Inside Uber’s Political Machine

In 2016, near the end of his second term as president, Barack Obama was asked what he planned to do on returning to civilian life. He gave a one-word reply: “Uber.” The joke suggested two changes that had occurred during his presidency. First, Uber had become a verb; the idea of “ubering” was commonplace. Second, the ride-hailing app had changed how Americans thought about the economy: headlines announced the uberization of everything from higher education to healthcare. That September The Economist announced the dawn of “Uberworld.” 

The company’s true financial success remains an open question. Founded in 2009, it raised $1.3 million in investor funding within a year; by 2015 its valuation rose to $51 billion, propelled by venture capital from sources like Japan’s SoftBank Group and Saudi Arabia’s sovereign wealth fund. Behind the scenes, however, its balance sheets showed staggering losses—$3.8 billion in 2016 alone. In 2019 its Chief Executive Officer, Dara Khosrowshahi, argued that, like Amazon, it was burning through investor cash to establish market dominance; profits would follow in time. This February it announced its first ever year in the black. 

But then Uber has never operated like a regular business offering services in the open market. From the start it has deployed huge amounts of capital to lobby for favorable laws—in other words, to change the terms on which markets are run. In 2016 it had almost as many lobbyists as Amazon, Microsoft, and Walmart combined. Using tactics favored by the gun and tobacco industries—such as corporate-sponsored research programs and aggressive consumer messaging campaigns—they have pushed local governments to deregulate chauffer services by eliminating safety provisions like licensing, background checks, and vehicle inspections. They have also convinced legislators to overlook employment laws and classify drivers as independent contractors rather than employees. Along with lobbying, Uber has used democratic referendums, judicial pressure, and the threat of capital strikes to mount a multi-pronged assault on regulation. That legislators in cities and states across the country have keeled over to meet its demands reveals how feeble our public infrastructure and governance systems have become. 

Uber, which today offers a range of services, was launched as a smartphone application that connects would-be passengers to drivers. The company’s cofounders, Travis Kalanick and Garret Camp, have said that the idea occurred to them on a snowy evening in Paris, when they couldn’t hail a cab. Its early growth was sustained by venture capital investment, which allowed it to lower prices to levels the taxi industry and challengers like Lyft could not match. In the aftermath of the Great Recession, it was also able to draw on a cheap labor pool, as large numbers of newly unemployed and underemployed people looked for work.

The app was novel and soon became very popular: in 2014 alone it boasted 140 million rides. But Uber’s deeper innovation was pioneering the gig economy model itself. The company established a system of on-demand ride-hailing that requires rapidly hiring and deploying a vast number of “driver partners,” who are given the ostensible flexibility of choosing their own work hours, in return for which they forgo the benefits of a traditional workplace relationship, such as a minimum wage, paid sick leave, pensions, health care, workers’ compensation, overtime pay, and unemployment insurance.¹ Since they drive their own cars, Uber doesn’t need to maintain a fleet of vehicles. In effect, it externalizes both labor costs and capital investment onto workers, who often earn less than a state or city’s minimum wage.²

Uber entered cities illegally, pitching itself as an innovator disrupting the entrenched taxi industry and battling moribund regulations. The company’s mantra, according to Mark MacGann, a former lobbyist who became a whistleblower, was: “Don’t ask for permission, just launch, hustle.” This expansion was undergirded by a political campaign, the outlines of which first emerged in 2012 in Washington, D.C. That year, as we document in our book, the D.C. Council proposed mandating ten percent of all ride-hail fleets to be wheelchair accessible and setting a price floor to protect the local taxi industry.³ In a campaign tactlessly named “Operation Rolling Thunder,” Uber urged users to speak up in its defense. 

In twenty-four hours, customers inundated the Council with 50,000 emails and 37,000 tweets opposing municipal regulation. A range of people wrote in to say that Uber offered a better service than the city’s taxi system, which was outdated, unreliable, not wheelchair accessible, and, above all, racist. Some claimed that taxis wouldn’t pick up passengers of color or travel to certain neighborhoods. “Being an African-American woman,” one wrote. “I have difficulty catching a cab in front of my office on Capitol Hill. It is upsetting to stand in front of the U.S. Capitol, in a suit, after a long day of public service and see cab after cab pass you by. With Uber, I call a car and it comes.”

This “clicktivism” worked. The next day, the price minimum and accessibility requirements were struck from the legislation. On its blog, Uber boasted: “Never underestimate the power of thousands of loyal supporters armed with email, social media, and a cause.” According to one early investor, Operation Rolling Thunder signaled the “the dawn of a new local politics: Tech/social exercising newfound muscles on a policy level in real-time.” It also demonstrated how corporations could exploit problems caused by years of urban austerity, like declining investments in mass transit and poorly-maintained cab systems. At the time The Washington Post’s Mike Debonis wrote that Kalanick had “pushed the idea that Uber should operate wholly free of government interference,” and the city, as one of Uber’s D.C. lobbyists told us, “adopted our view of the world.”

Uber’s growth across the country was not all smooth sailing. In 2014 it faced a blaze of bad publicity for a number of decisions. It gave employees and some drivers access to a program called “God View” that used phone location data to show passengers’ whereabouts in real time, booked and cancelled thousands of rides with Lyft to undermine it, pushed subprime auto loans to its drivers, and surged prices during national disasters. The company was also found to have a toxic workplace culture in which sexual harassment and bullying were rife, and employees who reported such incidents were retailed against. As a result, investors grew increasingly disgruntled. Cities, too, began to push back against Uber’s refusal to comply with insurance regulations, licensing, and background checks. Under pressure, in August 2014 it hired Obama’s 2008 campaign manager and White House senior advisor, David Plouffe, as its senior vice president for policy and strategy. Politico called the move “The Obamization of Uber.” 

Plouffe was not the only high-level Obama alumnus Uber recruited. Shortly thereafter it tapped former Defense Secretary Robert Gates to chair its program UberMILITARY and enlisted Obama’s former Chief Economic Advisor Alan Krueger to produce a study that claimed its drivers were happy with their pay level and work flexibility. The study was marred by unsubstantiated claims and methodological problems: drivers, for instance, were asked double-barreled and leading questions that would not hold up in a peer review. It also failed to account for their tax obligations and underestimated their operating expenses. But it nonetheless proved consequential, undergirding a discussion paper that Krueger and Obama’s former deputy secretary of labor Seth Harris coauthored for the Brookings Institution in 2015. In it, they argued that in order to modernize employment law, legislators should acknowledge a new category of economic actor, the “independent worker,” who they said occupied “the gray area between employees and independent contractors.” They presented “for-hire drivers who work on the Lyft or Uber platforms” as “archetypal examples.” 

Plouffe helped position Uber as part of the answer to a problem the Obama administration had struggled to solve: reining in an economy in freefall after the Great Recession. In press conferences and at policy seminars, he argued that the company, rather than the government, should be at the center of debates on wage stagnation, underemployment, and economic mobility. It helped workers put money “back in their pocket” and receive the “pay raise that they’ve been denied for years.” At the same time, he asserted that it was entirely self-reliant. “We are not asking for special tax breaks like those who want to build a factory or headquarters in a city often do,” he said.“We’re simply asking cities to allow their citizens to use their personal assets—their cars—to make money by driving their fellow citizens around their city.”

He occluded how Uber bends state norms to its benefit. In 2014 it convinced D.C. to adopt a model law that shields its performance and footprint from view, in order to protect customer data and proprietary company technology. Thereafter any information that the local government collected about its operations—even answers to basic questions like whether it served all areas equitably—was exempt from the Freedom of Information Act (FOIA). Meanwhile, the company was systemically using FOIA requests of its own to track the actions of city-level transportation policymakers across the country, even hiring third-party firms to gather information for use in lobbying. One high-ranking city employee in D.C. told us that he now communicates only by phone, because Uber “can’t FOIA a phone call.”

In the following years, Uber successfully lobbied for similar laws in other cities and states, with the help of the ultraconservative American Legislative Exchange Council, which uses campaign language that recalls the Koch brothers’ deregulatory efforts in the 1990s. The company also pushed bills to keep its drivers and other app-based workers from securing employee status. The model legislation, first introduced in D.C., pursues this agenda by creating two distinctions. First, it invents a new category of business called “a digital dispatch service” (or “Transportation Network Company”), which does not offer taxi services and is not a “common carrier” providing transportation, and is therefore exempt from the regulations of both industries. Second, it defines drivers as nonemployees who contract with the company.

Uber has fancifully suggested that classifying drivers as nonemployees helps Black and immigrant communities by affording them flexible work hours. In 2018 in New York City, it hired Spike Lee to create a series of short films, titled “Da Republic of Brooklyn,” about “the journey of five people who drive or deliver with Uber as they chase down their dreams.” In 2020 in California, after lawmakers laid the groundwork for Uber drivers to be reclassified as employees, they were overcome by a company–sponsored public campaign stressing that such measures would harm people of color, especially women with childcare or eldercare responsibilities.

All evidence points to the contrary. Any number of studies have exposed that Uber endangers the health and safety of drivers by distracting them on the road with ever-pinging notifications and subjecting them to what might be a greater risk of physical and verbal assault than other cab drivers, encourages them to take on debt, and makes them perform unpaid labor such as waiting for passengers or sharing data on traffic patterns and bridge vibrations between rides. Perhaps most egregiously, it subjects them to unpredictable wages, determined by an automated system in which two workers can be paid differently for the same job, based on their work histories and other data drawn from their phone. They are not allowed to contest these decisions. The legal scholar Veena Dubal has called this personalized pay system, which Uber’s CEO Khosrowshahi finally acknowledged this year, a form of “algorithmic wage discrimination.”⁴

Not all cities have rolled out the red carpet for Uber. If it meets city-level resistance, the company turns to state preemption—the nullification of municipal ordinances by state legislatures. The tactic was first deployed in 2015, when an Austin bill proposed requiring ride-hail companies to fingerprint their drivers, just as taxicab companies do. Uber threatened to leave the city if the law was adopted, pressuring the local council to reconsider. When that effort failed and the law was adopted, the company spent $8 million on a ballot initiative to overturn it, which the electorate rejected as well. It then closed operations in the city, hired twenty-six lobbyists, and spent $1.6 million to convince the Texas legislature’s Republican members to adopt a statewide regulatory framework that would nullify local safety ordinances and licensure laws. This campaign worked: in 2017 Governor Greg Abbott signed a state law that overrode any local legislation. He described the law, which would allow Uber to relaunch in Austin without any municipal oversight, as “a celebration of freedom and free enterprise.” 

The company soon took this strategy nationwide. Since 2017 it and its peers have pressured thirty-four state legislatures to prohibit governments at the city and county level from setting labor standards such as a minimum wages for drivers, raising taxes on ride-hail services, or mandating safety or accessibility measures. Hawaii’s law, for instance, preempts “any ordinance or other regulation adopted by a political subdivision that specifically governs transportation network companies, transportation network company drivers, or transportation network company vehicles.” 

Meanwhile, Uber has a long record of using deceptive actions to avoid regulatory oversight, most notably through a program called Greyball. In Boston, Las Vegas, and a host of European cities, it deployed a mock version of its app on the phones of unfriendly city officials to make it falsely appear that the service was not available. In some cities, it investigated passengers’ credit card accounts to help determine if they were government officials.

Where state legislatures or courts do not deliver for Uber, it turns to the ballot box. In 2019 California passed a law making companies responsible for proving that their workers were independent contractors, which opened the door to reclassifying them as employees. Uber and other gig economy companies responded by pouring $220 million into a ballot initiative, Proposition 22, which it billed as a defense of drivers’ rights. “Protecting the ability of Californians to work as independent contractors throughout the state using app-based rideshare and delivery platforms,” it stressed, “is necessary so people can continue to choose which jobs they take, to work as often or as little as they like, and to work with multiple platforms or companies.” In fact the proposition would exempt app-based workers from nearly all labor protections, including paid sick leave, retirement benefits, and workers compensation. It passed, though a group of drivers have contested its legality in the California Supreme Court. Its success is still a troubling sign of Uber’s political clout. In Massachusetts, Uber, Instacart, and Lyft raised $43 million in 2022—and $7 million so far this year—for copycat ballot initiatives. 

Back in California, Uber is spending $30 million this year alone on the Uber Innovation PAC, one of the state’s largest single-funded PACs. After disregarding laws and deceiving policymakers for over a decade, now the company is, as a spokesperson told Bloomberg, “pitching proposals to state legislators that add benefits while protecting flexibility.” In other words it is willing to lose minor battles over wage rates and paid sick leave as long as it wins the war on misclassification. “These policies typically promise limited benefits to a newly defined subset of workers,” the labor analyists Jennifer Sherer and Margaret Poydock have written, “while codifying their second-class status as nonemployees and their exclusion from a host of state and federal legal protections and benefits.”

Some segments of organized labor have cynically collaborated with Uber. In New York as in Seattle, the company worked with traditional unions to legislate sectoral or industrywide bargaining for ride-hail drivers while exempting workers from established labor protections, like the right to strike. Sectoral bargaining, which exists for grocery stores in Southern California, allows employees to negotiate one set of conditions across multiple employers rather than agreements with each individual workplace.⁵ But the tactic is bound to fail in the gig economy, where workers lack employee status and workplace power. In 2019 in California, Uber tried to strike a similar deal with the Service Employees International Union before a split in the labor movement buried the backroom negotiations.

The recent pattern is clear: Uber sells itself as pro-worker in name while opposing legislation that would require it to be so in practice. In 2020, after Seattle enacted a minimum wage for ride-hail drivers, the company went to the Washington statehouse to pressure legislators to alter the law, which they rewrote in a manner that at once denied gig workers employee status and established the country’s first paid sick leave program for ride-hail drivers. The national Teamsters union rejected the resulting 2022 law, but the local union supported it, maintaining that it was better to cut a deal and avoid a potential ballot initiative than fight for employee status. In 2023 in New York state, Uber similarly agreed to give UberEats drivers a minimum wage and paid sick leave but not treat its workers as employees. This year in Toronto, it celebrated a partnership with the United Food and Commercial Workers union to assist drivers with deactivation appeals, even as it campaigned against minimum wages for them. 

Last year Minnesota Governor Tim Walz vetoed state legislation that would have established a minimum wage for ride-hail drivers. He expressed concern about who, if not Uber and Lyft, would transport disabled and elderly residents in rural areas—as if the state’s transit services were doomed to remain inadequate. Labor organizers have since focused their attention on city policymakers in Minneapolis, who quickly adopted a similar bill. Following Walz’s lead, Mayor Jacob Frey twice vetoed it, but the city council overturned his decision the second time around, in response to which Uber and Lyft threatened to leave the city within months. Were this to happen, Walz warned, there would be “nothing to fill that gap” for disabled and elderly residents, who can use ride-hail services for free, thanks to a grant from the Minnesota Department of Human Services. 

Uber’s regulatory victories over the past fifteen years have put the likes of Walz and Frey between a rock and a hard place. They have come to rely on the company to provide solutions to governance problems that they cannot or will not address, such as underfunded public transit, urban inequality, and job shortages. This is one reason that politicians across the spectrum have embraced Uber with open arms. In 2016 Jeb Bush, Marco Rubio, and Ted Cruz all lauded it during their bids for the Republican presidential nomination. Starting with Arizona in 2019, a handful of southern Republican states have amended laws to allow patients to use Medicaid funds to pay Uber and Lyft for rides to nonemergency medical appointments. In 2021 Joe Biden’s administration partnered with Uber to provide free rides to Covid-19 vaccination appointments.

Voters often seem to feel the same way, hoping Uber might fill a gap in local governance that has been widening ever since the late 1970s under the pressure of neoliberal policies. The deepest political challenge the company poses, then, is not to any given type of regulation but to the value of regulation itself. If many Americans have an exaggerated idea of Uber’s capacity to improve their lives, it might be because they have dishearteningly low expectations that their government might do as much.