Uber’s tactics against rival Lyft crossed the ethical double-yellow line: Chris MacDonald

A truly competitive market requires that all the players obey the rules

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Uber app displayed on an iPhone with traffic in the background

Uber’s tactics for recruiting drivers working for rival Lyft were legal, but the company’s behaviour was definitely not ethical. (Oli Scarff/Getty)

If all is fair in love and war, what about in business?

Uber is in the news again, and not for happy reasons. The car service company has been accused of trying to poach drivers from competitors like Lyft. And, in the process of poaching drivers, Uber has apparently been responsible, over a 1-year period, for 5,000 or so cancelled Lyft rides—rides that were ordered and then unceremoniously cancelled. According to Casey Newton, whose piece for the Verge broke the story:

Uber is arming teams of independent contractors with burner phones and credit cards as part of its sophisticated effort to undermine Lyft and other competitors….Using contractors it calls “brand ambassadors,” Uber requests rides from Lyft and other competitors, recruits their drivers, and takes multiple precautions to avoid detection.The effort, which Uber appears to be rolling out nationally, has already resulted in thousands of canceled Lyft rides and made it more difficult for its rival to gain a foothold in new markets.

Uber, for its part, says its brand ambassadors never intentionally cancel rides. But as others have observed, doing so is a foreseeable consequence of their driver-recruitment strategy. If an Uber brand ambassador contacts a Lyft driver who happens already to have been contacted (and this can only be determined after the ride is booked), they realize their current call is pointless (and may well raise Lyft’s suspicions, resulting in the caller getting blocked) and so they cancel the ride.

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Now, I’m no Uber hater. In fact, I’ll admit from the start to being an Uber fan. I use the service frequently here in Toronto, and I love the model. But that makes it all the more disappointing that a company with a great idea is using scummy tactics to gain and hold market share.

MORE: Uber can’t be an $18 billion company with marketing this dorky »

Vox’s Timothy B. Lee has defended Uber. Poaching other companies’ employees, according to Lee, is par for the course. That’s what companies do. And since the best way for Uber to speak with Lyft’s drivers (not truly employees, but close enough) is by posing as customers and ordering a ride, that’s naturally what they’re doing. As Lee points out, this is completely legal (Uber’s brand ambassadors are, after all, paying for the drivers’ time) and is arguably beneficial to drivers to the extent that it makes them aware of new opportunities.

But that defence is off-target. It’s not clear that ordering a Lyft ride is the only way to find new drivers (what about the huge number of taxi drivers not yet affiliated with either company?) Of all the ways there are to recruit drivers (putting up posters near where cabbies congregate?), why choose the one that just happens to interfere with a competitor’s business? Lee claims that a few thousand cancelled rides pales in comparison to the size of Lyft’s fleet of drivers (roughly 60,000). But that argument fails. It’s the principle of the the thing—sabotage is not OK—not just the actual degree of interference experienced. (Compare: shoplifting isn’t OK just because a store’s sales volume is large.)

Uber is not, contrary to what Andrew Leonard suggested in Salon, an example of “no-holds-barred free-market competition,” precisely because there is no such thing as no-holds-barred free-market competition, at least not in a vaguely capitalist economy. Capitalism embraces competition, but the kind of competition it embraces is not unrestricted. It is competition based on innovation, and on a dedication to producing a better product at a better price than the other guy does. As others have pointed out, failure to compete (say, when such failure takes the form of collusion) is itself unethical and illegal. But that fact certainly doesn’t licence every imaginable competitive strategy. Hockey, too, is a rough game. And players are obligated not to generously share the puck with members of the other team. But the best hockey—and the best business—happens when competitors fight hard within the rules of the game, winning because of their superior talent, not because they busted the other guy’s knees.

3 comments on “Uber’s tactics against rival Lyft crossed the ethical double-yellow line: Chris MacDonald

  1. Interesting take on it. If it’s so obviously unethical, though, why shouldn’t it be illegal? Or should it be?

    Reply

  2. Welcome to the world of business. The competitive market not operate within the narrow confines which you deem as acceptable. Elbows are thrown behind the refferees back, get used to it. This is part of the game.

    Reply

  3. Here are some very diverse perspectives on all issues affecting Uber drivers:
    http://UberPeople.net

    Reply

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