Uber is the worst-performing stock among leading tech companies today — its shares are down more than 9 per cent as the regulatory tide appears to be turning against it.
As Dave Lee reports from San Francisco, Uber and rival Lyft already had lost a combined market value of more than $20bn in the week since labour secretary Marty Walsh first signalled his intent to look more closely at the classification of workers on gig economy platforms.
On Wednesday, the labour department withdrew a rule that the Trump administration had sought to push through in its final days, which would have made it easier for businesses to classify their workers as independent contractors, avoiding federally mandated rules on minimum wage and overtime. The Biden administration is also pushing legislation before Congress that would bolster worker protection measures, including classification and unionisation.
Uber has been coy about the potential cost of making any of its 3.5m global active drivers and couriers into employees, but the landmark UK Supreme Court ruling in February, in which the court ruled that drivers should fall under the country’s “worker” designation, could be a guide. Uber recognised there a $600m accrual for costs it expects to bear in settling historical wage claims.
In its earnings report last night, Uber claimed it was “starting to fire on all cylinders” with its highest-ever quarter of gross bookings, though its food delivery business continued to do the heavy lifting, as ride-hailing bookings remained flat.
However, a shortage of drivers has been hampering its recovery from the pandemic, incentive packages to lure them back have been costly and having to pay them more by law would only dampen its future profitability. As Lex points out, workers are the ones winning over shareholders for now.
The Internet of (Five) Things
1. Gopuff’s Fancy UK buy
We looked yesterday at how Uber was responding to the surge in rapid grocery delivery services — it partnered with Gopuff. Now the US company has entered the crowded European market after agreeing to acquire Fancy, a small UK-based delivery outfit. Tim Bradshaw writes about Gopuff and the seven dwarfs — Weezy, Fancy, Jiffy, Flink, Dija, Gorillas and Zapp (all real names of rapid-delivery services) for FT Magazine.
2. Nintendo Switch hit by chip shortage
Japan’s Nintendo has said that production of its popular Switch console could be hit by global chip shortages, following a similar warning from rival Sony last week. At its full-year results, Nintendo forecast a 12 per cent drop in sales of the console in the current financial year, with components hard to come by. Lex says the global return to normality could also hit sales.
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3. Facebook’s oversight board bares its teeth
The 20 legal and governance experts paid by Facebook to deliver “independent” judgments on its often controversial behaviour showed they have some teeth in their first major ruling, writes Hannah Murphy, in her analysis of the oversight board’s decision to keep a ban for now on Donald Trump. John Thornhill comments the broader and more important issue is whether a Facebook-designed, appointed and funded board is the appropriate body to be making such judgments.
4. Bezos shepherds in space tourism
Jeff Bezos’s space exploration company Blue Origin has launched an online auction for the first civilian seat aboard its tourism spacecraft, saying it will take flight on July 20. If successful, the trip on New Shepard would be the first commercial space flight to take a civilian beyond the Kármán line, the internationally recognised edge of space, more than 60 miles above earth.
5. What magic teaches us about misinformation
We share fake news not out of malice or ineptitude, but because of impulse and inattention. It is not so different from a magic trick. In both instances, we can spot the difference between what is real and what is fake, writes Tim Harford — but only if we pay attention.
Forwarded from Sifted — the European start-up week
The amount of money raised by venture capital funds in Europe has grown by 6x over the past decade to nearly $24bn in 2020, according to a new report. This is still short of the record $74bn raised by US funds last year, but is still a big jump and 1.5 times the rate of growth compared to the US over the same period. The rise speaks to the rapid growth of the European start-up ecosystem. The report found that 28 per cent of European VCs are headquartered in the UK, with another 13 per cent in Germany and 12 per cent in France. The remaining 46 per cent of firms are spread across 28 more European countries.
In other European tech news this week, new figures showed that Klarna, the buy-now-pay-later fintech, saw its customer base grow faster than any of its European and US rivals last year — putting the company in a strong position ahead of a rumoured public listing. Elsewhere, Swedish electric driverless truck company Einride raised a $110m Series B funding round, which will be used to roll out its services faster to customers in Europe and the US. And Sifted spoke to Professor Franco Cotana, who is trying to reinvent logistics creating a “physical internet”.
Tech tools — Cowboy 4
Belgium’s Cowboy unveiled the next generation of its electric bike today and added a “step-through” version — that’s without the horizontal bar across the top. I had a brief spin on Wednesday, after reviewing the Cowboy 3 earlier this year, and found the 4 a significant improvement with a host of new features. The step-through Cowboy 4 ST enables a more sitting-up riding position, which I prefer, and the seat and handlebar grips are softer. I also like the built-in attachment for a smartphone in the centre of the handlebars so you can keep a better eye on the improved app — on the earlier version I had to fit a kit to one side of the handlebars in order to mount my iPhone. Once docked, the phone will wirelessly connect and charge from the bike’s internal battery. The 4 also features a 50 per cent increase in torque, which gives a noticeable boost to the automatic transmission.
The C4 and C4 ST are both priced at £2,290/€2,490 inclusive of mudguards. They come in Black, Khaki or Sand and are available for pre-order today for delivery in September.