Uber Fares Have Soared In China After Didi Deal

Both Uber and Didi Kuaidi have been hailing their deal as a landmark moment for their companies. Travis Kalanick has called it a victory for Uber, and Didi has been pleased attaining a near monopoly in the cab hailing market. Investors have termed it a good result for their respective companies, and Chinese regulators are presumably happy that a Chinese company controls what’s a vital part of the economy. 

The only people who’re not celebrating are Uber’s customers.

uber

Days after the announcement, Uber has cut back on its subsidies and discounts in China. Chinese customers have taken to Weibo, a popular social network, to voice their concerns about how Uber fares have risen sharply.

“My ride nearly doubled in price,” said a user named Longdidongruirui. Another said that while one Uber journey in Beijing that has regularly cost Rmb10 ($1.50) for the past year cost Rmb19 on Tuesday morning, as the normal discount was not applied.

While Uber prices haven’t changed, several discounts and promotions appear to have been scrapped. “There are no Uber discounts today,” said Weibo user await_autumn in a post.

Both Uber and Didi had been trying to woo users with attractive discounts as they fought over a piece of China’s lucrative cab hailing market. This had meant that cab prices for Chinese consumers, at times, were comparable to bus rides. But with Didi buying Uber, the party seems to be finally over for the Chinese consumer.

 

In A Strange Turn Of Events, Uber Is Now An Investor In Ola

Modern businesses are notoriously complex entities. They transcend geographies and political boundaries, and can often have a confusing set of investors and partners. So when things happen in one business, they can impact other unrelated businesses  – often with surprising results.

Yesterday, Uber announced that it had sold its China business to Didi Kuaidi, China’s homegrown taxi company. Didi received Uber’s brand, business and data in China, and in return Uber received 20% of the stake in the new Didi entity.

Interestingly, Didi Kuadi is the same company that had invested $500 million into Indian taxi hailing ride Ola last year. With Uber now owning 20% of Didi, Uber is strangely an investor in…Ola.

-mindfuck-meme-17680

Uber and Ola, of course, have been at loggerheads in India as they try to gain a bigger and bigger slice of the country’s huge taxi hailing app market. And things haven’t been pretty – Uber has filed a case against Ola for trying to sabotage its services by making fake bookings, and Ola has called Uber a “foreign firm with no regard for Indian laws” in a court affidavit. 

While Uber’s small stake shouldn’t affect day-to-day operations at either company, it undeniably will create a strange dynamic between the rivals. Ola employees won’t be too happy that the only firm that’s preventing it from having a near monopoly in India might also be the one paying for their coffees. And Uber can’t be too excited about having put its money into a company that stands between it and global domination.

We might be headed for interesting times. Get out the popcorn.

Breaking: Karnataka Govt. Asks Uber, Ola To Stop Operations With Immediate Effect

Matters appear to have come to a head in the ongoing tussle between the Karnataka government and cab aggregators in the state. The Karnataka transport department has issued a circular stating that the aggregators who are operating un-licensed cabs in the city will have to stop operations with immediate effect.

The Karnataka government has had an uneasy relationship with cab aggregators such as Uber and Ola. The RTO had earlier issued notices to both companies to ban surge pricing, but neither Uber nor Ola had complied. Earlier this week, hundreds of Ola and Uber cabs had been seized for operating without proper licenses. In response, Uber and Ola drivers had staged protests against the RTO’s decision on Friday.

ubertaxi

But it doesn’t seem to have worked. The government circular released today states that unlicensed cabs are a violation under section 193 of the motor vehicles act, and if operations are not stopped by the companies, strict action will be taken by the department.

Both Uber and Ola have large-scale operations in Bangalore, with Uber claiming to have over 30,000 drivers on its platform in the city. Both aggregators had earlier run afoul of government regulations over their bike taxi services. The government had then contended that bike taxis being used by these companies were not commercial vehicles, and after a brief period of uncertainty, both Uber and Ola had withdrawn operations.

But Uber and Ola haven’t always immediately complied  with government orders, as was the case with the surge pricing directives. It remains to be seen if these cabs will operate on the city’s roads tomorrow. 

Uber Is Suing Ola For $7.5 Million Over Fake Bookings

In addition to the roads in the cities around India, Uber and Ola will now battle it out in the courtroom. Uber has sued Ola for $7.5 million ( Or around ₹50 crores) for trying to sabotage its platform by repeatedly making fake bookings and then immediately cancelling them. This resulted in loss of revenue and reputation for the company, Uber alleges.

uber vs ola
Bhavish Aggarwal & Travis Kalanick, CEOs Ola and Uber respectively

The court case had first come to light last month, but new details have surfaced after a Reuters investigation. Uber had formed a 7 member internal team in November after several drivers had complained of a spurt in cancelled bookings. The investigation team had identified locations and IP addresses of tens of thousands of users who had booked and cancelled rides, using information logged when a new customer account is created on Uber’s platform. In court documents, Uber says it found 660 accounts used to make troublesome bookings came from a building housing Ola’s office in the western city of Pune. Most of the rest were created near Ola’s office in the tech hub Bengaluru. Uber alleges that more than 23,000 of its drivers quit due to “illegal and wrongful interference” between September 2015 and February 2016.

Uber’s has made several submissions before the courts, including several images of LinkedIn profiles, locations pinpointed with Google Maps and hundreds of phone numbers it said belonged to people associated with Ola.

But apart from the fake bookings, Uber also levels and even more serious charge against its competitor. Uber claims that on New Years Eve 2015, Uber drivers had begun gettng calls around 5pm asking them to shut down their apps as there was a technical glitch which needed to be fixed. Uber says it made no such calls. New Years eve is one of the busiest times for cab hailing apps, and Uber alleges that several of its drivers were unavailable thanks to the rumour that was spread.

Ola, for its part, has denied all charges. It says that many of its phone numbers are in public record and Uber could’ve got them from these sources. Ola says it will battle Uber in courts, and the date of the first hearing for September 2016.

Ola and Uber are locked in a bitter battle for supremacy in India’s cab hailing market. While clear data is not available, both sides claim conflicting numbers about their market shares.

 

18 Cabs Impounded In Delhi On First Day Of Surge Ban; Citizens Complain Of Commuting Woes

 

The Delhi government had yesterday announced that it had banned surge pricing in the city, and it seems to be quite serious about implementing its ruling. 18 cabs belonging to Uber and Ola were impounded in the city today for overcharging customers.

“We impounded 18 vehicles of Ola and Uber for over-charging and permit violation,” Transport Minister Gopal Rai told reporters. “The action was taken after commuters complained on the helpline provided by the Delhi government,” Rai said.

Commuters meanwhile have had a mixed reaction to the diktat. While some people seemed relieved that they’d no longer have to pay higher surge prices on Uber and Ola, others complained that it had become hard to find cabs in the city.

https://twitter.com/itsashutosh/status/722274312636379136

Uber for its part sent SMSes explaining why there were fewer cabs on roads, and slyly implied that it was because of the government’s decision. Both Ola and Uber have maintained that surge pricing discounts prices during non-peak hours, and enables more cabs to be on roads during peak hours.

Screen Shot 2016-04-19 at 5.16.33 PM

While it’s still early days for the policy, two things are clear from the first day – the Delhi government, unlike other states,  is serious about its implementation, and it secondly, it still remains to be seen if it will ultimately help commuters in the state.

Bangalore Citizen Gets 50% Refund From Ola After Complaining About Surge Pricing

While Bangalore’s taxi aggregators are continuing to charge surge pricing rates despite a government order, it turns out that there’s now a way to get a refund – complaining to customer care.

Bangalore resident Manish Verma took an Ola Prime to have his parents dropped to the Bangalore Airport. While booking the cab, Verma had noticed the 2.7x surge notification, but having read that the Karnataka government had put an end to surge pricing, booked the cab anyway. 

While the Ola Prime employs the normal fare of around Rs. 10 per km, Verma was in for a rude shock when his parents’ trip ended with a bill of Rs. 2542. Ola had charged him surge prices despite the government order. The government had mandated a ceiling of Rs. 19.5 per kilometer for rides, but he’d been charged way above that amount for his 20.8 km long trip.

a screenshot of an Ola invoice

 


 

When Verma contacted Ola support, things got interesting. “I was told they have asked the government to give 1 month extension. Whether government has given the extension or not, they are not willing to tell me and why the same has not been communicated to customer, they are not answering. “, he tells OfficeChai.

There has been no official communication about this one month extension, either from Ola or from the government.

But Verma persisted with his complaints. And it helped him score a 50% on the surge price. “I had to make a deal with their escalation officer and she gave me 50% discount on surge price as an exception.”

This incident highlights how fuzzy the rules around surge pricing in Bangalore are at the moment. While the government has come out with its order, cab aggregator apps are still showing surge prices. And to add to the confusion, customer service representatives are willing to slash prices for those who complain.

The sooner the government comes out with a clear communication on the matter, the better.

Delhi Becomes Latest State To Ban Surge Pricing; Rules Implemented With Immediate Effect

State governments are ganging up against taxi aggregators, and how. After Karnataka had announced that it had capped surge prices in the state and had seized vehicles that continued to apply surge pricing, and Maharashtra had come up with similar regulations, Delhi too has banned surge pricing. And it’s gone a step further than in other states – it managed to get Uber to announce that it was ending surge prices with immediate effect.

What appears to have hastened this process is Delhi’s odd-even rule, which came into effect from April 1. The rule effectively meant that half of Delhi’s population couldn’t use their cars on any given day, and this led to a spike in demand for cabs, which led to high surge prices. After Delhi’s population had complained of prices that were 3-4 times the normal fare, Chief Minister Arvind Kejriwal had warned Uber and Ola of “strict action.” His action seems to have worked, and barely a day later, Uber withdrew surge pricing.

uber surge ban in delhi

What’s unmissable in the announcement, though, is Uber’s tone. It talks of “a threat to the livelihood of our partners”, which means that Uber’s hand was clearly forced into making the decision. It is likely that they Delhi government had threatened to shut down the service had they continued with surge pricing.

Both Uber and Ola claim that surge pricing reflects market demand, and higher prices help get more cabs on roads, thus eventually decreasing prices. Uber also states that it’s the drivers that get 80% of the revenue from surge pricing.

Uber’s Gagan Bhatia, general manager, North, has given the following statement in an email to OfficeChai.

Uber regularly does surge pricing when demand outstrips supply. Remember, we do not own cars nor do we employ drivers. Higher prices are required in order to get cars on the road and keep them on the road during the busiest times. This maximises the number of trips and minimises the number of people stranded. The drivers have other options as well. In short, without Surge Pricing, there would be no car available when people need it.

Now granted, that the prices are sometimes higher than our usual low fares. But we notify every customer in big bold images in text, which each customer has to confirm in order to request. Furthermore, every customer also has to type in what the multiplier was in order to double confirm that they understood what they were agreeing to.

Airlines and Hotels are more expensive during busy times. Uber is as well. We don’t just charge to make a buck – we take a small fee of the transaction, and the vast majority of the fare goes to the driver so that we can maximise the number of drivers on the road. The point is in order to provide citizens with a reliable ride, prices need to go up temporarily. Despite this, 92% of the trips in Delhi happened on regular fares, even during the first phase of odd-even scheme.

In the end, Uber is reliable, always, and we will create a system that maximises the number of people that can get safe and reliable rides. Consumers always have a choice to take a surged trip. Not surging is saying citizens shouldn’t have the option. Not surging is saying we should be just like a taxi and be unreliable when people need us most. These are outcomes that take choices away from the consumer and make it harder to get around cities – these are outcomes that we put a lot of hard work in to avoid so that at least you have the choice if you want one.

However, given the threat of the Delhi government to cancel permits and impound vehicles of our driver partners, we are temporarily suspending surge in Delhi with immediate effect. We hope to work with the government to keep Delhi moving especially during this time when the citizens need us the most.

While other states are still struggling to implement their policies against surge, the Delhi government has taken the most decisive decision against surge pricing yet. What this means for the aggregator cab industry remains to be seen.

Uber, Ola Cars Seized For Not Complying With Surge Pricing Directives

Vehicles belonging to Ola and Uber have been seized in Bangalore for continuing to apply surge pricing rates. Rame Gowda, the  commissioner of transport and road safety, said that more than 30 vehicles have been impounded and operations against the two companies are continuing. 

Bangalore had issued directives against surge pricing by imposing rules on cab  aggregators on 6th April. The rules had included caps on surge pricing and a per-kilometer price ceiling for both AC and non-AC cabs. But as OfficeChai had reported on 10th April, both companies were continuing to charge surge pricing rates in the city. 

Ola Uber Surge pricing
Screenshots from 10th April

“Surge pricing is not in the rules,”  said the commissioner of transport and road safety Rame Gowda. “You have to follow the rules of the land, you cannot violate the rules of the land and harass the public.” He encouraged commuters to file police complaints against Uber and Ola if they are subject to overcharging.

The Bangalore’s government’s ban on surge pricing had led to mixed reactions from the public. One set of people believed that the ban on surge pricing flew in the face of a sound economic-driven pricing model of demand supply, and that the move would eventually hit customers as fewer cabs will be available at peak hours. Another set had maintained that the move was long overdue, and surge pricing by cab companies amounted to price gouging.

But it still remains to be seen how Uber and Ola will react to this latest move. Last month, when Bangalore’s traffic authorities had imposed bans on bike taxis, Ola had immediately complied with the ban and removed the option from its app, while Uber had rebranded to a bike pooling service and continued to run its bike taxis in Bangalore. It will be interesting to see what the two companies do now.

Uber, Ola Continue With Surge Pricing In Spite Of Govt. Order

Two days after the Karnataka Road Transport Office issued a directive to commutech companies against applying surge pricing, Uber and Ola seem to be defying the rules and continuing with higher prices.

Both Uber and Ola have displayed surge pricing as on Sunday evening with as much as 3.5x the normal fare.

Ola Uber Surge pricing
Screenshots from Ola and Uber on Sunday evening.

On April 3rd, Karnataka became the first state in the country to regulate pricing by commutech companies by issuing a directive against inflationary pricing. Uber and Ola regularly employ surge or peak time pricing to offset its low fares during non peak hours. 

The move by the government had met with mixed reactions from public. One set of people believed that the ban on surge pricing flies in the face of a sound economic-driven pricing model of demand supply, and that it would eventually hit the customers as fewer cabs will be available.

Screen Shot 2016-04-10 at 6.10.58 pm

Others, who were regular cab users, had expressed happiness at the decision.

 

But the continuing with surge pricing is getting people in both camps angry.

https://twitter.com/sumanthr/status/719130964073381888

It remains to be seen if Ola and Uber will continue to flout the government rules or eventually toe the line. Uber, especially, is known for finding creative ways around government rules as it battles regulators worldwide. In Bangalore, Uber had continued with its UberMOTO service in spite of a government ban on bike taxi services by rebranding it as a bike pooling service.