The IPO was estimated to sell around $10 billion worth of stock at a valuation between $90 billion and $100 billion, according to reports. But the filing did not specify the size of the IPO.
The food biz
Besides the rides business, UberEats too would require significant investments, as local players such as Swiggy and Zomato have an edge in the food discovery and ordering business, it has noted. “In India, for example, our Uber Eats offering competes with Swiggy and Zomato, each of which has substantial market-specific knowledge and established relationships with local restaurants, affording them significant product advantages. As a result, such competitors may be able to respond more quickly and effectively than us in such markets to new or changing opportunities, technologies, consumer preferences, regulations, or standards, which may render our products or offerings less attractive.”
According to the filing of the firm, co-founded by Travis Kalanick ten years ago, ‘’future competitors may share in the effective benefit of any regulatory or governmental approvals and litigation victories we may achieve, without having to incur the costs we have incurred to obtain such benefits”.
Impact of Competition laws
The firm has referred to a growing number of competition laws across the EU, the US, Brazil and India as an area of concern. It has made specific mention of issues like predatory pricing and abuse of market power in this context.
“Complaints have been filed in several jurisdictions, including in the US and India, alleging that our prices are too high (surge pricing) or too low (discounts or predatory pricing) or both. If one jurisdiction imposes or proposes to impose new requirements or restrictions on our business, other jurisdictions may follow. Our revenue is dependent on the pricing model we use to calculate consumer fares and driver earnings,” said the company.
Uber has also raised the issue about the need to change the pricing model in certain markets. “In 2016, following the filing of a petition in the Delhi High Court relating to surge pricing, we agreed to not calculate consumer fares in excess of the maximum government-mandated fares in New Delhi, India. Additional regulation of our pricing model could increase our operating costs and adversely affect our business. As a result, we may be forced to change our pricing model in certain jurisdictions, which could harm our revenue or result in a sub-optimal tax structure,” it said.
The company has pointed at risks linked to use of cash too. ‘’In certain jurisdictions, including India, Brazil, and Mexico, as well as certain other countries in Latin America, Europe, the Middle East, and Africa, we allow consumers to use cash to pay drivers the entire fare of rides and cost of meal deliveries (including our service fee from such rides and meal deliveries). In 2018, cash-paid trips accounted for nearly 13 per cent of our global gross bookings.”
It has argued that many jurisdictions have specific regulations regarding the use of cash for ridesharing, and failure to comply with the regulations could result in the imposition of significant fines and penalties and could result in a regulator requiring them to suspend operations.
Also, in certain jurisdictions, ‘’serious safety incidents resulting in robberies and violent, fatal attacks on drivers while using our platform have been reported.’’
The company has listed driver dissatisfaction as a likely reason for decline in the number of platform users. ‘’That would reduce our network liquidity, and which in turn may cause a further decline in platform usage.’’
Uber fears that drivers engaging criminal activities would have a serious impact on their business. It has mentioned the New Delhi rape case involving an Uber driver a few years ago. “In December 2014, a driver in New Delhi, India kidnapped and raped a female consumer, and was convicted in October 2015.’’
Uber's global expanse
Six continents, 700+ cities, three platforms (Uber, UberEats and Uber Freight)
10 billion plus total trips
3.9 million drivers as of Dec 31, 2018
$78 billion in driver payments
$9.2 billion revenue from ridesharing products in 2018, compared to $3.5 billion in 2016
$3 billion in operating loss in 2018
26 billion miles travelled by consumers via Uber platform in 2018