Business

Under legal pressure, Uber moves to cap its prices during emergencies

Above: A car drives through the aftermath of Hurricane Sandy in Hoboken, New Jersey.

Image Credit: Alec Perkins / Flickr

Uber’s chief executive has repeatedly defended the company’s controversial, algorithm-driven price spikes, claiming it puts more drivers on the road during periods of heavy demand. But faced with governmental pressure, Uber today announced its intention to cap surge prices in U.S. cities during natural disasters and other emergencies.

The New York Attorney General’s office played a major role in pushing Uber to adopt its new policy, which is finally consistent with New York’s price gouging law. The 35-year-old law bans companies that provide consumers with goods and services from charging “unconscionably excessive prices” during “abnormal disruptions of the market.”

During states of emergency, Uber has promised to keep its prices below that of the three highest-priced days without emergencies of the prior two months. The policy applies to all Uber services that use dynamic pricing, including UberX and Uber Black.

“This policy intends to strike the careful balance between the goal of transportation availability with community expectations of affordability during disasters,” said Uber CEO Travis Kalanick in a statement. “Our collaborative solution with [New York] Attorney General [Eric T.] Schneiderman is a model for technology companies and regulators in local, state, and federal government.”

Uber faced widespread criticism after hiking prices during natural disasters like Superstorm Sandy. But with the new agreement in place, Schneiderman publicly praised the company for cooperating.

“This agreement represents the thoughtful application of long-established law to new technology,” said Schneiderman in a statement. “It provides consumers with critical protections to which they are entitled under the law — and it provides Uber with clarity from government about how the law will be applied to its innovative pricing model.”

The agreement comes just hours after transportation competitor Lyft announced plans to launch in New York, Uber’s biggest market.

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5 comments
Yannick Boucher
Yannick Boucher

The more I hear it's backers, the more it seems to me like Uber's main demographic are mainly anti-government neolibs first, and people who need a ride second.

Joshua Darlington
Joshua Darlington

The nobility of the market/perfection of the invisible hand/homo economicus paradigm ended in 1980 with behavioral economics. Reigning in the extremes of market bad behavior stabilizes markets and stabilizes society.

Dan Root
Dan Root

I'm a believer in the supply and demand curve, but Uber's surge pricing failed to adapt to decreasing demand in a timely manner... Essentially trapping people who were relying on a quick ride home.

Jesse Grimshaw
Jesse Grimshaw

Well then I suggest reading Economics In One Lesson by Henry Hazlitt. And go to the chapter on "Government Price Fixing"

Teddy Luben
Teddy Luben

Now we can be sure very few people will be getting rides during natural disasters.