Uber introduces dynamic pricing algorithm in London

Ride-hailing app Uber has launched a “dynamic pricing” algorithm in London to automatically set variable fees for drivers and fares for passengers, but the drivers’ union claims there is a lack of transparency about how the data will be used. people.

Uber’s introduction of the algorithm in London at the beginning of February 2023 allows the company to set variable wages and pricing levels based on real-time data for market conditions, such as time and distance, predicted route , estimated traffic, and number of users requesting. or providing services.

In letters sent from Uber to UK drivers in August 2022 about the roll-out of the algorithm, published by Brave New Europe, the company said: “If you joined Uber years ago , you join when the prices are simple.

“We set prices based on time and distance, and then surge [pricing] helped raise prices when demand was highest,” it added.

“Uber has come a long way since then, and we now have advanced technology that uses years of data and learning to find a competitive price for the time of day, location and distance of the trip. “

While Uber itself has not revealed what data its algorithm will use to set fees and prices, the App Drivers and Couriers Union (ADCU) says it will likely use personal data and profiles of drivers and passengers to can make decisions.

ADCU added that, in the case of consumers, the algorithm may unfairly affect passengers in vulnerable situations (for example, those traveling home at night or elderly people trying to reach hospital appointments).

Working conditions

For drivers, ADCU said the algorithm can improve working conditions by targeting drivers based on their willingness and ability to accept lower fares.

“In both scenarios, competing algorithms monitor market signals as well as the behavior of customers and drivers in real time,” ADCU said. “As a result, passengers are offered prices at higher prices than they could afford. Likewise, driver salaries are kept artificially low with drivers effectively black- and grey-listed in the workplace.”

An Uber spokesperson said it was “untrue” that Uber uses any personal data or profiling algorithm, and completely rejected the claim that it creates “blacklists” of drivers. They also said that Uber is working closely with GMB, with which it signed an agreement in May 2021, to consult drivers on the algorithm and incorporate their feedback before the launch in London.

“Upfront Pricing is designed to improve reliability for riders, which in turn helps create more trips for drivers,” they said. “Overall, Uber’s average pickup rate remains the same, but each trip is now based on real-time information to provide the best price to attract drivers to the area.”

Anti-competitive effects

ADCU also pointed to a January 2022 Harvard study on the harm to consumers of dynamic pricing algorithms, which found that the use of such technologies opens up the possibility of “tacit collusion” between companies , as their automatic monitoring of the prices of rivals in combination with the ability to quickly change the price creates an unspoken understanding that deviations will be met with retaliatory reduction, thus tacitly establishing a supracompetitive price.

The authors add that a company can also “start a cycle of harm to consumers simply by using a superior pricing algorithm”, because its capabilities to easily exchange goods and service, as well as autonomous observation and reaction to competitors’ price changes, removes all. incentives for less advanced technology players to compete on price; create a situation where “all companies pay more than the competitive price”.

ADCU general secretary James Farrar described the pricing algorithm as “dangerous and predatory”, and further accused the Mayor of London and Transport for London (TfL) of “failing their duty” by providing the algorithm in green light.

“Passengers and drivers, directly and indirectly, are unfairly targeted for personal car exploitation,” he said. Vulnerable passengers are put at risk when service is denied or unfairly priced while driver compensation is unfairly withheld through the collusion of the owner and the individuals targeted for black-and grey-listing.

“In post-Brexit Britain, where the government plans to remove some of the protections we have against algorithmic abuse, the Mayor must step forward and insist on high data protection standards for commuters and workers in London,” Farrar said. “We call on the Mayor to immediately ban the use of dynamic pricing algorithms in London’s regulated minicab market.”

ADCU added that although Uber updated its privacy policy in December 2022, the company has yet to disclose how driver and customer data are processed in its dynamic pricing algorithm.

Computer Weekly contacted Uber about these concerns about the effects on drivers and consumers, as well as its position in the Harvard study, but Uber rejected the claim that personal data or profiling was used in the algorithm. It does not answer questions about studying at Harvard.

Computer Weekly also contacted TfL and the Mayor of London, but received no response.

Ongoing concerns

Uber’s issues with a lack of algorithmic transparency are long-standing. In June 2022, ADCU called on Uber to provide full algorithmic transparency so that drivers understand how they are profiled, how their performance is managed, and on what basis work is allocated or withheld.

In December 2021, a report published by the Worker Info Exchange – a campaign group set up to help workers access and gain insight from data collected from them at work – noted that there was a “dismal which is an insufficient level of transparency” about the extent of algorithmic surveillance and automated decision-making that workers across the gig economy are subject to.

ADCU added that Uber still fails to provide algorithmic transparency when drivers submit data subject access requests to the company for information it holds on them. Computer Weekly reached out to Uber about its alleged failure to provide algorithmic transparency, but received no response on this point.

In March 2021, following the legal action brought by ADCU on behalf of six Uber drivers, the District Court of Amsterdam decided that Uber and Ola must disclose – to different extents – large amounts of data used in make decisions about the work and work of drivers.

These cases stem from operators withholding information from drivers who submit subject access requests for data held by companies.

The court also rejected claims by Uber and Ola that drivers acting collectively to access their data amounted to abuse of their individual rights to access data, putting the basis for drivers to establish their own trust in the data controlled by the union.

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