As Uber sees off yet another competitor, the tech juggernaut is tightening its grip as Australia’s go-to rideshare app despite long being a source of frustration for drivers, passengers and the taxi sector.
One executive at Didi – Uber’s last remaining rideshare competitor in Australia – says the sudden exit of Indian app Ola on April 12 was significant because it left only two rideshare players.
Rideshare app Didi launched in Australia six years ago.
Dan Jordan, head of external affairs at Didi Australia, is warning that the fewer operators there are, the worse the experience will be for consumers.
He said that made it important for Didi to succeed here – and not just for the Chinese-owned business.
“Ultimately, the more players in the marketplace, the better it is for the consumer,” he said.
“The beauty of rideshare is both drivers and riders can switch between apps depending on what value it brings to them.”
Former competition watchdog chairman Allan Fels.Credit: Alex Ellinghausen
Didi tends to be favoured by drivers. It takes an 18 per cent cut for a typical fare, while Uber takes 27.5 per cent, according to the companies.
Former Australian Competition and Consumer Commission chairman Allan Fels said any reduction in the number of operators in Australia, even a fairly small one like Ola, tended to reduce competition.
“Ridesharing businesses are experiencing some significant cost increases, partly due to industrial relations rulings and other factors, and the more players there are, the harder it is for them to raise prices,” Fels said.
“[With less competition], the possibility of reduced earnings rates for drivers also can’t be ruled out.”
Uber is retaining its dominance in Australia.Credit: AP
Jordan said there was no doubt Uber dominated the sector in a way that made it difficult for new players to establish themselves, but Didi had done so through slow and sustainable growth.
He said Didi’s market share was 24 per cent in Melbourne, where it launched six years ago, and 21 per cent in Sydney, where it was rolled out in 2020.
“We don’t have big high-profile ambassadors like Uber. We do it by running an efficient operation with affordable rides,” he said. “Ultimately we’re fighting with Uber for attention.”
Federal parliament this year passed laws that will empower the Fair Work Commission to set new minimum standards for the conditions and pay of workers in the so-called gig economy. They earn income through apps that provide services such as ridesharing and food delivery, which Uber also offers.
Transport Workers’ Union acting national assistant secretary Emily McMillan said Ola’s collapse showed that the rideshare industry was highly insecure and in need of basic standards.
“We have a market that’s cannibalising itself when new entrants can’t survive,” McMillan said
“Either they lower standards, which is exploitative and driving a race to bottom, or they’re coming in with higher standards and they just can’t compete.”
Jordan said he was concerned the upcoming Fair Work changes could hurt competition in Australia.
“It’s essential the changes bring meaningful benefits for rideshare drivers but also ensure all platforms can retain a sustainable business model and not give a competitive advantage to the bigger player in the market,” he said.
“If smaller players are disadvantaged then competition will reduce and rideshare will suffer. ”
Uber has been embroiled in many high-profile legal stoushes globally, which have exposed how the San Francisco-based company reached market dominance by taking advantage of vulnerable workers, regulatory loopholes and aggressive undercutting funded by venture capital.
In Australia, Uber last month agreed to pay a historic $272 million class action settlement. More than 8000 taxi and hire-car drivers joined the lawsuit, filed in 2019, claiming they lost income when Uber entered the Australian market in 2012.
A second civil proceeding is under way in the Supreme Court of Victoria with Taxi Apps – creator of the GoCatch app – suing Uber, alleging the company intentionally destroyed the rival through conspiracy, unlawful conduct and covert surveillance. Uber argues that GoCatch declined due to its own internal challenges and denies using spyware in the way alleged.
Didi, too, has had its own troubles. In 2022, China’s cybersecurity regulator fined Didi Global the equivalent of more than $1.8 billion for violations related to cybersecurity, data security and the protection of personal information.
Despite years of controversy, frustration and even boycotts, drivers and riders return to Uber.
Dr Marian Makkar, a senior business lecturer at RMIT, said this was a common phenomenon known as the “attitude-behaviour gap”.
People may intend on stopping their use of Uber as it does not align with their values, but ultimately their actions are driven by other factors: convenience, finances, safety.
To help encourage competition, she recommended that consumers split their business as much as possible between rideshare apps, taxis and public transport.
An Uber spokesman said Australia’s broader “point-to-point” transport sector – which includes taxis, public transport and car-sharing platforms – remained competitive.
“Our focus remains on helping Uber riders get from A to B in a safe, affordable and reliable manner, while providing flexible earnings opportunities to thousands of Australian drivers,” he said.
“Uber has long advocated for better protections for all Aussie platform workers, and we support recent legislation passed by the federal government that paves the way for industry-wide standards for gig workers.”
Sydney-based Rosalina Pirozzi quit driving for rideshare apps four years ago after she had to almost triple the hours she worked just to make ends meet. At its worst, she said she was driving 60 hours a week just to earn the same money she’d been making years earlier.
Rosalina Pirozzi decided to start her own business because rideshare driving was no longer financially sustainable.Credit: Dean Sewell
“When I first started, we earned decent money: I could pay the kids’ school fees and have a comfortable living but over time expenses kicked in such as insurances and vehicle registration increasing, fuel costs going up. Everything was going up except our rates.”
Pirozzi, who campaigns for better conditions and wages for rideshare drivers, now runs her own private driving business where her fees are double that of Uber.
Still, it’s likely that Uber’s influence will continue to grow. It has been positioning itself as the future “Amazon of transport”, rather than merely a rideshare app.
University of Queensland honorary professor of planning Neil Sipe said it’s why taxis could now be booked from the app and in some countries Uber partnered with public transport agencies, deepening its grip on consumers.
Rod Barton, a former taxi driver and MP of the Transport Matters Party.Credit: Jason South
Rod Barton, a former Victorian MP and taxi driver who was involved in the class action lawsuit against Uber, said he was concerned the tech giant was on track to take control of the taxi industry.
“What punters don’t understand is that booking a taxi through the app, they can charge anything they like,” Barton said. “We have a foreign company doing our essential services.”
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