Feb 15, 2017 ยท 3 minutes

Ohhhhhh shit.

Core to Uber’s valuation is global domination. Has been for several years. Since about… $50 billion in valuation or so.

That’s one of only clear differences between Lyft and Uber in terms of strategy. These two companies have commodity products, similar apps, the same drivers in most cases, and basically charge you the same amount to get you from one place to another. Sure, Uber is far larger, in part because it spends more money, but also because it has been operationally superior. But Lyft has seen clearly: The more cash it spends, the more it chips into that market share.

(The most effective marketing spend may have been that $1 million donation to the ACLU…)

Neither treat drivers as employees, both have slashed drivers’ wages, both will pull out of markets over things like regulators requiring drivers to be fingerprinting.

But on international the two clearly diverge. Lyft has wisely decided to focus its $2 billion raised thus far on carving out a meaningful number two position in the US, while Uber spent a large part of its nearly $9 billion raised aiming for global domination.

What was it Uber’s Emil Michael said about the billions burned in China before it gave up? Oh yeah:

I think if you asked anyone would Uber have a shot at being the only American tech success in China at a grand level, they would say 'Hell no,' and Travis said 'Hell yes.' And I like to hire people who have that same mentality. 

It doesn’t appear to matter if they are right.

So China is done. Uber is banned in most major European markets, save London. And even there, a legal tribunal has ordered that drivers be treated more like employees than contractors. How is the rest of the world going?  

Grab is bolstered by Didi and many of its investors in South East Asia. The market is large, but it’s incredibly fragmented. I don’t see it being a strong enough focus for Uber to overcome those small country-by-country idiosyncrasies. Meantime, Grab is reportedly making big moves at some of the region’s biggest challenges, like payments.

But I’ve written before that Uber has a very real shot at winning India. Ola doesn’t appear to be as operationally strong Didi or Grab, and is said to be raising money at down round prices. Meantime Indian urban elites don’t have much nationalistic pride in backing their own startups.

But it’s an open question what “winning” India means. Right now, drivers have been striking for days over the same deceptive “here’s how much you can make!” practices that have already caused Uber to be fined $20 million in the US. Several Indian news outlets have noted that these drivers’ woeful economic state means they likely can’t strike for very long. Still, the international news is another nail in the coffin of any idea that Uber is some engine for economic empowerment. On top of Uber’s other character-related woes, it isn’t good news. And these drivers are asking for government intervention.

Meantime, a judge in Brazil just struck a blow to the central premise of Uber’s business model, ruling its drivers are employees and are entitled to benefits. From Reuters: “The consequences for Uber, if the ruling is upheld, could be far greater if more drivers follow suit and if state and federal regulators and tax agencies start treating it, as the judge suggested, as a transportation company rather than a tech firm.”

It’s no wonder that Alphabet’s Waze carpooling service has set itself up so that the fees don’t do more than recoup basic costs. No one is looking at Uber and thinking its labor issues are a good look.

It may find a new way to justify that now $70 billion valuation when it invariably needs more cash this year. But the argument will most certainly not be global domination.