Hailing a taxi in San Francisco used to be about as easy as panning for gold, but that was before the advent of Uber, the San Francisco-based tech company that's shaking up the taxi and town-car businesses in major cities. Tapping a button on my iPhone's Uber app last Thursday produced a Yellow Cab at my downtown office in less than two minutes. "It is the best thing, my friend!" my beaming driver, Solomon Alemayhu, said of the GPS-based cab-hailing service. He likes the convenience factor so much, in fact, that he's willing to overlook allegations that Uber is improperly skimming from its drivers' tips.
According to the company website, Uber's smartphone-based payment system automatically adds to the rider's tab a $1 booking fee plus a 20 percent gratuity "for the driver." But as Alemaythu and I drove through Chinatown, he told me that half of that gratuity actually goes to Uber. If that's true—and Uber insists that it is not—then the company would be misleading consumers and breaking the law in some cities.
In Boston, for instance, Uber faces a class-action lawsuit over the tip-skimming allegation. Filed in late December on behalf of taxi driver David Lavitman, it accuses Uber of violating a state law stipulating that "no employer or other person" may take any portion of a worker's gratuity. The lawsuit refers to a company document that explains how Uber and the driver divide the earnings: "We will automatically deposit the metered fare + 10% tip to your bank account each week," it says. It cites the following example of how Uber would handle a $10 fare:
Uber Boston general manager Mike Pao says the document was just a promotional handout and doesn't reflect Uber's actual partnership agreement with drivers. "Since we launched here in Boston, the agreement with taxi driver partners has been that 10 percent of the metered fare goes to Uber as a marketing fee," he insists. "Uber does not touch the tip."
When I asked Pao for a copy of Uber's partnership agreement, he referred me to an Uber "terms and conditions" page that lacks specific details about how Uber and drivers share profits. I repeated my request to Uber's national PR guy, Kenneth Baer, but only received another statement from Pao: "Uber takes 10% of the metered fare as commission, plus the rider's $1 booking fee, and all drivers are told this during the on-boarding process."
The next day, Uber's explanation of its tips policy seemed to have changed again [see below for comment from Uber]. "We don't take our cut from the fare or the tip," Uber's head of policy, Corey Owens, told me when I ran into him outside Uber's headquarters. "What happens is that the driver pays Uber a commission based on the services rendered." He added that the commission amount varies widely depending on city and partner company and refused to cite any specific numbers.
Uber is just "backtracking off of what was very clearly the arrangement between it and the drivers from the beginning," contends Lavitman's attorney, Hillary Schwab.
To some drivers, the wording of the deal may not matter so much—the company's "commission" would be the same whether it's half of a 20 percent gratuity or a 10 percent surcharge on the fare. The distinction may matter more to passengers, however. In October, Uber rider Caren Ehret filed a class-action lawsuit in Chicago arguing that its practice of snapping up a portion of the "gratuity" charge had defrauded her and other passengers by making the "metered fare" appear misleadingly low. "She has a right for her gratuity to be remitted to the driver," contends Ehret's attorney, Hall Adams III.
These skirmishes highlight the types of challenges faced by startups aiming to buck an established industry with smartphone-based transportation apps. The San Francisco ride-sharing services Lyft and SideCar rely on drivers who lack taxi medallions; they bypass the regulated market by asking riders for "voluntary donations" in lieu of fares. Uber also features town-car services called Uber Black and Uberx (a lower-cost version that utilizes hybrids)—and it's planning to enter the ride-sharing market too. All of these services appeal to consumers because they're cheap, convenient, and allow people to rate their drivers, adding a layer of accountability to an industry with notoriously bad customer service.
Yet Uber's honeymoon with its hometown may be coming to an end. With increasing competition, it recently cut its town car fares in San Francisco by 10 percent. Late last year, the California Public Utilities Commission threatened Uber with $20,000 fine for allegedly ignoring insurance regulations, then began drafting a new set of ride sharing rules that could give Uber the squeeze.
This past November, two long-time San Francisco cabbies filed a class-action lawsuit against Uber claiming that it breaks the law by dispatching limos and town cars that are not licensed as taxis. "Simply stated, Uber's 'partner' drivers, who are operating without restriction, are taking passengers, and thus income, away from legally sanctioned taxicab drivers who are literally playing by the rules," the suit says.
"My biggest beef with these guys is that this app is allowing them to break the law, and the Pubic Utilities Commission is allowing them to get away with it, because they have $50-million venture capitalists as backers," says Barry Korengold, the president of the San Francisco Cab Drivers Association. "The cab drivers don't have that kind of money to hire lawyers to fight this."
Uber's defenders write off the complaints as sour grapes from a monopolistic industry that loathes competition and accountability. But the grumbling is growing among Uber's own partners; in recent weeks, dozens of Uber Black drivers have picketed the company's San Francisco headquarters over what they consider unfair labor practices. A banner held up last Friday read, "Stop stealing our tips!"
Alemayhu, my taxi driver last Thursday, was trying to keep a positive attitude about the taxi-tech revolution. He said he hoped Yellow Cab's own taxi-hailing app could eventually defeat Uber at its own game. "They can beat them on price, easy!" he said, snapping his fingers. "They just have to change their system."
UPDATE: Uber representative Kenneth Baer says that Owens was only referring to Uber Black drivers, who, unlike Uber's taxi driver partners, do not receive any tips through Uber's payment system.
Are Apple and Samsung helping to prevent your tablet and smartphone from getting stolen? Not according to San Francisco District Attorney George Gascón, who last week accused mobile device makers and data carriers of doing little to nothing to fix a problem that costs their customers tens of millions of dollars a year in replacement costs.
"For the manufacturer and the carriers, all a theft means is another sale," Gascón told me. "People are going back for a second phone; there is usually an up-sale, because the model that they had is generally no longer available—so people get sucked into new contracts. At least on the surface, [the companies] appear to be very mercenary, very profit-oriented, and not very socially conscious."
Last year, cellphones were stolen in nearly 30 percent of all robberies, according to the Federal Communications Commission. Between 2007, when the iPhone was introduced, and 2011, thefts involving cell phones in Washington, DC, increased by 54 percent. New York City Mayor Michael Bloomberg blamed iPhone thefts for single-handedly increasing the city's major crime rate last year. In San Francisco, nearly half of all robbery cases last year involved a mobile communication device. "People get traumatized by this," Gascón says. "At the same time, we're seeing young people starting to accumulate very, very serious criminal records."
Major wireless carriers say they're working to prevent thefts through a national registry for logging the serial numbers of stolen phones. By April 30, customers buying a new phone will be informed of ways to remotely lock the device and erase its data.
In New York—but nowhere else—Apple works with police to track down stolen iPhones.
But Gascón says those efforts fall far short. He points out that many stores will jailbreak a stolen phone "no questions asked," at which point thieves could sign it up with smaller carriers that aren't participating in the registry. Other critics of the approach say that bad guys will just ship the stolen devices overseas.
Gascon believes that if smartphone makers really cared about preventing thefts, they'd create a way to track or shut down their devices anywhere in the world, regardless of which carrier was being used.
"That seems like something that is reachable," Kevin Mahaffey, the chief technology officer of Lookout, a maker of anti-theft smartphone apps, told me.
Indeed, after New York's Mayor Bloomberg blamed Apple for fueling a crime wave, the company partnered with the NYPD to track down stolen iPhones using each phone's unique tracking number, known as its International Mobile Station Identity. Using that number, Apple can locate a phone even if it's registered with a different wireless provider. According to the New York Post, one stolen iPad was even tracked to the Dominican Republic and recovered with the help of a cop in Santo Domingo.
Why? Apple didn't return a request for comment, but a reader of the tech blog Slashdothad an idea: Tracking or locking stolen phones "would reduce the likelihood of theft," he figured, "which would in turn reduce 1) Apple street cred; 2) The need to purchase another Apple device."
The biometric handgun used by James Bond in Skyfall.
Yesterday in San Francisco, a group of leading Silicon Valley tech investors announced a partnership with the families of Sandy Hook victims that will seek to raise $15 million in seed funding for 15 to 20 start-up companies dedicated to preventing gun violence. "A year from now we will be able to point to the Googles, the Facebooks, and the Twitters of gun safety," said Ron Conway, a billionaire angel investor who made big early bets on those companies. "This is a huge area for genuine innovation."
With several Newtown families standing by, the tech investors announced the partnership, the Sandy Hook Promise Innovation Initiative, on the three-month anniversary of the massacre. "In the instance of our shooting, it was the mother's guns that were used," said Nicole Hockley, whose first-grader was killed. "Had she had biometrics on the gun, or a different sort of safe technology protecting the guns, then he would not have had access to them in the first place."
A member of a powerful DC-based coalition of education and labor groups says Microsoft tricked him and others into opening the door to the Immigration Innovation Act, a federal bill that would promote the offshore outsourcing of American jobs.
"It was a classic bait and switch," says the source, a member of the STEM (Science, Technology, Engineering, and Math) Education Coalition, an umbrella organization of some 500 corporate, labor, and education groups that was cofounded by Microsoft. The source, who asked to remain anonymous for fear of jeopardizing his relationships with allies on Capitol Hill, described Microsoft's approach to the bill as "lobbying malpractice."
Though Microsoft did nothing illegal, it appears to have run afoul of its would-be allies by making the bill a vehicle for for significantly looser immigration restrictions—thereby putting its own interests ahead of those of the education and labor groups it had seduced by promising something more palatable.
For more than a decade, Microsoft has supplemented its American-born workforce with foreigners who come to the US on temporary H-1B work visas. The federal government offers just 65,000 H-1B visas each year, however, and in prosperous years the cap quickly maxes out. In September, the software giant claimed it couldn't fill some 6,000 domestic jobs due to a shortage of qualified Americans and a lack of available visas.
When you get down to it, the debate over the sequester—the automatic budget cuts that kicked in on Friday—is really about the future of the middle class. Democrats want to close tax loopholes for the wealthy to preserve education and social programs for the rest of us. Republicans call this socialism, and flatly refuse to consider any option other than cutting bigger holes in the social safety net.
As these opposing views come to a head, a new video based on Mother Jones' well-known income inequality charts has been making the rounds. Even if you've already seen the originals, it may put Washington's latest squabbles in a different light:
UPDATE, Thursday, February 28 (Brett Brownell): Following the video's viral spread this week, Mother Jones reached out to its mysterious creator, YouTube user "Politizane." "Z," as he signed his messages, told us that he is a freelance filmmaker "living and working in a red state (Texas)" who is staying anonymous in order avoid losing clients or jobs due to "a vague political affiliation."
At first he saved the original "Ariely chart" to his phone, and from time to time would "try to wrap [his] head around it." The chart, created by Mother Jones and based on polling data by Dan Ariely and Michael L. Norton, showed Americans' mistaken expectations of wealth distribution. Eventually Z decided to visualize the disparity in his own way by tinkering with After Effects software over a period of a few days. He also says he vetted the math/curve-fitting among some "geeky friends."
"Wealth Inequality in America" is his only politically minded video so far. "These issues are simply things I think (and perhaps angst) about in my spare time," Z says."The really incredible thing for me is the simple fact that people are now talking about these issues…So it's pretty neat to open some eyes and get people thinking."