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Summary
  • Uber has had a rough few months as regulatory and market challenges have mounted – from California’s AB-5 putting pressure on to reclassify Uber’s drivers as employees to a massive $642M charge for past-due employment taxes in New Jersey to the loss of its license in London for safety issues.
  • Uber’s high-profile challenges are indicative of larger headwinds facing the gig economy, especially in ride-hailing and delivery.
  • It’s becoming increasingly difficult for a gig-economy firm to control the user experience without also taking on some of the responsibility when outcomes go awry – even if the workers are called “contractors.”
  • As the tide of funding goes out, smaller players won’t be able to absorb the costs of growth – i.e. the bonuses to acquire/retain gig workers (supply), and the marketing and promotions to acquire/retain customers (demand).
  • Questions are being raised as to whether the large gig players’ business models can ever be profitable.
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