Uber Suffers More Bad News, Company Could Potentially Collapse

Things seem to get worse and worse for Uber these days and it looks like the company is in the beginning stages of a significant freefall, if not collapse.

In Seattle, a Washington state judge has denied Uber’s attempt to block a city ordnance that would allow Uber drivers there to unionize. Uber had been joined in the suit by the US Chamber of Commerce who opposes unionization pretty much on principle. The ordnance passed in December of 2015 and has been under litigation since then.

Uber’s only hope for viability is to keep the costs associated with its drivers low and treat those drivers as contractors, not employees. Unionization is a clear threat to that strategy. Even so, Uber is subsidizing its fares to the tune of nearly 40% and hemorrhaging billions each year in order to build a monopoly position in as many markets as possible. Uber’s typical reaction in the past to cities that attempt to regulate them or their business practices has been to threaten and then pull out of those cities. I have a feeling Seattle will get the same treatment.

Yestereday, Uber President Jeff Jones resigned after being on the job for just six months. The rumored reason for Jones’ departure is that the problems at Uber were far deeper than he had been led to believe when he joined the company. In addition, the head of the mapping group at Uber, Brian McClendon, also resigned to go back to his home in Kansas and get into politics. Mapping technology is key to Uber’s strategy to become a dominant force in the autonomous vehicle market so it is probably not a good sign that he is leaving.

These departures follow on other key resignations from the company over the past year. Another executive in the autonomous vehicle program left earlier this month. The vice president of engineering was forced to resign after he was accused of sexual harassment at his former place of employment. The head of Uber’s AI lab also resigned in December and another engineering guru left last week and the vice president of product and growth resigned earlier this month.

For the first time ever, it is not beyond the realm of possibility that Uber will actually collapse. The Google suit over the theft of its autonomous vehicle technology by Uber threatens the viability of that program. And that ignores the question of whether autonomous vehicle technology is itself viable. Meanwhile, Uber is hemorrhaging huge amounts of money keeping its ride-sharing business afloat. If the ship keeps sinking at its present rate, we will surely see even more executives abandon the Uber ship.