The nuclear option is not for now. Lyft, Uber's US rival, will not end its chauffeur-driven car reservation service (VTC) Thursday at 11:59 p.m. in California, after the appeals court granted the two companies a delay in re-qualifying drivers in employees.
A judge in that US state had given the two companies ten days, until Friday, to comply with a law on the status of self-employed workers, but the appeals court put the order on hold for the duration of resolve the ongoing legal battle, crucial for the “gig economy” model (task-based economy).
Technology or transport companies?
The two San Francisco-based companies see themselves as technology platforms, connecting drivers and passengers, not transportation companies.
The AB5 law, which came into effect in California on January 1, was drafted with Uber and Lyft in their sights. Politicians thus intend to force them to grant social benefits (health and unemployment insurance, overtime, etc.) to their tens of thousands of Californian drivers, considered to be self-employed, who often work in precarious conditions.
The platforms ensure for their part that the overwhelming majority of drivers ("4 out of 5") prefer the current model, for the flexibility of schedules.
A referendum to decide?
The two competitors are betting on a referendum, scheduled for November, to save their model. They spent tens of millions of dollars to organize the poll and call on the citizens of the state to support their “Proposition 22,” a compromise that would guarantee flexibility and some social benefits to self-employed drivers.
"Interrupting service in California could allow them to gain support for Proposition 22, because consumers are likely to be frustrated if suddenly there is no more VTC in the state," notes analyst Dan Ives of Wedbush Securities. "In this game of high level poker, we think it's smart on Lyft's part, and Uber who will follow suit." Elected officials and unions in favor of the AB5 law recalled for their part that Lyft and Uber had time to regularize their situation since January.
"It's a shame that companies prefer to shut down operations instead of complying with labor laws," Jim Hoffa, president of the American union Teamsters, said on Wednesday, calling their "threats" "tactics of intimidation of greedy corporations. ". The Californian twists and turns are being followed closely in the United States and by many other governments critical of the “gig economy”.
Uber has so far never managed to turn a profit. In the first half of 2020, the group lost $ 4.7 billion, mainly due to the collapse in demand for car trips during the health crisis. A change in the model is “inevitable” for independent analyst Rob Enderle, but “now is not the time. (Due to the pandemic) a lot of drivers are in survival mode, and Uber and Lyft are losing a lot of money. They could go bankrupt ”.
- World