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Uber CEO to face class action lawsuit over price fixing

Uber Price Fixing Class Action Lawsuit

Despite Uber’s best efforts, the ridesharing company was unable to persuade a U.S. District Court judge to dismiss a pending class action lawsuit against company CEO Travis Kalanick over price fixing allegations. According to the suit, Kalanick, through the use of the Uber algorithm which determines rates and surge pricing charges in real-time, effectively conspired with the company’s army of drivers in an elaborate price fixing scheme.

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As a result, the plaintiffs argue that Uber passengers have been subjected to higher charges, especially during high-demand periods such as New Years Eve. Additionally, the suit suggests that Uber’s price fixing tactics led to other ridesharing companies like Sidecar to go out of business. Of course, both of these arguments seem to be diametrically opposed to one another. If Uber’s tactics led to inflated prices for passengers, wouldn’t that make competing services more attractive?

What’s more, the entire notion of Kalanick colluding with tends of thousands of drivers seems beyond far-fetched to begin with.

“In creating Uber,” the plaintiffs argued, “Kalanick organized price-fixing among independent drivers who should be competing with one another on price.”

Reuters reports:

Passengers led by Spencer Meyer of Connecticut claimed that drivers conspired with Kalanick to charge fares set by the algorithm, with an understanding that other Uber drivers would do the same, even if they might fare better acting on their own.

It almost seems that the plaintiffs here are ignorant, perhaps purposefully so, of the way that Uber is set up and actually operates.

It’d be one thing if Kalanick was being accused of manipulating Uber’s algorithm to set artificially high prices or to increase the incidence of surge pricing. But in this particular case, it appears that relying on an algorithm to determine pricing in the first place is the basis of the lawsuit.

Unfortunately, the Judge’s ruling doesn’t shed much more light on the situation.

“The advancement of technological means for the orchestration of large-scale price-fixing conspiracies need not leave antitrust law behind,” the ruling reads in part.

In a statement on the matter, an Uber spokesperson said the following: “These claims are unwarranted and have no basis in fact. In just five years since its founding, Uber has increased competition, lowered prices, and improved service.”

There are certainly no shortage of reasons for people to criticize Uber or the behavior of CEO Travis Kalanick. Still, the lawsuit in question here seems frivolous to say the least.

A life long Mac user and Apple enthusiast, Yoni Heisler has been writing about Apple and the tech industry at large for over 6 years. His writing has appeared in Edible Apple, Network World, MacLife, Macworld UK, and most recently, TUAW. When not writing about and analyzing the latest happenings with Apple, Yoni enjoys catching Improv shows in Chicago, playing soccer, and cultivating new TV show addictions, the most recent examples being The Walking Dead and Broad City.