
Uber backtracks after jacking up prices during Sydney hostage crisis - unreal37
http://www.washingtonpost.com/news/morning-mix/wp/2014/12/15/uber-backtracks-after-jacking-up-prices-during-syndey-hostage-crisis/
======
danso
Whether or not the surge kicked in automatically and the tweet was made merely
as an announcement, or the surge was instigated manually...It's surprising
that Uber doesn't take advantage of these situations for PR purposes. Would it
kill their bottom-line to overpay their drivers for several hours in extreme
situations?

I guess the problem is that anytime an "extreme" situation happens (which
could be any kind of accident or dangerous weather), Uber would then be
expected to absorb the costs.

That said, maybe Uber shouldn't say _anything_ during emergencies? I mean,
what's the usecase here? People in the area are panicking for their
lives...their first thought is to check Twitter, then check @Uber_Sydney to
see if Uber has anything interesting to say about the terrorist hostage
situation? Uber should've made no statement on this, and everyone would've
more or less accepted the auto-surge situation. Instead, they not only
inserted themselves into a citywide emergency for PR purposes, but then they
did something that will never, ever be popular. Would really love to hear the
PR strategy that inspired that original tweet by @Uber_Sydney

~~~
agwa
Instead of taking a loss to compensate drivers, perhaps they should just waive
their 20% cut during emergencies, so 100% of the fare went to drivers. They
could sell the surge pricing as hazard pay for drivers without opening
themselves to the criticism of profiteering off an emergency.

Another reason to like surge pricing is that, in addition to increasing the
supply of drivers, it reduces demand by incentivizing riders to conserve:
people are more likely to split a ride with strangers when surge pricing is in
effect. That's a desirable property when there's an emergency and your goal is
to get people out of an area as efficiently as possible.

------
fludlight
One man's price gouging is another man's hazard pay.

~~~
chris_wot
There was no danger in driving someone out of the Sydney CBD.

~~~
fludlight
Demand to leave was abnormally high because of a perceived threat to public
safety. Keyword: perceived.

Regression to the mean applies to panic as well. With a large enough sample
size, all humans, wether they be passengers or drivers are susceptible to fear
in the same ways.

------
josu
If increasing prices will put more drivers on the streets, this means that
more people will be able to "escape". It may look bad, but surge pricing may
actually help in these situations.

~~~
abandonliberty
That's the Uber argument. It makes logical sense but their customers don't get
it.

Uber has a reputation problem and failed to generate public goodwill. They're
the poster child of arrogant valley companies that everyone loves to hate. As
logical as surge pricing is, it will be a hard sell until they win the people
over.

As a result there was no optimal way for them to respond in this situation. \-
Disable automated surge pricing, less cars on the street, less people home
quickly \- Remain silent about automatic surge pricing, guaranteed backlash,
more cars on the street

Instead they tried to get ahead of the backlash. Maintains their strategy,
gets more people home, paints a huge target on their backs for everyone who
hates them.

~~~
vacri
Jacking up prices in response to a humanitarian problem is called
'profiteering'. It is economically sound, but it's not ethical.

If they want to show it worked, they should release numbers - proportionately
how many uber drivers were 'enticed' back onto the roads? Show people that it
actually works, rather than wave hands around saying 'mutter mutter logic
mutter mutter save lives'.

~~~
josu
> It is economically sound, but it's not ethical.

In this case on the one hand you have people desperately trying to leave a
place, and on the other hand you have drivers sitting at home not wanting to
risk their lives for $x/mile.

When Uber jacks up prices, you are creating incentives for those drivers to
get out of their homes and start allowing people to desperately leave the
places where they don't want to be in.

Highers prices>More drivers>More people leaving the dangerous places

There is nothing ethically wrong with it. I could even argue that the
unethical thing would be not to jack up prices, since this would put less cars
on the streets and consequently less people would be "rescued".

~~~
vacri
s/uber/food and s/sydney cbd/famine area

"I could argue that jacking up the prices for food in a starving area is
ethical, since it would encourage diversion of food from other areas, bringing
in merchants who would otherwise not visit"

Or maybe ethics is a little broader than just economic invisible-hand logic?

------
lettercarrier
Uber is all of us on HN. And we need to speak up that greed is bad. We need to
not associate with greed. We need to recognize that this new economy-thing-
that's-so-new-we-don't-have-a-name-for-it-yet changes life; And we need to not
be on any side that funds, creates, supports, programs, designs and Elephant-
in-the-room ignores greed.

If the end result of rich people funding new companies makes greed, then I
vote to stay poor. There is so much potential with "airborne extensive
genetics" to do good. But Uber is greed; greed is bad and toxic.

------
dllthomas
It's an interesting case, which raises a few issues.

On the surge itself, I think it's a bit instructive to imagine two worlds,
call them World 1 and World 2. In World 1, every person has the same ability
to pay and attachment to money - their willingness to pay changes only by
virtue of how much they need the ride. In World 2, every person needs the ride
precisely as much, their willingness to pay is solely due to differences in
their financial circumstance.

In World 1, the ideal response in every sense would seem to be surge pricing.
Those willing to pay a higher price would have their greater need met, at a
price they agreed to. Refunding them is fine but arguably unnecessary.

In World 2, we're clearly discriminating by class (what you think about that
depends on your moral framework; I don't love it) by initially _presenting_
the higher price, whether or not it's refunded. It's interesting to note that
refunding in this case is particularly weird - you're giving money back to
those who need it least - except when you consider that Uber probably has
greater ability to pay than anyone in Sydney...

The real world, of course, doesn't resemble either of these.

In all cases offering more to drivers is desirable, other things being equal.

One thing that I haven't seen discussed is that there could be a distinction
between moving people to some minimum safe distance, and moving people beyond
that.

------
debacle
Is Uber really this bad at PR? Don't the investors pay attention to the news
cycle? Or is there a witch hunt going on behind the scenes?

~~~
potatolicious
It's possible - and IMO likely - for both to be true.

Media outlets are scrutinizing Uber's every move because scandal is popular
and everyone wants to break the next Uber story.

They are doing this because public opinion for Uber is at a low, mostly due to
Uber's own doing and shocking lapses in basic business ethics.

Uber got themselves into this mess by behaving deplorably, but one must
acknowledge that there's a dogpiling/witchhunt going on as a result.

------
AndrewKemendo
Seems as though Uber is a great candidate for a real life example of Homo
Economicus.

------
kesava
This is the city of #illridewithyou. There are probably volunteer uber drivers
who are willing to help people escape safely during the crisis free of charge.
That would have been an awesome PR moment for Uber.

------
DigitalSea
This story really highlights just how far the media witch hunt against Uber
has gone. The story basically calls out Uber for its surge pricing strategy
which kicked in during a siege in a Sydney, Australia cafe. People in the area
were clearing out and catching Uber's. Because of the increased demand, Uber's
automatic surge pricing kicked in.

This story makes it sound like Uber deliberately turned on surge pricing to
capitalise on what was going on, which is not the case. Those who have used
Uber before know this is an automatic mechanism, simple supply and demand,
which in most cases makes sense. It is just unfortunate that this happened
when this hostage crisis was taking place.

Surge pricing is and always has been an automatic thing. It isn't something
that someone in an Uber office switches on when they notice an increase in
demand or a crisis going on they can take advantage of. Uber are a pretty
questionable company who have done some rather questionable things, in this
situation, Uber did everything right (for the most part).

While I understand the fear is real from some of the people fleeing, the
people actually being held captive in cafe were the ones we should be focusing
on, not the people fleeing who were safe surrounded by. Calling an Uber in a
crisis is the last thing I would honestly be doing, I would be calling an
actual taxi because I know there are more taxis than Uber's in Sydney.

As unfortunate as it might be, the system works for the most part. Obviously
there were a lack of vehicles in the vicinity of the siege, the system
realised this and compensated by increasing the cost. The alternative in this
situation if there was no surge pricing, there would be no additional vehicles
to meet the demand which means people have no transport. It is also worth
noting the drivers get paid more when surge pricing is in effect, the
incentive of more money brings drivers from further away into the area.

And you know what, once Uber found out what was happening, they made all rides
in the Sydney area free which they didn't have to do. Does this sound the like
an action of a company trying to capitalise on a crisis? I don't think so. If
Uber didn't reverse surge pricing in the area, then yes, I would be calling
them out like everyone else, but as soon as they noticed, they made all rides
free and offered refunds to anyone charged surge prices. Anything for a story,
right?

I think Uber could have handled the PR around this so much better, especially
keeping the public in the loop around complexities (if any) of turning off
surge pricing or making rides free. I think this also highlights Uber need to
consider pricing caps on surge pricing, a 4x increase is just ridiculous
crisis or no crisis. I have heard of some parts of the US which have hit a 6x
increase before and then Uber intervenes and caps it.

A fine piece of shoddy journalism. Shame on you Washington Post and every
other media outlet making this into a far bigger issue than it actually is.

~~~
cjoh
This wasn't an "automatic price increase" unless software got really good at
explaining why they were increasing prices.

[http://cl.ly/image/2U3l242l350p/Image%202014-12-15%20at%2012...](http://cl.ly/image/2U3l242l350p/Image%202014-12-15%20at%2012.41.06%20PM.png)

"We are all concerned with events in CBD. Fares have increased to encourage
more drivers to come online & pick up passengers in the area."

Somebody wrote that sentence, and it's a gross one. The same doesn't belong on
the Post, it belongs on the person who wrote that and upon the culture that
allows for sentences like that to be written.

~~~
res0nat0r
That doesn't discount the fact that the surge pricing algorithm is still
automatic. They don't have people sitting at their evil corporate HQ clicking
buttons trying to maximize screwing people over.

~~~
davidgerard
No, but they knew what they were doing and can't claim they didn't _choose_ to
continue.

~~~
dllthomas
Although it's _possible_ (no idea whether it's the case) they didn't have a
mechanism to shut it down, on the time frame they would have needed to.

~~~
davidgerard
We can't philosophically disprove it. But Occam's razor applied to the
behavioural evidence suggests Uber thinks surge pricing is fantastic, and
keeping it in place during crises is corporate policy unless and until there's
a media backlash large enough for it to actually get through their thick
skulls that people are pissed off.

~~~
dllthomas
Presuming Uber thinks surge pricing is fantastic, wouldn't it be all the more
likely they wouldn't build in a mechanism to disable it at the drop of a hat?

~~~
davidgerard
Possibly. But it's a red herring considering the issue is moral culpability
and whether their behaviour is socially acceptable.

~~~
dllthomas
Their behavior, at this point, was "pay drivers out of their own pocket to
help get people away from the emergency". It's hard to call that "socially
unacceptable". It arguably took longer than it should have, but it takes time
to make decisions in any large company. Hopefully they will learn from the
experience, get better plans in place, and clarify policies for the future.

------
closetnerd
Is there a way to filter out posts trying to hate on Uber? I think I've gotten
the point already.

------
dreamdu5t
How about Uber can charge what they want, and if you don't want to use them
then don't. Stop whining. Uber doesn't owe people fucking rides.

~~~
quonn
They can charge what they want, but let's remember that the free market only
works if there is complete information. "Whining" in this case is helping to
provide full information, so the rest of us can choose which service we pick
in the future.

