From Business Insider · Alex Bitter · · 1m 30s
Uber shifts money from riders to drivers
Uber is spending less on rider discounts and more on driver incentives, which may push up fares for passengers.
In brief
Uber is spending less on rider discounts and more on driver incentives, which may push up fares for passengers. Uber is redirecting spending from rider discounts to driver incentives to address a severe driver shortage, risking higher prices for customers. Originally reported by Business Insider.
Uber shifts spending to drivers
Uber is moving money away from rider discounts and toward driver incentives to attract more drivers to work more trips and deliveries, CEO Dara Khosrowshahi said on the company's third-quarter earnings call on Wednesday.
“This year, we're taking down rider incentives, and we're using those dollars to fund driver incentives.”
Higher prices likely for riders
The shift in spending strategy means rider prices may increase as a result. Khosrowshahi said the company watches out for this outcome but sees it as necessary to address the driver shortage.
“This year, we're taking down rider incentives, and we're using those dollars to fund driver incentives.”
Worst driver shortage in years
Uber has not faced a driver shortage this bad in years. The last time the company increased spending on driver payments was in twenty twenty-one, after the pandemic forced many gig workers off the road.
Global problem worsens
The driver shortage extends beyond the US.In emerging markets like Brazil and India, both drivers and customers are squeezed by higher fuel prices, CFO Balaji Krishnamurthy said.
AI decides where incentives go
Uber's algorithms trained on billions of trips now decide exactly how and where to spend incentive money. Khosrowshahi said the algorithms make choices humans cannot, calculating the maximum predicted return for each dollar spent.
“If you have a dollar, what is the maximum predicted return for that dollar?”
The key point
Uber is redirecting spending from rider discounts to driver incentives to address a severe driver shortage, risking higher prices for customers.
