Benner on Tech: Uber Drivers Unite

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About…

U.S. district judges ruled that Uber and Lyft must convince juries that their drivers aren’t their employees.

Before you say, “Of course, the people who drive me around and say that they represent Lyft and/or Uber are therefore employees of Lyft and/or Uber,” remember how these particular ride-hailing companies work.

The companies say that they’re software platforms whose only real product is the app that you use to summon a driver. They create a marketplace where independent drivers can be paired with people who need rides. These companies take a cut of the fare, and they become more profitable as they do more volume, since they don’t have pay more to make the driver base grow.

If the juries agree with the drivers -- that they should be classified as employees and get minimum wage and benefits --  Lyft and Uber would get way more expensive to run. That could call into question their high valuations. Uber is valued at $40 billion, making it one of the world’s most highly valued venture-backed companies. Lyft just raised $530 million and is now valued at $2.5 billion.  

The judge in one case has already said that neither employee nor independent contractor status really fit in these cases. This obviously won’t be easy for juries to decide.

I’m inclined to think that the drivers will be considered contractors unless they can prove that Lyft and Uber subject them to a lot of rules and regulations. When FedEx drivers won their legal fight to be classified as employees, that situation was very different from the one transpiring with the ride-hailing apps. Those drivers wore FedEx uniforms, drove FedEx-branded vehicles and leased FedEx equipment. FedEx subjected them to random drug tests.

The taxi apps so far don’t do anything of the sort. A class-action lawsuit against an on-demand service company would stand a better chance if it were brought against a startup that forces contractors to wear uniforms or more overtly demands that drivers comply with company policies.

** Related: David Sutton digs up and disseminates anti-Uber news. A recent Bloomberg profile describes him as a “hired gun” who wants to kill Uber, or at least delay its adoption, so that the 1,000 taxi companies that he works for can develop their own ride-hailing apps.

Ventureland

Snapchat is raising money from Alibaba in a deal that would value the messaging company at $15 billion, according to Bloomberg. It's also trying to forge rights deals with the NCAA and Turner broadcasting, Digiday reports.

Square bought the payment-processing startup Kili Technology, TechCrunch reports.

Whisper, the anonymous social network, laid off several staff members after the Guardian published a series accusing the company of tracking users and sharing information with the Defense Department. The newspaper walked back those accusations and deleted a column that was critical of the startup.

Zuora, which helps companies set up subscriptions, raised $115 million and is closing in on a $1 billion valuation, the Wall Street Journal reports. 

Ellen Pao v. Kleiner Perkins: Pao testifies today after being on the stand since Monday, and Lynne Hermle, the lawyer representing Kleiner Perkins, will continue her cross examination. For the past day and half, Hermle has mocked, cajoled and chastened Pao like a child, while revealing e-mails and texts that show how deeply Pao disliked her colleagues and how she often fought with male and female coworkers alike. She’s shown Pao’s testimony to be inconsistent with her deposition, particularly around issues of whether or not she asked Kleiner for copies of its harassment policy. Pao has not helped her case by growing increasingly defensive and frustrated, correcting Hermle for tiny errors. (“The Daily Princetonian,” Pao said when Hermle asked her if she’d been reporter for “the Princetonian.”) Re/code has a great live blog of the trial.

Companies

Apple…

You won’t find the Jawbone Up or the Nike FuelBand in Apple stores anymore as the company makes way for its new watch, Re/code reports. Less than 24 hours after ResearchKit was introduced, 11,000 people had signed up for a cardiovascular study using the iPhone tool, Bloomberg reports.

Box…

Shares sank after the company reported a quarterly loss and the situation was exacerbated by the fact that many analysts were using the wrong number of shares to calculate their earnings figures, Bloomberg reports. 

Google...

The company announced a new Chromebook Pixel that will use the same USB Type C port that you’ll find in Apple’s new MacBook, and it launched a new online store for Google hardware. The company introduced a low-cost data storage option for files that users don’t often access, in an attempt to compete with Amazon Web Services. It’s also in talks to buy the Indian mobile-advertising network InMobi, according to the Economic Times.

Twitter…

Users may no longer post pictures of people having sex or nude photos, unless the subjects have consented to having their photos published, BuzzFeed reports. Company rules also ban “doxxing,” or publishing someone's address and other personal information without their consent.

Media Files

Sony's online TV service, PlayStation Vue, will launch this month in New York, Chicago and Philadelphia, the Wall Street Journal reports.

News and Notes

Tech valuation growth will eventually slow and fall, but people won’t get hurt like they did after the first dotcom bubble, argues my Bloomberg View colleague Noah Smith. Mohamed El-Erian predicts a lot of increased volatility in U.S. financial markets.

The Associated Press sued the State Department over the release of e-mails and other documents from Hillary Clinton's tenure as secretary of state.

Access to clintonemail.com’s server wasn’t encrypted for the first three months of Clinton’s term as Secretary of State, and it was vulnerable to hackers, Fortune reports. 

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.