Uber’s troubles have stretched into the world’s second largest market

A bitter battle for taxi drivers’ rights has been playing out in the streets of New Delhi.

Striking Uber and Ola drivers and protestors gather at Jantar Mantar Road in New Delhi, India, February 17, 2017. CREDIT: Ashish Malhotra
Striking Uber and Ola drivers and protestors gather at Jantar Mantar Road in New Delhi, India, February 17, 2017. CREDIT: Ashish Malhotra

While Uber continues to deal with the fallout of the #DeleteUber campaign, the San Francisco based ride-hailing app is also engaged in crisis-management in the world’s second largest market: India.

Drivers who work for the company, and its local Indian competitor Ola, have been striking across the city for the past week, demanding better pay and amenities. In some cases, protests have even turned violent. And on Thursday, two protest leaders ended up in the hospital, after having been on hunger strike since the standoff first began last week.

The strike is a significant setback for Uber and Ola, after a period of remarkable success in major Indian cities. The companies have thrived by managing to offer low fares for customers, as well as high incomes for their drivers. Rates often fall as low as 6 rupees/km ($0.09), as opposed to more traditional cab companies, like Meru Cabs, which charges 21 rupees/km ($0.31).

The ride-hailing apps have been able to compensate drivers better than more expensive competitors through lucrative bonus and incentive schemes — Uber and Ola drivers have been known to make up to 100,000 rupees a month (about $1,500) — but many say their incentives have begun to disappear, and with them, their fortunes.

“Before there were incentives — good incentives,” said Rahul Singh,* who has been driving with Uber for a year and Ola for a few weeks. “Nowadays they’re not giving the incentives, only the 6 rupees per kilometer that you’re driving. That’s a very big loss for the driver.”

Singh says he used to be able to earn up to 80,000 rupees ($1,192.26) in a month with Uber, depending on how much he worked. Now, he says, he would only make about 30,000 rupees ($447.09) working at full capacity.

Though the strike has centered around New Delhi, it did briefly extend to some cities in the south of the country earlier this week. And on Sunday, an Uber driver in Hyderabad, unable to pay the monthly installment on his car, committed suicide.

Drivers gathered on Jantar Mantar Road, a main protest site in New Delhi, told ThinkProgress of similar financial troubles.

“Why did the company increase our work, and reduce our fare? With me, the company made a commitment, so I mortgaged my wife’s jewelry and financed the car through a private financer,” said one, on the condition of anonymity. “When I have more income, then naturally expenses rise. My daughter was admitted into an engineering college. How can I pay the fee?”

Jagjit Ram,* who owns a cab that he and another worker both drive for Ola, believes the violence that has occurred has been an organized effort by a minority of drivers to keep others off the road. “These guys are hooligans,” he said. “They’re doing fake bookings and when a driver comes there to pick up, they snatch his phone and take the SIM card, and then they ask him to pay 600 rupees [to get it back].”

Though it is difficult to verify the specifics of these claims, the standoff — which has largely been peaceful — has been colored by numerous allegations of drivers being assaulted and their cars vandalized. And on Tuesday night, an Uber driver was stopped by protestors who set his car on fire just outside of Delhi.

Uber declined to comment for this story, but released a statement earlier in the week noting “isolated reports of threats and intimidation” and calling on authorities to ensure the safety of drivers and passengers.

A Delhi court order on Wednesday restrained two drivers’ unions from obstructing or interfering with the business interests of Uber, but in practice, little has changed on the streets. With no clear end in sight, the strike represents a potential turning point for Uber and Ola’s business models in India.

To some experts, this situation was inevitable.

“I think this is just a consequence of Uber and Ola screwing up. Because what they’ve done in their haste to add more and more cars, and because they were competing with each other for drivers, is increase incentives,” said Nikhil Pahwa, the founder of MediaNama, an organization analyzes digital and telecom businesses in India. “So I think it’s a flawed approach the way they’ve done this, to try and scale up this quickly in a manner that is unsustainable. This competition between Uber and Ola has been destructive.”

Destructive is a word providers of more traditional transport services know too well, having seen their earnings plummet as a result of Uber and Ola’s rise.

“Our business was totally destroyed,” says Vijay Bahadur, a 44-year-old owner and driver of an auto-rickshaw, a three-wheeled motorized vehicle. “First they started offering 6 rupees/km, then sharing [UberPool]. That’s why there was nobody on the street for our business.”

As Uber and Ola users have experienced abnormally long wait times and inflated prices throughout the week, however, many have returned to auto-rickshaws. For Bahadur, this has offered some much needed respite.

“Right now things are going well,” he says, “Before, wherever we went, we were roaming for half an hour or an hour to get a passenger….when I’m going now, it’s five or ten minutes.”

Where Uber and Ola go from here is unclear. This is not the first time the companies have experienced tension with their drivers — in India or elsewhere. But with no clear end in sight to the strike, Uber and Ola’s status atop the cab market in major Indian cities could be in jeopardy.

“It’s not sustainable, that’s very clear. But how they’re going to change, nobody knows,” says Pahwa of their business models. “If they hike rates, users might decline. You never know.”

And if that’s the case, #DeleteUber could take hold in India for entirely different reasons.

*Where noted, names of some drivers have been changed to protect their identities.

Ashish Malhotra is a freelance journalist based in New Delhi who has previously worked at Al Jazeera English and the Hindustan Times. You can find him on twitter at @amalhotra2.