The free market in action: after months of Uber CEO Travis Kalanick saying price gouging helps increase supply, The Verge reports exactly the opposite. This past Valentine's Day, the company blocked new drivers in order to keep prices high.
The news comes by way of a San Diego Uber user, whose driver read aloud a message he'd received from the transit startup:
This Valentines day, while traveling through San Diego in an Uber car, Lane heard something that disturbed him. "The driver had a Ford Sync system, and it read his text messages out loud." The message, which came wedged between numerous texts about a promotion for free roses, said, "UberX is very close to SURGE. It's Valentine's Day! People will be out all night and we didn't activate new drivers to make earnings even higher this weekend."
Emphasis added. It can't be overstated: this is the exact opposite of what Uber says it tries to do, which is boost driver supply accordingly when demand increases. Here, we have a case of Uber suppressing driver supply to exploit increased demand. Kalanick screams the gospel of unfettered market forces, and yet his company is now caught manipulating that very market, like the sort of Red Soviet bogeyman you imagine haunting his cashmere-lined dreams.
Uber confirmed the text as authentic, and tried to spin it:
[Uber] explained the text simply noted that Uber did not onboard as many San Diego drivers as they could have that week because in the two weeks prior, a very large number of new drivers were added to the system. Earnings had been low, and the company wanted to reward new drivers with a strong holiday paycheck.
And yet the text explicitly mentions surge pricing and Valentine's Day, a particularly busy moment for the company. It's great to make Uber a great deal for drivers—but the company line has been that Uber wants to put as many of them on the road as possible. This is now demonstrably untrue. Ayn Rand is frowning from Hell, Travis.
So, now that we've established that Uber is willing to manipulate supply and demand, how about capping surge pricing at something sub-exorbitant?