Uber's law flouting could bring its joyride to a screeching halt. The taxi app company is covering its drivers' fines for illegally picking up passengers. That may be just another business expense to a firm that earned a $40-billion valuation by moving quickly and breaking the rules. But the legal, lobbying and public relations costs of reckless behaviour are accelerating fast.
The strategy's benefits are obvious from Uber's explosive growth and popularity among investors. The company said this summer that revenue was at least doubling every six months, and its market value has soared. The costs remain largely hidden, though, a red flag considering the service's prodigious appetite for capital. It has raised more than $2 billion from investors since June.
How the money is spent remains essentially secret. Uber is a technology company that operates as an intermediary, meaning its infrastructure expenses should only rise slowly. But there's a high price attached to doing business in more than 50 countries and many more cities while smashing the regulatory china in the process.
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The company's legal bills are mounting, for instance, as government officials lose patience. France, Spain and Thailand have banned some or all Uber services, as have cities from New Delhi to Portland. The company is shelling out money not only to cover drivers' fines but also to push for changing the rules behind those penalties. The car service has hired lobbying firms in at least 50 US cities and states, according to the Washington Post.
Uber's strategy could well pay off: the voices of satisfied customers and some fat cheques to lobbyists can be powerful weapons against outdated and protectionist taxi laws. In the US, 17 jurisdictions changed their ride-sharing regulations after Uber entered the market.
The company's ham-fisted public relations don't help, though. The latest gaffe was charging inflated prices to people attempting to flee the vicinity of an Australian hostage situation.
Encouraging drivers to snub local laws makes matters even worse. Uber might want to stop hot-rodding around and start acting like a responsible citizen.
