GoKawiilWinners & losers: Nobody likes seeing companies laying off people, except maybe their shareholders, but CEO Dara Khosrowshahi says the roughly 3,300 people Uber let go of last week will be a good thing for customers: it will use the savings to reduce prices, apparently.
Uber said last week that it was laying off 10% of its corporate staff, or around 3,300 positions, as the ride-hailing giant looks to reduce management layers. The move marks its biggest cuts since Covid.
At the Goldman Sachs Communacopia + Technology Conference yesterday, Khosrowshahi talked about taking the savings stemming from the layoffs and reinvesting them in the business, which includes lowering prices for customers.
The CEO added that the money saved from insurance will also be used to lower ride prices, something that he believes will keep travelers using Uber's app.
Some of the savings will also be directed toward Uber's autonomous taxi network. The company says it plans to invest over $1 billion in this area as it looks to compete with rivals such as Waymo.
As is so often the case when companies make mass layoffs, Uber performed better than expected in its recent quarterly earnings report. Khosrowshahi himself admitted that the layoffs had come at a time when the firm was in "a position of strength versus weakness."
"Some companies wait," he said. "We don't believe in waiting."
Of course, we only have Khosrowshahi's word that prices are going to drop as a result of the layoffs. CEOs aren't renowned for their honesty, and we've seen promises like these fail to materialize before.
When T-Mobile announced 5,000 job cuts in August 2023, CEO Mike Sievert said the restructuring would help deliver better value and a better customer experience. Less than a year later, the carrier announced price increases for customers on some older plans, including an extra $5 per voice line each month. Better value, it seems, is open to interpretation.
Uber might also want to use some of the money from the layoffs to pay the almost $1 billion fine recently imposed on the company by the EU. Between 2018 and 2022, Uber automatically suspended or deactivated drivers suspected of fraud or receiving poor ratings. The Dutch regulator found that these decisions involved no human review, breaching GDPR rules on automated decisions with significant personal or financial consequences.