Uber’s Surge Pricing: Is it Ethical?

Uber has been popping up in the news quite a bit recently, not really for anything good either. They were criticized heavily when they stayed active (only shutting down the surge pricing) right after the Muslim ban was announced, despite the fact that taxi drivers around the JFK airport protested doing any driving in effort to show their disagreement with the ban. Uber’s CEO Travis Kalanick made a statement condemning the ban right after and removed himself from Trump’s economic advisory council due to heavy pressure. Kalanick’s statement can be seen below.

“I also let him know that I would not be able to participate on his economic council. Joining the group was not meant to be an endorsement of the president or his agenda but unfortunately it has been misinterpreted to be exactly that.”

Again, this was after much pushback from their users, as they had already lost 200,000 users by February 3rd. Now it is important to account for the fact that those number of users only account for 0.5% of the amount that use the company, but the pushback in general was significant enough for him to leave the council and set up a three million dollar legal defense fund for those affected by the ban. This fund was set up after Lyft had immediately announced that they would be donating one million dollars over a four year period to the ACLU.

Now, it was certainly unethical for Uber to be active for the period of time that they were after the Muslim ban was announced, but the surge pricing standing alone is a different topic, and an important one to discuss.

Uber has created surge pricing almost as a brand since its inception in 2010, with the general idea of surge pricing being that if you are in a crowded location the rates will automatically go up based on the demand for a ride. Additionally, this idea is that if the surge pricing is high enough more drivers will participate and there will be more overall supply to those who need to go somewhere. Many people have criticized Uber because of this strategy due to the fact that surge pricing still occurs on holiday and general busy events. In my opinion, it is not unethical to have surge pricing on during the holidays because just like any other company, you might see mark ups when an item is being demanded at such a high rate or in such a short period of time.

It does become unethical in events like the Sydney hostage crisis in 2014 where they originally left surge pricing on in the area (obviously extremely wrong for people trying to escape) but then reimbursed the passengers later. There is a line to be crossed with surge pricing, and Uber has to be very careful when these issues come up. When it comes, to sports, concerts and general busier events it is a fine business model to have when there are generally more people demanding a ride.

Put yourself in the position of the driver, the one that may simply do it because of the surged prices. Now, put yourself in the position of the consumer like many of us that have used Uber or similar services. Make a conclusion and let me know what you think!

 

 

 

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