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Hubert Horan: Can Uber Ever Deliver? Part Twenty-Seven: Despite Staggering Losses, the Uber Propaganda Train Keeps Rolling

Yves here. We are sadly seeing far too many real world demonstrations that propaganda can very successfully sell shit sandwiches. Sorry for being so crude, but being polite minimizes the disservice being done to the public at large…bizarrely often with its active cooperation. As P.T. Barnum put it, ““Every crowd has a silver lining.” And no one want to admit they’ve been had, even when that fact becomes undeniable (except of course for bankers, who get had on a cyclical basis but because everyone got had all together, so no one is blamed).

By Hubert Horan, who has 40 years of experience in the management and regulation of transportation companies (primarily airlines). Horan has no financial links with any urban car service industry competitors, investors or regulators, or any firms that work on behalf of industry participants

This half year Uber review has been split into three pieces.

Last week’s Part Twenty-Five examined the data in Didi’s recent IPO, laid out the strong similarities between the terrible economics of Didi and the terrible economics of Uber, and discussed the increasingly divergent Chinese and American approaches to tech companies. [1]

Yesterday’s Part Twenty-Six, [2] following the format of past reviews, summarizes the highlights of the second quarter Uber financial results released on August 4th. Uber’s continuing operations had a GAAP net margin of negative 38% while Lyft’s was negative 49%.

In order to prevent investors and the business press from understanding these results, Uber improperly combined the results of its ongoing, continuing operations with claims about valuation changes in securities of companies operating in markets they had abandoned. To further confuse matters, Uber and Lyft both emphasized a bogus, easily manipulated metric called “Adjusted EBITDA profitability” which does nor measure either profitability or EBITDA.

Part Twenty-Seven returns to an important question this series has discussed on multiple occasions—how can a company that has produced eleven years of horrendous financial results and  failed to present any semi-coherent argument as to how it could ever achieve sustainable profitability, still be widely seen as a successful and innovative company? One aspect of that was discussed in Part Twenty-Six: the mainstream business press reports of Uber’s financial results are written by people who have difficulty reading financial statements and do not understand concepts such as “profitability.”

The primary driver of the huge gap between Uber’s positive image and its underlying economic reality was its carefully crafted and extremely effective propaganda-based PR program. This series has documented the origins and results of this program in great detail over the years. [3] In the years before objective data about Uber’s terrible economics became widely available, these accounts were designed to lead customers and local officials into believing that Uber was a well-run and innovative company producing enormous benefits that justified its refusal to obey existing laws and regulations and its pursuit of monopoly power.

Uber propaganda is still being produced since the company needs to give potential investors and the general public some reason to believe that a company with its problematic history and awful financials still has a promising future. Major examples of Uber’s two main PR techniques were published in major mainstream publications in recent weeks.

The Soft and Fuzzy Mainstream Media Endorsement of Uber PR Talking Points

One Uber approach was to get a seemingly independent reporter from a high-status mainstream publication to write a story that made no attempt to present factual data or competing views, but simply repeated unsubstantiated Uber PR talking points. On July 16th, the New York Times printed 4000 words by Maureen Dowd, one of its top opinion writers to a fluff piece profiling CEO Dara Khosrowshahi. [4]

Nowhere in those 4000 words did Dowd explain to her readers Uber’s enormous ongoing losses and cash drains, explain what Khosrowshahi planned to do to eventually earn profits in the ridesharing business, or explain how Uber’s major expansion into food delivery might ever work. While the story emphasizes Khosrowshahi’s personality and notes that he was hired to address “cultural problems” that existed under Travis Kalanick, Dowd never explains what those problems were, or what Khosrowshahi did to fix them. Nor does the article mention anything Khosrowshahi has done in the past three years that improved Uber service, efficiency or profitability. In fact there isn’t a iota of new information about Khosrowshahi or Uber in the entire story.

When Dowd is not talking about superficial nonsense such as his taste in videogames, or things he did on dates with his wife, she uncritically quotes Khosrowshahi repeating phrases from Uber’s talking points. These include the aspiration to become the “Amazon of Transportation” (even though the story separately notes that many of the businesses key to that strategy have been shut down) and someday find a way to get “a piano delivered to your home in an hour and a half,” the claim that Uber would be doing great but for the pandemic, the claim that Proposition 22 passed in California because Uber’s drivers supported it (The $200 million spent to defeat the measure are not mentioned) and that complaints from drivers are all coming from the 10% of them who aren’t bright enough to figure out Uber’s systems (and the complaints have nothing to do with pay or conditions). Khosrowshahi says he hopes recent moves toward greater regulatory enforcement “doesn’t destroy what we built” but Dowd never asks him to explain what it was he thinks Uber built, or explain why the New York Times readers would be better off if Uber didn’t face increased oversight.

Using Bogus “Academic” Analysis to Create the False Impression that Uber PR Claims Are Backed by Rigorous, Independent Research

A Wall Street Journal editorial on July 30th, “How Uber and Lyft Can Save Lives” [5] illustrates one of Uber’s other prominent propaganda techniques. Instead of getting a credible mainstream reporter to push narrative claims, this technique gets academics from established schools to publish a technical article finding that Uber creates great benefits. These articles are not peer reviewed and rely on proprietary Uber data, so it is impossible to replicate the analysis.

The purpose of these academic papers is to allow other pro-Uber publications to repeat simplified (and sometimes overstated) versions of the “Uber creates great benefits” claim in a way that falsely implies that the finding was the result dispassionate academic research that received rigorous independent scrutiny.

The WSJ editorial’s opening:, “The value of ride-sharing apps has been proven in the marketplace and residents of areas poorly served by old-fashioned cabs have a particular reason to be grateful.”

It is unclear whether the claim that “The value of ride-sharing apps has been proven in the marketplace” demonstrates whether the editorial board of the WSJ is willfully dishonest or is simply incapable of reading financial statements, but it certainly indicates their willingness to serve as a PR mouthpiece for Uber. The WSJ also ignores the fact that the service improvements they laud depended on massive predatory subsidies, and that those benefits have largely disappeared as Uber desperately tried to reduce its negative cash flow.

The next sentence in the editorial highlighted the great benefit the study had found: Uber “has decreased US alcohol-related traffic fatalities by 6.1% and reduced total US traffic fatalities by 4.0%.” Presumably the number lives saved by taking Uber instead of driving a private car while drunk is greater than zero. But nothing in the underlying academic paper, published by the National Bureau of Economic Research[6] documents any claim that Uber significantly reduced fatalities, much less the Journal’s claim that they have been accurately measured thes benefits to one decimal place.

The paper’s findings are based on a simple regression of Uber activity against fatalities that wasn’t done properly. The data used for the independent data isn’t Uber’s activity and there’s no correlation between the proxy used and actual Uber activity data. You can’t test the validity of the derived regression coefficient by applying it against ridesharing data from different points in time to see if accurately predicts fatalities.

The paper absurdly assumes that every Uber trip replaced a private automobile trip, and that there were no Uber trips that would have previously been made with a traditional taxi or public transit (or wouldn’t have been taken at all but for Uber’s low fares). By 2019 Uber drivers operated roughly 1% of all automobile trips in America; at least half of these simply replaced taxi or transit trips. The paper makes no attempt to explain how shifting (at most) 0.5% of all automobile trips to Ubers could have reduced alcohol related deaths by 6%. [7]

The authors had no interest in increasing anyone’s understanding about the causes of traffic fatalities or how they could be reduced. Both total traffic fatalities and alcohol related fatalities have been in decline for many years, due to a large number of factors (e.g. safer cars and highways, enforcement of drunk driving laws, reduced drinking, better health care for accident victims). But the paper makes no attempt to analyze how the impact of these different factors on fatalities or explain why their estimate of the impact of Uber makes any sense in the broader context. It also makes no attempt to use available data to break down aggregate measures by driving factors that are critical to any accident analysis such as trips to work/school vs trips for entertainment, big cities vs suburban vs rural, or short trips vs long hauls.  The NBER authors are claiming that a simple one variable regression that ignored every alternative causal factor could pinpoint the impact of Uber (measured in hundreds) on fatality rates (measured in tens of thousands) out of a total trips (measured in hundreds of billions).

As further confirmation that the authors were acting as Uber advocates and not as independent researchers, they conclude the paper with bogus estimates of the “consumer surplus” and “producer surplus” Uber has created. Both completely ignore the fact that claims that companies have enhanced welfare aren’t legitimate if the company isn’t sustainably viable and are especially bogus if that company lost $28 billion in the last 5 ½ years. And neither used conceptually valid ways to measure surplus.

This isn’t even the first time that Uber’s PR department convinced mainstream media outlets to trumpet the “Uber saves lives” claim based on indefensible analysis.[8] This case also follows a pattern I have documented with other examples of this type of Uber propaganda [9] where papers not only failed to analyze their nominal subjects (e.g. comparative taxi operating productivity, the labor market for taxi drivers, changes in consumer welfare since Uber’s entry, or factors affecting driver welfare), but were not written to provide any value to people who might be interested in those subjects.


[1] Can Uber Ever Deliver? Part Twenty-Five: Didi’s IPO Illustrates Why Uber’s Business Model Was Always Hopeless, August 2, 2021

[2] Can Uber Ever Deliver? Part Twenty-Six: With No Hope of Real Profits, Uber and Lyft Double Down on Fake Profit Metrics, August 9, 2021

[3] The origins, structure and promulgation methods of Uber’s propaganda based PR programs are documented see Hubert Horan, Will the Growth of Uber Increase Economic Welfare? 44 Transp. L.J., 33-105 (2017) pp.76-90 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2933177and in Hubert Horan, “Uber’s Path of Destruction” American Affairs, vol 3, no 2, Summer 2019, pp. 115-117, https://americanaffairsjournal.org/2019/05/ubers-path-of-destruction/and in a four-part series that began with Hubert Horan, The Uber Bubble: Why Is a Company That Lost $20 Billion Claimed to Be Successful? Promarket, November 20, 2019, https://promarket.org/the-uber-bubble-why-is-a-company-that-lost-20-billion-claimed-to-be-successful/

[4]Maureen Dowd, Dara Khosrowshahi, Dad of Silicon Valley, New York Times, July 16, 2021. Incredibly, this stands as only the second worst example of this genre of Uber propaganda masquerading as MSM reporting. See Can Uber Ever Deliver? Part Fourteen: The New Yorker Lays Out the Template for Pro-Uber Propaganda, April 3, 2018

[5] Editorial, How Uber and Lyft Can Save Lives, Wall Street Journal July 30, 2021

[6] Michael L. Anderson, Lucas W. Davis, Uber And Alcohol-Related Traffic Fatalities, National Bureau of Economic Research, http://www.nber.org/papers/w29071

[7] Very detailed data on automobile usage and traffic fatalities can be found at https://www-fars.nhtsa.dot.gov/. In 2017 there were roughly 220 billion automobile trips taken. Uber does not release detailed operating data but reasonable estimates based on data from its SEC filings suggest it operated 2.5 billion ridesharing trips in 2018. Between 2016 and 2019 the number of fatal crashes in America was between 33,294 and 33,749 and 28-30% of those were alcohol-related.

[8] In the prior case Uber claims of that it had reduced drunk driving crashes by 6.5% were uncritically reported (for example, Issac, Mike, Hard-Charging Uber Tries Olive Branch, New York Times, Feb 1, 2015) but it later came out that the supporting research was just a simple consumer survey conducted by a nonprofit that Uber had paid to produce favorable findings. Paul Bradley Carr, MADD Still Insists Uber Cuts Drunk Driving Rates (Forgets To Mention Hundreds Of Thousands Of Dollars It Receives From Uber), Pando Daily, August 2, 2016

[9]Hubert Horan, Uber’s “Academic Research” Program: How to Use Famous Economists to Spread Corporate Narratives, Promarket, December 5, 2019 https://promarket.org/ubers-academic-research-program-how-to-use-famous-economists-to-spread-corporate-narratives/




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