The Reminger Report: Emerging Technologies

Emerging Trends in the Ridesharing Industry

May 05, 2021 Reminger Co., LPA Season 1 Episode 3
The Reminger Report: Emerging Technologies
Emerging Trends in the Ridesharing Industry
Show Notes Transcript

In part three of our Intro to Ridesharing  series, Zachary Pyers and Kenton Steele identify emerging trends for the future of ridesharing including: COVID-19, the gig economy, and autonomous vehicles.

Visit our website for information about our legal services related to emerging technologies.

ZBP

            Welcome to the Reminger Report Podcast on Emerging Technology.  Reminger Co., L.P.A. is a full-service law firm with 150 lawyers spread across 14 offices and serving states throughout the Midwest.  My name is Zach Pyers, and I am a partner in Reminger’s Columbus, Ohio office.  I’m also an adjunct faculty member at Capital University Law School where I teach a number of courses focused on litigation, the most recent of which was added to the curriculum is Ridesharing Law and Liability.  I also have recently co-authored a book published by the American Bar Association on ridesharing law and liability.

 

KHS

            My name’s Kenton Steele.  I’m an associate in Reminger’s Columbus, Ohio office.  I am also an adjunct faculty member at Capital University School of Law, teaching a course on ridesharing litigation, and I’m one of Zach’s co-authors on the ABA ridesharing book that was recently published.

 

ZBP

            This podcast on emerging technologies will examine how changes in technologies and business models affects our daily lives and how the law is adapting to respond to these changes.  Exponential technological advances in the last two decades have transformed how we travel, how we do business and how we communicate.  Nearly every part of our daily lives are evolving and changing to incorporate the benefits offered by these new technologies, and while in many ways, these new technologies offer convenience, they can also offer uncertainties.  For instance, how does using an in-home smart speaker impact one’s privacy rights?  Are ridesharing services safe?  Who is responsible if I buy a defective product from an online vendor?  Are cryptocurrencies the wave of the future or a passing fad?  This podcast will explore these questions and others related to emerging technologies and will offer insight into how the law is responding to the new issues arising in our increasingly technologically advanced world.

 

KHS

            On today’s podcast, we’ll be continuing our discussion on ridesharing and the law related to ridesharing, and while most of us are familiar, to one extent or another, with ridesharing, in this podcast series, we’ll be taking an in-depth look into the origins of ridesharing, how this type of business operates and the laws and regulations that impact ridesharing.  And continuing from our prior discussions on ridesharing, today we’ll be exploring what the future of ridesharing looks like and what kind of changes we see on the horizon for this company.  Zach, can you tell us a little bit about that?

 

ZBP

            Certainly.  So, when we talk about the future of ridesharing companies, 2020 and the start of 2021 have been certainly a time to examine a lot of traditional business models.  And when I say traditional, I don’t necessarily mean companies that have been around for a hundred years, but I do mean companies that have been operating prior to 2020, and so, what we’ve had to do is we’ve kind of examined the impacts recently on ridesharing companies, and I’m not saying that there’s more than this, but the four main areas that we see that kind of are going to shape and affect the future of ridesharing companies are:  (1) the recent pandemic; (2) the struggles of recognizing the gig economy worker and whether that person is classified as an independent contractor or an employee and kind of the struggle for legislators and regulators and companies as we kind of navigate that area.  Now, the other thing is that the other area of changes and the future, right, is the expanded business models that so many of these ridesharing companies have been undertaking, and the last, and one of my favorite areas to talk about, is autonomous vehicles.  We anticipate that over the coming years and/or decades that autonomous vehicles will play a large role in these ridesharing companies.

 

KHS

            And Zach, taking those four topics that you mentioned and kind of breaking them out individually, I believe the first one that you mentioned was the way that the COVID-19 pandemic has impacted existing ridesharing companies.  Can you tell us and kind of walk us through what that impact on ridesharing has been like?

 

ZBP

            Well, first of all, I will say that the pandemic and COVID-19 has certainly impacted a lot of businesses, and so, when we look kind of from a historical perspective, and it’s not even that long historically, but at least when we look back to, for example, July of 2020, what we saw is some studies being and some statistics that suggested that as many as 65% of previous ridesharing users had indicated that they were not comfortable using a ridesharing company as recently as July of 2020.  Now the basis for that and the reasoning for that largely was that, because of the ongoing pandemic.  And so what we saw is that in a lot of these areas, they just weren’t as comfortable being utilized.  Now when we look even kind of closer to the onset of the pandemic in April of 2020, we saw that Uber and Lyft’s ridesharing dropped by as much as 70 to 80%, and so while that’s not necessarily shocking, it really significantly impacted the business models for these ridesharing companies.  And so what we have started to see is that some of these companies have, I don’t want to say bounced back fully, but what we’ve started to see is that some of these companies, from a ridesharing perspective, the ridership has picked up but it has still not necessarily returned to pre-pandemic levels.  Now I will say, right, that some of these companies, and I’ll talk about this a little more in a minute, but have shifted a little bit.  For example, to food delivery services.  A lot of people have heard of the company Uber Eats, and so we’ve seen some of these ridesharing companies and other mobility companies have shifted to more of a delivery service to kind of offset revenues and kind of recognize that as a growing area available to them as a result of the impact of the pandemic on the ridesharing business.  Now one of the things that I will say is that Uber at one point in time was predicting, and this was much more recently.  This was back in February of 2021, Uber was predicting that it will be profitable in 2021, meaning that they were not expecting to lose money as they did in 2020, and so they were clearly indicating that they believed that at least that they would increase or be back to some level of profitability this year, which is obviously good news for the ridesharing companies, that they will be moving more forward, kind of out of the area of the COVID-19 impacts on their business.

 

KHS

            And Zach, you touched on one thing that I expect a lot of listeners will be familiar with, which is the shift away from ridesharing services and similar companies being used to offer rides and direct transportation of people from one place to the other to more of a service-focused industry, delivery of goods, of food, of groceries.  Can you tell us more about what the expanded business offerings that we are likely to see from ridesharing companies are in the future?

 

ZBP

            Yeah, so a lot of companies, I mean a lot of people are going to be familiar with some of these companies, like DoorDash, Uber Eats, Grubhub, and so it’s no surprise that a lot of these companies are working in conjunction with traditional ridesharing companies to kind of offer restaurant delivery services.  Now what we’ve also seen is that they’re expanding into other areas of delivery.  For example, grocery delivery became a huge area of expansion, and not just for groceries but other stores were offering a variety of delivery options as a result of the pandemic.  We just saw recently, and when I say recently, I mean in March of 2021, that Uber teamed up with ScriptDrop here in Columbus, Ohio to expand prescription delivery access in the United States, and so I’m always happy to give a shout out to Columbus, obviously because we’re located here, and I was happy to see that news come across out local news, but I mean, it’s another area where people are having trouble getting access to their prescriptions where Uber is kind of stepping in to kind of increase that access but also obviously to increase their market share.  Now another area where we’ve seen this expanded business model is specialty ridesharing, right.  So there are some ridesharing companies that we’ve seen that have started to kind of target very specific demographics.  For example, there are some that are promoting women drivers and only for women passengers, right, because they believe that there are some safety concerns.  There are others, some that target and recognize that Uber and Lyft traditionally don’t offer rides to unaccompanied minors, and so they are offering stricter background checks for drivers, increased vehicle safety checks, and start providing services where you can monitor, or not necessarily monitor, but you can have an increased level of protection where your child who is under the age of 18 can ride in one of these more specifically designed ridesharing services.  And so we’ve started to see them take their traditional business model and kind of expand it into other areas to kind of utilize and pick up market share.

 

KHS

            And Zach, you touched on a little bit earlier that in the recent changes we’ve seen, they’ve not only impacted ridesharing companies at large, the company itself, but have also impacted the individual workers and drivers for these companies.  Can you tell us more about what the future holds and what the issues, the future holds for individual workers in the gig-economy and drivers for ridesharing companies?

 

ZBP

            So, one of the long-standing struggles that we’ve seen, kind of, with this industry is that the industry itself wants to classify all of the drivers as independent contractors, and it has classified them that way.  It holds them out and represents that they are independent contractors.  Now the flip to this is we’ve seen a situation where at times, we have seen other interests, whether those are legislatures or regulators or plaintiffs in tort cases, really are trying to classify the drivers as employees, arguing that the ridesharing companies have such control over them that they really need to be classified as employees, whether for regulatory purposes or Workers’ Compensation classifications or taxes or tort liability, and so we’ve seen this kind of struggle.  Well, you know, it’s really kind of come to a head in a couple of areas.  We’ve seen recent rulings out of England that sought to address this issue, but more closer to our home and not having to cross an ocean, we’ve seen this come up in California with the recent passage of Prop 22 which really kind of sought to carve out these workers as being kind of almost a separate classification.  The idea was that they still maintained their independent contractor status, but it sought to give them additional benefits while still letting them maintain that independent contractor status, and so while that’s just one state that’s kind of examining this, we also saw situations where the CEO of Uber, during the start of the pandemic, wrote an open letter to President Trump, who essentially argued and requested that a third category of workers’ classification be recognized, so not independent contractors, not employees, employers, but this third kind of categorization where we would actually have people be kind of recognized as gig-economy workers, and so we’ve seen this kind of change and dynamic, and frankly, it’s not settled at this point, right.  And even if Prop 22 in California does pass, the reality is that’s just one state, and so it may start a national trend; it may not.  And so we still haven’t totally seen how this is going to play out kind of on the broader spectrum.

 

KHS

            And Zach, I believe one of the last things that you touched on is you mentioned one of your favorite topics to discuss, is the role of autonomous vehicles, and certainly issues related to drivers in the ridesharing context become less of a concern if there are no drivers, so can you tell us what autonomous vehicles have in store as it relates to ridesharing.

 

ZBP

            Absolutely.  So when we talk about autonomous vehicles, I know a lot of people, including myself, anxiously awaited 2020.  Now I will tell you, I anxiously awaited 2020 not because I recognized that a pandemic was coming but because for so long, people had been saying that 2020 was the year autonomous vehicles were finally going to hit the road.  Those projections started coming back in 2010, they heated up in 2015 and ’16, and I know a lot of us thought, okay they’re coming.  The reality is 2020 came and went and we don’t yet have fully autonomous vehicles on the road, and so I think what a lot of people have recognized is kind of this autonomous vehicles, which we’ll discuss at much greater length in future podcasts, is that they are most likely going to be utilized at least initially by ridesharing companies in an attempt, because they’re easier to control.  For example, they anticipate that the cost is going to be more expensive for these vehicles, and so they are going to need to be operated in such a manner that you can actually recoup the costs of the vehicles.  The second thing is, too, is that they may not be fully, Level 5 fully autonomous vehicles that can operate anywhere in the country, right.  They may be Level 5 fully autonomous, no steering wheel, no brakes, no gas pedal autonomous that are only operating in kind of a limited space, and so I’m talking about Level 5 autonomy and without going into great detail about the various levels of autonomy at this juncture, I’ll just say that when we reach Level 5, people are anticipating that it would be no driver or human interaction to really drive the vehicle, other than maybe to program the destination.  And so when we talk about that type of level, most people anticipate, including a lot of much more sophisticated industry analysts than myself, that those vehicles more likely than not are going to end up in ridesharing companies.  Now whether or not that those are owned by the ridesharing companies we know today or whether we see car companies kind of instituting their own ridesharing companies, that has left to be seen, or maybe it’s a ridesharing companies we’ve never even heard of, but a lot of people are anticipating that that’s kind of the future.  The other reality is that one of the cost factors for a lot of these ridesharing companies is the fact that they have to pay the drivers and they have to split the fees that they earn with the drivers.  If these companies are able to remove the drivers from the equation, they theoretically will be able to keep more of the profit as it relates to the fares, and so that’s one of the other areas that a lot of people are kind of wrestling with or looking at as they look towards the future of ridesharing companies.

 

KHS

            And Zach, we’ve certainly covered a lot of very interesting subtopics and issues about what the future holds for ridesharing and other emerging technologies, whether that be the rule that autonomous vehicles will play in the future of transportation, how workers in the gig economy are ultimately going to be classified and whether or not the rise of the gig economy will result in radical changes to the way we think about worker classification and other specific services that we can expect to see become part of the gig economy, whether that’s prescription drug delivery, grocery delivery, child transportation, we really see that this sweeping changes that the gig economy represents are going to continue to proliferate throughout every part of our life, and those are all topics that we’ll be exploring in more depth in future episodes of this podcast, but for today, I’ll thank you for joining us for this Reminger Report Podcast on Emerging Technologies, and I ask you to join us next time where we’ll be discussing some of the specific legal issues that can arise in the ridesharing context.