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CNBC: ‘Uber CEO Says Its Service Will Probably Shut Down Temporarily in California if It’s Forced to Classify Drivers as Employees’

Lauren Feiner, reporting for CNBC:

Uber would likely shut down temporarily for several months if a court does not overturn a recent ruling requiring it to classify its drivers as full-time employees, CEO Dara Khosrowshahi said in an interview with Stephanie Ruhle Wednesday on MSNBC.

“If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly,” Khosrowshahi said.

Justin Wolfers:

Basically, an admission that Uber’s key innovation was to skirt labor law.

Noah Smith:

Whatever you think of the employee/contractor issue, it seems clear that if Uber can’t survive except by classifying drivers as contractors, it was never as valuable of a business as people thought.

These two things can both be true:

  1. Uber saw how terrible traditional U.S. taxi services were, and created a much better alternative that people love to use, entirely based on the key insight that ubiquitous smartphones could and should change the game. Hailing, mapping, location tracking, payment, driver/passenger rating — all of it enabled via phones.

  2. The idea that this business model was worth tens or even hundreds of billions of dollars was based almost entirely on exploiting a gray area in labor law, and thus the company’s workers.

  3. The founder was an enormous jackass.

OK, that’s three, but they’re still all true.

Thursday, 13 August 2020