A new study out of Columbia Business School claims Uber has been using a secretive algorithm to boost its profits, largely at the expense of both drivers and riders. The research, which analyzed tens of thousands of trips and more than 2 million trip requests, found that Uber's approach to pricing—labeled "algorithmic price discrimination"—systematically raised fares for passengers while cutting pay for drivers, reports the Guardian. This comes on the heels of similar research from the University of Oxford, which examined 1.5 million UK trips and concluded that Uber drivers there have seen hourly earnings drop significantly since a 2023 switch to a new "dynamic pricing" system that also increased Uber's share of each fare.
Len Sherman, who led the Columbia study, said Uber's model lets it pinpoint who will pay more as a customer or accept less as a driver—information the company can then use to its advantage. The report found that after Uber rolled out "upfront pricing" in the US in 2022—a move similar to the UK's dynamic pricing—Uber's share of ride fares, or "take rate," climbed from 32% to 42% by late 2024. In the UK, Oxford researchers reported that Uber's median take rate rose from 25% to 29%, sometimes exceeding 50% on individual trips.
Earlier this year, meanwhile, a Delhi entrepreneur took a closer look at Uber's algorithm and says he found "striking inconsistencies" regarding fares depending on what devices were being used and even how much battery power was left in those devices, per the Hindustan Times. Both recent studies add to a string of controversies for Uber, which has faced legal rulings over driver rights and criticism for its dealings with regulators and governments. Uber's latest financials show it generated $6.9 billion in cash in 2024, a turnaround from a $303 million loss in 2022. Both new reports suggest much of that gain may have come from quietly changing the way it splits the fare.
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