Daily Management Review

Uber Invites Investments for China; Meanwhile Law Case with the US Division Goes Ahead


Uber taxi service attracted $ 1.2 billion to strengthen its position in the Chinese market. It is reported by Tech Crunch, citing a source within the company.

The Uber confirmed that one of the investors was the Chinese search engine Baidu, yet the received share is not disclosed, as well as the names of other contributors and the total amount of funds that the start-up will receive in this round. The company stressed that the round has not been completed. Given the money, the total amount of funds invested in the startup exceeded $ 8 billion.

The funds will be directed at strengthening Uber’s position on the Chinese market. According to the company, in China, there are 5 of the 10 cities that bring the greatest profit.

According to analysts of The Wall Street Journal, Uber was estimated by investors at more than $ 50 billion at the end of July 2015. It is possible that this figure would grow at the end of the last round.

Simultaneously, Uber’s main competitor in the Chinese market, a local service Didi Kuaidi, announced bringing $ 3 billion investment on September 7. According to Analysys International, it accounts to 78 percent market share in China.

In late August, Uber’s representatives complained of harassment by one of Didi Kuaidi’s owners, corporations Tencent. Its messenger, WeChat, blocked and deleted Uber’s customer support group. The first incident, according to the Chinese division’s representatives, took place in February 2015, shortly after the two largest Chinese local taxi service Didi Dache and Kuaidi Dache announced merger.

Baidu is the largest search engine in the Chinese market. As of June 2015, the number of active users is more than 1 billion people a month. Baidu has already invested in Uber: in December 2014, the company has invested $ 600 million in the taxi service.

Meanwhile, the trial of three taxi drivers in California and the company-aggregator Uber Technologies has received the status of collective action last week. In the center of the proceedings - the difference between employees and independent contractors.

The plaintiffs accuse the taxi service in that, referring to the drivers as employees, Uber simultaneously refuses to provide them with adequate safeguards and compensation.

According to The Wall Street Journal, US District Court Judge in San Francisco Edward Cheng on Tuesday ruled that the claim relates to all drivers in California that have not waived their right of a hearing in the group order. Thus, this is about thousands of people, and the case becomes resonant.

The outcome of the proceedings could materially affect the business model of Uber and dozens of startups that use the services of independent contractors in the sector and in other market segments.

Uber app allows calling a car within walking distance from the client, and the trip is often cheaper than a traditional taxi services. The company has positioned itself as a technology platform that enables communication between service providers and customers, not a taxi service, which owns car hires and drivers, notes WSJ.

Investors liked this business model, so they have invested billions of dollars in Uber: now the total value of the company is estimated at more than $ 50 billion.

However, if the California court decides in favor of the taxi drivers, Uber will have to pay for their medical insurance, social security contributions and business expenses - fuel, repairs of cars, taxes on toll roads.

Such rotation may change the situation with the economy of joint consumption in general, writes Financial Times. According to estimates of the Harvard Business School Professor Andrei Hagiu, the appearance of such a precedent would affect most companies, working on the principle of joint consumption.

Uber’s report said that the company plans to challenge the judge's decision to grant a collective lawsuit status. Uber representative stressed that few Californians will be able to join the lawsuit, since Uber updated template contract with drivers and included refusal for drivers of the right of collective actions last year. Initially, the plaintiffs in the lawsuit intended to include all 160 thousand man, ever carried out orders in California Uber.

In addition, the proceedings will not be able to engage those drivers who work for other transport companies, the judge ruled. Because of this, one of the drivers who initiated the suit may lose the right to be a plaintiff on it.
Meanwhile, as reported by Bloomberg, an unknown woman withdrew a lawsuit against Uber last Tuesday, filed in a court in San Francisco in January. The woman claimed that fell asleep in Uber’s taxi in New Delhi and was raped by the driver. Uber’s accusations were associated with lack of checks on drivers and security measures. The Indian driver was arrested, but Uber has not gave necessary assistance to the investigation, claimed in the lawsuit.

A strike of thousands of traditional taxi drivers dissatisfied with the growing popularity of Uber and similar services was in Mumbai on Tuesday.