🔐🖤🩷 Uber Says Lockouts Ending But Likely Returning, NYTWA Sends Mayor Letter About Collusion
After messaging NYC drivers that it would "remove demand-based restrictions", Uber tells amNewYork Metro that it doesn't expect Lyft to meet 50% utilization requirement in City / TLC "lockout" deal
Uber is simultaneously saying it will end NYC driver lockouts next week and predicts it will need to restart them
NYTWA says Mayor & TLC are failing to appropriately regulate rideshare companies, while City-facilitated “lockout” agreement could be seen as an antitrust violation (i.e., Uber and Lyft colluding)
Just when NYC TLC-licensed drivers thought Uber access restrictions (“lockouts”) were about to “drastically reduce”, under a Mayor / TLC-brokered deal, it increasingly appears that it’s not so simple.
Uber sent its NYC driver base an email on Wednesday stating the following:
Important changes to your driver app access
Dear [driver name],
Recently the TLC and Mayor Adams announced an agreement with Uber to scale back demand-based platform access restrictions.
Beginning September 3rd, we will remove demand-based restrictions to the Uber driver app. In line with Mayor Adams’ negotiated compromise, this change is contingent on Lyft’s performance. That means we will not impose demand-based restrictions so long as Lyft meets their commitment to improve their annual utilization.
TLC’s industry-wide utilization measurement rule is still in effect, and if Lyft’s performance does not improve, we may need to reintroduce demand-based restrictions in the future.
- Text of Uber email sent on Wednesday that was shared with AutoMarketplace by several NYC TLC-licensed drivers
Uber’s email is intriguing in the sense that while it appears to be announcing an end to the much hated lockouts, the company uses the rest of the email to effectively warn drivers that lockouts might not be ending due to TLC rules and Lyft.
In fact, Uber representative Josh Gold went a step further in comments made to amNewYork Metro and actually predicted that lockouts would need to return because Lyft is unlikely to meet the utilization rate (UR) prerequisites of the Mayor / TLC-brokered deal to end lockouts.
“Uber spokesperson Josh Gold said the company doesn’t expect that Lyft will meet the mark on the 50% UR rate, and noted that would leave the company without “other options” but to continue lockouts.”
- amNewYork Metro. Rideshare drivers threatening strike over ‘lockouts’ by Uber, Lyft, antitrust suit over city-brokered deal. By Ben Brachfeld. Published August 29, 2024.
We also find Uber’s email curiously timed as the New York Taxi Workers Alliance (NYTWA), an influential driver advocacy group, is set to protest lockouts (for a second time) this upcoming Wednesday, September 4th…the day after Uber is communicating to its NYC drivers that lockouts would, at least temporarily, end.
Furthermore, if an Uber representative is comfortable predicting, on the record, that Lyft would likely not meet utilization rate requirements to Uber’s satisfaction, why even send any email about lockouts ending? While Josh Gold is an intelligent and perfectly nice person that we’ve communicated with, this is the second time he risks going on record and saying something that he probably shouldn’t have.
“There is no concern about falling below 53% [utilization rate]”
- Uber Executive Josh Gold implying if utilization rate “floor” went from 56% to 53%, there would not be a need to institute NYC “lockouts” during a TLC public hearing (March 1, 2023)
Uber Needs To Reflect
In our opinion, the best way to demonstrate lockouts ending is not locking out drivers. Announcing that you’re going to end lockouts means nothing to most drivers. Talk is cheap, at this point. Uber should not underestimate NYTWA and other driver advocates. The same advice applies to the Mayor and the TLC.
Uber, and we respect their capabilities as operators (as does the the stock market), might be miscalculating the current situation in NYC. If we were major shareholders in Uber, we would be worried about how executives are handling the current situation and would voice our concerns. Uber must remember while passengers are their direct customers, Uber’s network effect can be significantly impacted if enough drivers walk away in a market that has supply constraints (i.e., FHV License Cap, insurance “barriers to entry”).
If you get enough drivers upset, if you embarrass the Mayor and the TLC enough, if you try to kill your primary competition via regulatory capture, you’re making a lot of enemies (maybe too many) and years of built up goodwill, begin to go away. We think Uber is run by intelligent people, but some actions around lockouts show arrogance combined with mismanagement. The TLC is also as, if not more, at fault than Uber re. driver lockouts. It continues to not take ownership of disastrous policies that clearly oversaturated the market with over 10,000 new for-hire vehicles in 2023, alone.
This leads us to today’s virtual press conference held by NYTWA.
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Uber & Lyft Colluding? Wage Theft? Antitrust?
Earlier today, NYTWA along with Towards Justice and the Open Markets Institute held a virtual press conference on Zoom and published a joint letter addressed to NYC Mayor Eric Adams.
The letter asks the Adams administration to “cease facilitating Uber and Lyft’s anticompetitive conduct”. NYTWA further states, and this was reiterated during the presser, that the City-supported agreement between Uber and Lyft, announced in late July, was in “plain violation of black-letter antitrust law, which prohibits companies colluding over wages and suppressing labor outputs”.
“Black-letter” law, in our understanding, simply means legal rules that are well accepted or “indisputable”. In this instance, we believe NYTWA, Towards Justice and the Open Markets Institute, are making the simple point that two market players, with a combined duopoly share, are colluding with one another and hurting workers. If true, this would be considered a straightforward antitrust violation.
“You have seemingly surrendered your role as regulator and permitted in place of regulation a harmful collusive arrangement between powerful duopolists. The only purported benefit to drivers—Uber’s promise to “reduce” lockouts—not only seems unenforceable, but will have little impact on drivers’ working conditions when the tradeoff is that Lyft will have to simultaneously increase lockouts in order to quickly reach a 50% utilization rate.”
*****
“This is an illegal agreement among horizontal competitors in restraint of trade”
*****
“An agreement to decrease the amount of recorded time drivers are available to work is effectively a wage-fixing agreement.”
- Excerpts from NYTWA letter sent to Mayor Eric Adams (August 30, 2024)
David Seligman, Executive Director at Towards Justice, presented during the virtual press conference and stated Uber and Lyft might be engaged in “wage fixing” and “appear to be colluding”. Brian Callaci, Chief Economist at the Open Markets Institute, also presented and made a brief statement stating that Uber and Lyft had created an “internal private labor market” making it difficult for drivers to work between and outside of the two rideshare apps.
Copy of NYTWA Letter Sent To NYC Mayor Eric Adams
NYTWA’s virtual press conference concluded with three NYC TLC drivers sharing how lockouts have impacted them and their families. One driver stated that lockouts need to be “permanently cancelled” as he can no longer afford to pay essential bills, while another said Uber & Lyft should “go to hell”.
Some Thoughts
We’ve written and spoken extensively about driver lockouts and shared specific solutions. We think NYTWA and its partners make a lot of interesting and valid points. We’ve also been calling Uber a monopolist for months.
However, we think one of the core issues is not about two market players colluding. It is more about Uber trying to use a crisis, unintentionally facilitated by the TLC’s careless management of for-hire vehicle license issuance, to finally kill off Lyft, its main and essentially only scaled competitor in NYC.
“Uber is edging closer to total “regulatory capture” of the NYC for-hire transportation (TLC) industry. It is now using this leverage to cement a monopoly.”
- AutoMarketplace (August 1, 2024)
This is a much larger cartel player, trying to kill off a much smaller competitor. This isn’t a story about two equally positioned corporations working together to manipulate a market.
Uber is using this moment to potentially kill Lyft via using a well meaning utilization-based driver minimum pay formula. The regulator and advocates, it appears, are still having a hard time conceptualizing and understanding what the “first principles” of the issue(s) are. Uber wants to be judged on standalone utilization and if they are granted that, Lyft might go out of business. To say Uber and Lyft are colluding is misunderstanding incentives and what both companies are actually saying and agreeing to.
In the same amNewYork Metro article referenced earlier, journalist Ben Brachfeld managed to get an official statement from Lyft about driver lockouts.
“We believe the city’s driver pay formula is broken, and no other city uses such a convoluted system…Today, NYC drivers make more per hour when logged on the Lyft platform than in any other city, even without tips and bonuses, but the pay formula is turning rideshare into a luxury only the most wealthy can afford, all while forcing us to limit driver flexibility. Instead of sticking with a flawed system, we need to recognize its issues and fix them.”
- CJ Macklin, Lyft spokesperson (amNewYork Metro. Rideshare drivers threatening strike over ‘lockouts’ by Uber, Lyft, antitrust suit over city-brokered deal. By Ben Brachfeld. Published August 29, 2024)
That doesn’t feel like Lyft is colluding with Uber, that feels like Lyft is fighting for its life. It’s time advocates and drivers reflect on why lockouts are actually occurring and what practical, technical solutions can be proposed and implemented.
One of the worst mistakes an individual can make is thinking you fixed something, but realizing you made things worse. For example, killing a duopoly to create a stronger monopoly player is not a good outcome. Having the same utilization-based pay rules for the 60% share player and 20% share player, is unfair. Increasing required driver pay so much, that you kill trip demand and actually end up decreasing overall driver income, is not helping anyone.
We’re not saying we, AutoMarketplace, are the all-knowing oracle, but we disagree that Lyft is colluding with Uber. We believe Lyft could more accurately be described as a hostage to Uber. We do generally agree with NYTWA’s point about the Mayor and TLC failing to properly regulate NYC’s for-hire transportation marketplace. NYTWA, its leadership and members are genuine, proven and successful advocates for NYC TLC drivers. We agree with some of their proposals and thoughts, but also disagree with others.
AutoMarketplace Lockout-Related Videos
For those who want more detailed, technical insights into why NYC driver lockouts are occurring (in our opinion), please see the videos below.
What's the deal with shl pilot? can I put my green cab as shl as of today? If so can I drive uber/lyft?
Isn't it madness for the industry to have recently registered almost 10 thousand or more new drivers and afterwards resort to locking them out of their platform, "both veteran drivers and rookie drivers". This is definitely an indication that there's no job protection with these rideshare companies who either don't care about the drivers because they believe that there's always going to be drivers outthere to drive whenever they need them or that they can do whatever they want with no consequences.