Uber's surge pricing sparks controversy amidst record-breaking profits

economictimes.indiatimes.com:

Uber's surge pricing has once again come under scrutiny after CEO, Dara Khosrowshahi, expressed his astonishment at the exorbitant fare charged to a journalist recently. During an interview with Wired editor Steven Levy, Khosrowshahi was taken aback when shown a receipt for a 4-km trip in Manhattan, New York, which amounted to a staggering $51.69, including the driver's tip. Khosrowshahi's reaction was one of surprise, exclaiming, «Oh my God.

Wow,» as he had initially estimated the trip to cost around $20, but the final fare was more than double his prediction. Attributing the surge pricing to inflation and increased costs of time and labor, Khosrowshahi defended the pricing strategy. However, Forbes' report contradicted this explanation, revealing that Uber's prices in the US had risen at four times the rate of inflation from 2018 to 2022, with fares increasing by a total of 83% over nearly four years.

Despite the surge pricing controversies, Uber announced a record-breaking second-quarter performance, reporting a profit of $394 million in the three-month period ending June 30. This marked a significant improvement from the $2.6 billion loss reported in the same period the previous year, with operating profits reaching $326 million, making it Uber's first profitable quarter since its inception in 2009. However, the surge in prices hasn't been without consequences.

Following the earnings report, Uber's stock fell nearly 6%, indicating that investors are concerned about the potential impact of surge pricing on the company's long-term prospects. The disparity between Khosrowshahi's explanations and the reported data has raised questions about the fairness and transparency of Uber's pricing model. Customers and analysts are