At the Goldman Sachs Communacopia + Technology Conference, Uber CEO Dara Khosrowshahi stated that the approximately 3,300 corporate jobs cut by the company last week will prove beneficial to customers since the money saved will be used to lower prices.
The previous week Uber announced that it was dismissing 10 per cent of its corporate staff, covering about 3,300 positions, in order to reduce the number of management layers, which represents the company’s largest job cuts since the pandemic.
Khosrowshahi said that the savings from the layoffs and from the insurance will be reinvested, with one of the ways being to reduce ride prices so as to encourage travellers to continue using the app.
The money saved will also be used to fund Uber’s autonomous taxi network.
Uber’s Layoff Savings Pledge and Reasons for Skepticism
Khosrowshahi stated that the savings resulting from the layoffs would be reinvested in the business, specifically by reducing prices for customers.
He also said that the money saved from the insurance would be put to use in lowering ride prices, a move which he thinks will cause travelers to continue using the Uber app.
The company says that it intends to invest more than $1 billion in Uber’s self-driving taxi service in order to compete with rivals like Waymo, and some of the cost savings will be channeled towards this initiative.
Uber’s performance in its most recent quarterly earnings report was better than had been expected, and Khosrowshahi admitted that the layoffs took place when the company was in a ‘position of strength versus weakness’. He also said, “Some companies wait. We don’t believe in waiting.”
The lower prices depend on Khosrowshahi’s promise, and corporate assurances of this kind have not always come true. In August 2023, when T-Mobile announced it was making 5,000 job cuts, CEO Mike Sievert stated that the reorganisation would result in better value and an improved customer experience.
However, less than a year later the company announced price rises for some of its older plans, including an additional $5 for each voice line every month.
Uber’s EU Fine and Unconfirmed Price-Cut Plans
Uber has recently been hit with a fine of almost $1 billion by the EU. From 2018 to 2022, Uber automatically suspended or disabled drivers who it suspected of committing fraud or who had received bad ratings.
The regulator in the Netherlands found that these decisions had not involved any human review and thus violated the GDPR rules concerning automated decisions that have significant personal or financial consequences.
It has not been confirmed whether the layoffs will result in lower prices for customers, the outcome entirely depending on the CEO’s stated intention.
Uber has not specified the extent or timing of any price reductions, nor explained how the savings will be divided between lower prices, the investment in autonomous taxis, and other purposes.
Since in previous cases similar promises have not been kept, the real effect on riders is still uncertain.
