Price Fixing: The Legal Argument That Could Destroy Uber

https://jalopnik.com/the-legal-argument-that-could-destroy-uber-1834790506

by ryan_j_naughton • 7 years ago

76 19 7 years ago

jalopnik.com

ProAm• 7 years ago

“They’re setting a price for a product they say they don’t sell.”

This is going to be an interesting court battle.

kop3163• 7 years ago

"However, independent contractors, who can have limited liability corporations or other incorporated entities in their own right, do not have many of those rights, including the right to collectively bargain."

I am not inclined to believe this is correct. As a hobby, I am a musician and a member of The American Federation of Musicians. Through them, I have done quite a few gigs where I was not an employee of the place I played, but they did the collective bargaining.

I imagine if Uber/Lyft drivers want to form such a union, that would be an extremely powerful way of doing such.

klyrs• 7 years ago

Indeed, one such guild already exists. This seems like a strange oversight for an otherwise well-researched article. Unions represent employees, guilds represent contractors.

https://drivingguild.org

kop3163• 7 years ago

I would argue it's not just a "strange oversight", a lot of the article falls apart with that knowledge. The article continues with:

"This is because we have a different label for when different corporations get together and determine the cost for their services. We call it price fixing. And price fixing, under the Sherman Antitrust Act, is illegal."

However, such a practice is legal and is very well known. Musicians do it, and a lot of other skilled labor have similar things (I seem to recall IBEW is another such organization).

mrfredward• 7 years ago

According to the FTC: "A plain agreement among competitors to fix prices is almost always illegal, whether prices are fixed at a minimum, maximum, or within some range."

https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

I know there are examples that don't appear to conform to this rule, but I don't think it's fair to make a general statement that businesses can collectively bargain when the FTC is so clear about price fixing.

jsty• 7 years ago

I'm also curious about this - from what I remember from the relevant bits of history lessons, the early antitrust laws were enacted at least in part to quash the price-fixing of guilds.

Unions have rights to conduct in collective bargaining, but I'm not aware of any similar allowances for guilds of independent contractors to set prices collectively where it would have anticompetitive effects - they're treated just the same as other traders / companies.

kop3163• 7 years ago

I am curious if the difference is having such an organization as an option versus finding people off of the street. In that way, using a guild is one option, but they do not prevent you from using other options.

Waterluvian• 7 years ago

My PiHole is unplugged today. I read the whole article and loved it. Quite a fascinating argument on how Uber is trying to get the both of best worlds.

But wow... 19 ad breaks? Every time a half second page freeze.

lugg• 7 years ago

Complains about 19 adbreaks as 2000 adnetworks are pinged.

ggg22• 7 years ago

nonsense. uber and lyft end-game is a monopoly.

see how uber fixes the percentage it pays to drivers exclusively on their control of the market. if there's lyft in a city, they pass down 70%, if they are alone, they retain 70% instead.

in the same way, if drivers try to fix price or bargain, they will simply change the algorithm to give almost no rides at any time to drivers that are not driving a certain time while handsomely rewarding the striker breakers, until the price fix turn into their favour again.

b_tterc_p• 7 years ago

If they do that, there will be fewer drivers, so their prices will go up.

ggg22• 7 years ago

it will go doubly up, for the drivers working when they say so. eventually it will starve the others.

it's not like they need to actually be profitable at any point...

drinane• 7 years ago

This is true.. if they clear enough of the market they will have to have WAY more regulation and disclosures on them... they probably operate under a loophole though

lotu• 7 years ago

I don't really see how this is an existential threat. Uber and Lyft have a simple option allowing each drive to set their own prices (presumably $ per expected mile and $ per expected time idling according to Google Maps traffic info). Uber/Lyft gets a defined cut. The user could then choose the closet or cheapest car, and you would have a self working market where the price is set by the drivers according to market forces. The main downside would be prices could fluctuate wildly if their are very few drives in an area.

dhfromkorea• 7 years ago

While switching to the simple option may help the likes of Uber defend themselves on the legal front, the switch may not be that simple to implement and will be costly on the business front (if not making them cease to exist). First, the switch will likely lead to an increase in ride fares and a decrease in user experience. Second, it will be increasingly difficult for the Uber's management to justify its massive operating losses, when they cannot say to their investors "hey, we can always increase the price at will".

dangjc2• 7 years ago

Couldn't they just say they use an auction mechanism, so there's one price, but it's a clearing price?

m463• 7 years ago

Is there a bidding mechanism?

dangjc2• 7 years ago

Nope. I wonder if they switched to one if the effect would be the same.

hamilyon2• 7 years ago

This is complete Ghost in the shell-level dystopia. Multinational corporations own people's means of survival. Governments hide in corners and surrender.

Price Fixing: The Legal Argument That Could Destroy Uber

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