Even under normal economic conditions, labor arbitrage racket and venture capitalist money pit Uber barely made sense; during an economically devastating global pandemic, the company looks to be flailing.
With 3,000 additional layoffs today, on top of the 3,700-person culling that took place May 6, Uber has now cut a quarter of its staff in less than a month. In a filing with the SEC, the company claimed it expects “an aggregate cost savings of at least $1 billion annually” from the headcount reduction.
In the Before-Times, Uber had to justify its ludicrous valuation by appearing to be more than a scheme to undermine the taxi industry. To do so, it made several prestige moonshot bets with its lucre, from autonomous vehicles, to freight delivery, scooters, a product incubator, artificial intelligence research, and Uber Works—a gig work platform that no one really understands. The downsizing, first reported by the Wall Street Journal, will largely reduce the footprint of these peripheral concerns.
“Given the dramatic impact of the pandemic, and the unpredictable nature of any eventual recovery, we are concentrating our efforts on our core mobility and delivery platforms and resizing our company to match the realities of our business,” Khosrowshahi was quoted as saying in the SEC statement. Of those two aspects Uber seems keen to rally around—rides and delivery—the former is down 80 percent year-over-year, according to a company spokesperson.
As for delivery, at a time when Uber is financially strained and probably not yet done laying off staff, it was reported that it’s actively exploring an all-stock deal to buy up Grubhub, the second-largest competitor to Uber Eats. While the companies have been unable to agree on terms, lawmakers have already criticized the merger as a potential antitrust issue.
Looming over all of this, too, is a lawsuit in Uber’s home state of California seeking to legally enforce employee status on the platform’s many drivers, who are currently classified as independent contractors—a cost-saving decision by Uber that allows it to skirt paying minimum wage, overtime pay, businesses expenses like gas, or healthcare to its core non-salary workforce. If that lawsuit is successful is one matter, but whether there’s much left of Uber by the time it concludes is, increasingly, a real concern.