Thread by @garius

Uber have now LOST their appeal on the ruling that they employ workers, not contractors.

I said back in 2019 that refusing basic benefits was silicon valley bro culture at it's worst and a massive own goal.

Because English Employment law includes the Duck Test.

A quick thread

FIRSTLY:

My long read, from the beginning of this whole drama, is over on @lonrec.

It features the legal difference between golf caddies and pole dancers, the WORST Uber lawyer in the world and an explanation of the difference between cabs and apps londonreconnections.com/2019/schroding…

The short version though, is that Uber's model was (and is) in every jurisdiction built on the idea that it can work around existing transport (and legal) regulation long enough to force through regulatory change, or to force other operators out.

I am not anti-rideshare. Never have been. Never will be. I think it absolutely has a place in the marketplace of both ideas and transport.

But it has to compete on a level playing field with others.

It's about fairness.

Disrupt the market, not the law.

Okay, so assuming you're too busy/can't be arsed to read the full article. Here's why driver costs matter to Uber:

Uber sell their ability to be profitable to investors on the "Amazon effect". That is, that by being clever with tech and size, you can reduce operating costs.

This is true in tech. Which is why tech investors love Uber.

But step back for a second and think:

What are the OPERATING COSTS in running a cab firm?

They're the car, fuel and driver.

Now okay, you can try and reduce fuel and car costs through fleet management and bulk buy. But AT LEAST 40% of the overall cost of keeping a cab on the road is THE DRIVER.

You can't reduce that. It's a FIXED COST vs the LIMITED SPACE in the car.

This is why Uber has (and remains) obsessed with:

1) Driverless cars
2) Drivers being contractors not workers
3) Trying to persuade app users they want to share with strangers
4) Pretending to reinvent the bus

Because they CANNOT AFFORD to run drivers at fair rates.

S'why they've fought tooth and nail to refuse to acknowledge drivers as workers. Not just in the UK, but in the US, France, India and beyond.

Because it breaks their model. It's why they INSIST they're just an app.

Also to dodge tax. more on that later. Let's talk about ducks.

So why was their clash with UK Employment Law problematic, and why didn't they spot it?

Second part first: because the silicon valley firms ALWAYS forget that other countries don't work like America.

Otherwise they wouldn't hire Nick Clegg to lobby for them.

Now the first part (OVER SIMPLIFICATION WARNING):

English and Welsh Employment law is not as literal as other parts of the law, and DEFINITELY not like it is in the US.

It has the duck test: it doesn't MATTER how you describe yourself. How you behave is what matters.

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

Or in Uber's case, if it looks like a cab, picks up passengers like a cab, and DESCRIBES ITSELF TO CUSTOMERS as a cab service.

It's a fucking cab firm.

And that, ultimately, has been Uber's problem. To operate in a tightly regulated city with a strong Mayor and local government (London) it has had to behave increasingly like a cab firm.

The more it's done that, the more it's proven itself to be one, and not just an app.

Uber has been trying to walk a fine line between being cabby enough to be regulated, but appy enough to avoid paying the people it employs, everywhere.

In the UK it has just fallen off that line.

This doesn't just screw its path to profitability though. It makes HMRC VERY happy

This is because the repercussions for Uber of this decision potentially extend beyond actually treating their workers properly.

Because Uber has been MASSIVELY avoiding paying UK tax for years.

Uber processes payments in Holland. Lots of tech firms do this to dodge UK and other countries' tax.

When you book an Uber, you are paying their Dutch subsidiary, but being driven around by one of their UK ones.

See here from 2017: londonreconnections.com/2017/understan…

Beyond this (remember I mentioned tax) they have also not been paying VAT. That's one reason they get to undercut the prices of everyone else.

They do this by claiming that EVERY Uber driver is a tiny contracting cab firm. Who all then magically fall under the VAT threshold.

That's why this ruling has potentially larger repercussions. Because if they have employees, that very much reopens the debate about Uber THEMSELVES being the cab firm.

Which means they're then liable for VAT.

About £5billion of it, and counting.

Anyway, what should you take from this:

This ISN'T about being anti-innovation. It's about making sure firms like Uber don't get to pretend they're something they're not, to make a quick profit.

You're NOT disrupting a market if you're not playing fair. You're cheating.

And Uber have been cheating for a LONG time. Fair play to them for getting away with it this long.

But they're NOT a tech firm. No matter what their PR says. They're a TRANSPORT firm. And they've been selling a lie for a long time that transport costs work like tech costs.

And yes, the downside of all of this is that it increases the cost of rides.

Uber will try and tell you that it's nasty government or courts making them charge you more.

But you need to remember that THEY SHOULD ALWAYS HAVE BEEN THE HIGHER PRICE.

That they weren't already was because Uber was using every trick in the book to keep them artificially low. INCLUDING running at a massive loss in the hope of being the last-man-standing.

And you know what, when they'd got that, they'd have jacked up the prices anyway.

Uber isn't an innovator. It was (and is) a good app, with financial backing, and good lawyers.

It used those things to try and build a monopoly, by exploiting regulatory loopholes, before they could be closed.

It's not a disruptor. Never has been. It's a troll.

Anyway. Read the article from last year. Nothing's changed. Still relevant. Hope it helps. londonreconnections.com/2019/schroding…

And, on this day when the Supreme Court finally confirmed it, I will leave you with the text of the ORIGINAL ruling on whether Uber are a cab firm employing people or not.

It was, and remains to me, one of the finest bits of legal writing of all time.

Quack quack, motherfucker.

And a final reminder that if this stuff excites you, you weirdo, then I wrote A LOT of words about this back in 2019 londonreconnections.com/2019/schroding…

SUPER FINAL ADDENDUM.

People have asked about impact on food delivery, and why it matters what contracts drivers are under. So:

Thread on impact on food business (sv: not as much)

https://twitter.com/garius/status/1363059098690990085

Impact on drivers (sv: HUGE. Breaks the model)

https://twitter.com/garius/status/1363089505683668993