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Uber Deals with Unforeseen Challenges

Uber Technologies Inc. is a ‘transportation network company’ that since its founding in March 2009 in San Francisco, California through $200,000 in seed funding now operates in roughly 60 countries and 450 cities, and is valued, after its latest round of private financing in the spring of 2016, at $62.5 billion.

Uber’s latest corporate slogan —Where lifestyle meets logistics— is a neat description of the benefits offered by this now a seemingly obvious derivative of smartphone potentialities: a smartphone app that connects users with trip requests to vehicle owners with the responding mobile app who wish to sell their driving services. Once the app enables the connection, it displays live tracking, and once the trip is completed, payment by automatic credit card billing. In short, this taxi-like service is easily ordered, tracked, and paid for by the user, and easily and profitably provided by the driver.

Nothing, however, is quite as easy as originally envisioned.  Nowadays it seems the battles never end for Uber as world-wide it faces protests and lawsuits initiated by traditional competitors—taxi companies and their regulators, governments at all levels, users wanting more and better service for less, and even their drivers claiming some times employee and sometimes full independent status, depending on the respective benefits of either characterization.  Add insurers and car companies as vehicle lessors into the mix: no sooner resolution on one front than another opens up.

Investors, though, if not bullish at least remain engaged.  In late May 2016, Toyota Motor Corp. announced it was making a strategic—albeit undisclosed in size—investment in Uber to learn how consumers use ride-sharing services.  Toyota will also work with Uber on offering auto leases to Uber drivers.

In mid-June, Fiat Chrysler Automobiles NV, the first major carmaker to make a deal with Google Inc. on driverless cars, was reported to have started discussions on a similar partnership with Uber, whose access to a massive car fleet offers the potential for unique data gathering and systems improvement.  Clearly, self-driving technology developers and ride-sharing developers foresee dovetailing.  No surprise, therefore, to see Uber join with Google this past April in advocating for safety regulations for self- driving vehicles.

Perhaps the highest profile investment in Uber was made in early June 2016, when the Saudi Public Investment Fund announced a US$ 3.5- billion investment in Uber, which has operated in Riyadh since 2014.  Described as the Fund’s highest-profile overseas investment yet, this sizable investment is part of a transformation program to wean the Saudi economy off oil.

Saudi women who, banned from driving, are dependent on taxi and ridesharing for their mobility.  Some news reports say this investment “institutionalizes women’s inferiority and dependency, and …turns women into an object of investment.”  Uber’s response, as reported in The New York Times: “Of course we think women should be allowed to drive.  In the absence of that, we have been able to provide extraordinary mobility that didn’t exist before — and we’re incredibly proud of that.”

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