How data drives Uber’s efficient but controversial business model

How data drives Uber’s efficient but controversial business model

The Uber business, which is in 65 countries, making about 15 million trips a day, has a team of in-house economists to analyze the data from such trips to establish the most efficient means to maximize the efficiency of the market, specifically surge pricing. The data collected by Jonathan Hall and his team are used to understand passenger driver behaviour. Randomized controlled tests and improvements over the years have been used to improve algorithms as well as make the systems better (Solman, 2019). The latest improvement has focused on constantly keeping the drivers busy by ensuring that they have a rider at every convenient time to ensure they make as much profit as possible. This business model of depending on data from the trips made by Uber drivers has also brought controversies as some drivers have complained of a decrease in money given to them each year. An example is Mosrafa Maklad, who has been forced to work up to 80 hours a week instead of 40 to bear the cost of bills and expenses. 

Maklad further states that every time the Uber company makes changes, they are compelled to give in and agree to the terms to continue with their job.  Michael Martinez also says that they have no choice whatsoever but to accept the changes made by Uber company since they have no power. Despite the challenges, they continue to drive due to the main advantage offered by Uber company which is flexibility. Due to the flexibility, Makclad claims that this is the only job he can do while also pursuing his studies. The value of flexibility has been studied by Uber economist Libby Mishkin who noted that drivers could work more due to flexibility. This was because they had the choice of working whenever they felt like and not committing to a job they did not want. The data has also been used by the economist to answer critics concerning various issues, such as the claim that congestion in New York has been increased by Uber (Solman, 2019). 

From the article, it is evident that the data collected from the Uber app is analyzed by the economist to maximize the market efficiency, improve the algorithm and make the system better. This has led to much controversy as the drivers feel they have no power but have to agree to the terms set by the Uber company. Despite all these challenges, the result of analyzing and using data collected by the economist has been significant. The data has helped to understand better the driver and passenger behaviour, maximized flexibility and implemented the surge algorithm, which maximizes the efficiency of the market by identifying the imbalance between supply and demand and solving it.             

Reference

Solman, P. (2019, May 2). How data drives Uber's efficient but controversial business model.            PBS NewsHour. https://www.pbs.org/newshour/show/how-data-drives-ubers-efficient-           but-controversial-business-model