable whether self-employed parcel couriers who deliver parcels on behalf of a large logistics company are really independent. Or the "juicers" who collect e-scooters in the metropolises at night, charge them and distribute them again in the streets. Or the bicycle couriers who deliver food deliveries ordered on brokerage portals.

Lieferando

Lieferando is currently testing whether price increases can be enforced in Germany and increased the fees by 90 percent in some large cities. Official reason: They want to raise the wages of freelancers to the level of permanent employees. It is doubtful whether a model like Uber or Lieferando can still be profitable if the agent has to bear the full social costs for his group of service providers.

In order to get around this problem in principle, things have become much quieter at Uber lately: Autonomous taxis that do not require a driver at all - that is, without the driver's vacation entitlement - are much further away from their market launch than initially thought. But they too would completely turn the Uber business model upside down. Uber doesn't own a single taxi right now. In times of self-driving cars, they would suddenly have to have a lot - and employees who maintain them, clean them and charge them if necessary.