This week Uber introduced dynamic pricing to London which sees algorithms utilize driver and personal data, including personal profiling to automatically set variable pay for drivers and fares for passengers.
The move is part of a global strategy for the minicab platform operator to boost profitability for shareholders as growth slows. Uber is progressively moving from a transparent fare and pay structure based on time, distance and commission to one that is variable, opaque and algorithmically controlled. However, the technology push will place vulnerable customers at risk of not being able to book the service when they most need it and drivers will be at even more risk of unfair exploitation.
A recent Harvard University study – Dynamic Pricing Algorithms, Consumer Harm, and Regulatory Response – has warned of the danger to consumers of tacit collusion between the algorithms of competing firms. Tacit collusion can occur where the pricing & pay algorithms of competing firms anticipate and respond to the actions of the other in the marketplace in real time. There may be no overt collusion, but the effect of tacit collusion may be even more damaging to consumers and workers. The Harvard academic authors have called for a robust regulatory response to the growing problem.
In the case of consumers, vulnerable passengers travelling home late at night or elderly passengers travelling to hospital appointments may find themselves directly or indirectly targeted unfairly for higher prices. Drivers may also be targeted based on their willingness and ability to accept lower fares which yield below the minimum wage. In both scenarios, competing algorithms are monitoring market signals as well as the behaviour of customers and drivers in real time. As a result, passengers are offered prices at higher rates than they might otherwise be. In the same way, driver pay is kept artificially lower with drivers being effectively black and grey listed in the workplace.
In recent financial results, Uber’s margins have improved because of the roll out of this dangerous technology. The firm has also weaponized inflation to raise fares for consumers but failing to pass on gains to drivers who are most exposed to fuel and other operating cost increases.
To make matters worse, the government’s forthcoming post-Brexit, Data Protection and Digital Information Bill plans to strip consumers and workers of valuable protections against unfair automated decision making by algorithms. Government deregulation will relieve operators such as Uber from the responsibility to consult stakeholders & conduct risk assessments and gives platforms greater powers to refuse data access and algorithmic transparency requests. In short, the government’s planned relaxation of data protection rules will make consumers and workers to algorithmic predation on pay and will permit algorithms to even sack workers.
Uber is obliged by regulation to clear all business model changes with Transport for London before implementation. It beggars belief that the Mayor and TfL would have agreed to the introduction of technologies so harmful to consumers and TfL licensed minicab drivers but that appears to be exactly what has happened.
The ADCU is staging a demonstration against TfL to demand action against Uber’s dynamic pricing model on Tuesday February 7 at 11am at TfL’s Palestra House, London SE1 8NJ.
James Farrar, ADCU General Secretary said:
“The Mayor and Transport for London have failed in their duty when they haver Uber the green light to set loose such dangerous and predatory algorithms in what is supposed to be a closely regulated market. Passengers and drivers are directly and indirectly unfairly targeted for personal auto-exploitation. Vulnerable passengers are placed at risk when service is denied or unfairly priced while driver pay is unfairly held down by means of employer tacit collusion and with individuals targeted for black and grey listing. In post Brexit Britain, where the government plans to strip away the few protections we have against algorithmic abuse, the Mayor must step now forward and insist on high standards of data protection for London passengers and workers. We call on the Mayor to immediately ban the use of dynamic pricing algorithms in the regulated London minicab market.”