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Uber Technologies Inc. (NYSE: UBER) Battles for Survival and for New Success in Pandemic-hampered Global Marketplace

  • Uber Technologies has established itself as a tech giant innovator over the course of a decade since it launched ride-sharing services in California’s Bay Area, now with transportation operations in 67 countries
  • The company has threatened to leave California, however, if it is unsuccessful in drawing enough voters to support a ballot measure in November that would nullify state law requiring gig economy giants to reclassify their contract workers as employees
  • Uber also faces similar legal challenges in other states and overseas, but continues to demonstrate its resourcefulness through M&A activity that has added new channels for revenue
  • The acquisition activity is providing the company with a necessarily diversified revenue stream at a time when its flagship ride-share operations are witnessing a devastating plunge in use as a result of the COVID-19 pandemic
  • Uber’s Eats and Freight divisions have seen growing traffic as a result of the pandemic, and Uber launched two new courier services in the spring that also are helping the company to remain nimble amid the new health crisis trends

Uber Technologies (NYSE: UBER) emerged as a world-class innovator when it launched its disruptive ride-share business a decade ago, drawing on the Big Tech mindset of liberating the worker from the daily workplace grind to better breed employee engagement and productivity (http://nnw.fm/QWCjC). The company now finds itself in a high-cost battle to preserve its established brand operations in various U.S. states and abroad, and with a potential time limit drawing near it continues drawing on its ability to innovate for simple survival as well as to deliver new successes.

“This is the 21st century. People don’t have jobs; they have gigs. This is a vast improvement over the industrial revolution way of thinking, where you go to the factory and put part A into slot B for 8 hours a day,” investment strategist and publisher Jared Dillian wrote in a Bloomberg LP media opinion piece favoring Uber amid the company’s legal battles in the state of California (http://nnw.fm/RpjFB).

Although states such as New York, New Jersey and Illinois have raised concerns about Uber’s model, and Uber has been appealing to have its business license restored on the busy streets of London (http://nnw.fm/QNp0d), California’s giant economy and its position as Uber’s birthplace have made it a key battleground in the company’s bid to preserve its contractor-as-a-service operational strategy.

Uber, its chief competitor Lyft, and related gig-model companies DoorDash, Instacart and Postmates had contributed more than $111 million as of Aug. 28 to California’s Proposition 22, a voter referendum that seeks to nullify a recent state law classifying the companies’ contract workers as employees potentially entitled to health benefits and unemployment compensation, according to California’s Fair Political Practices Commission data cited in CNET tech reporting (http://nnw.fm/rrxNE).

Unions and labor groups have amassed a comparatively minuscule $3.6 million to oppose the ballot measure, which will be up for a vote during this year’s election in November, according to the report on the data.

Uber and Lyft have argued that a court decision upholding the state law’s standard for determining which contractors should be classified employees could lead to the closure of an entire industry and have threatened to leave the state, if necessary. But San Francisco Superior Court Judge Ethan Schulman noted in his Aug. 10 ruling that the all-time low ridership statistics resulting from the ongoing COVID-19 pandemic make current conditions perhaps “the best time (or the least worst time) for Defendants to change their business practices to conform to California law without causing widespread adverse effects on their drivers” (http://nnw.fm/AyEEx).

Uber’s flagship ride-hailing business has seen a disastrous 73 percent fall because of people’s reluctance to travel and commute during the worldwide COVID-19 health crisis. But the company has mitigated its losses with M&A activity that includes its new UberX service for delivering packages to local destinations, which has seen 3 million trips recorded since launching in early June. And bookings for Uber’s food delivery business were up 113 percent, according to the company’s second quarter financial filing (http://nnw.fm/huRQL).

Uber’s $2.65 billion all-stock acquisition of its rival Postmates Inc. last month was expected to boost its ability to compete in the restaurant, groceries and other staples delivery market. And its agreement to purchase taxi software business Autocab was expected to help the company quadruple the number of United Kingdom towns and cities where it operates, giving it an edge over locally based competition in areas where its app currently doesn’t function (http://nnw.fm/7ONNW).

For more information, visit the company’s website at www.Uber.com.

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