Uber forced to stop 'surge' pricing during emergencies and natural disasters after charging EIGHT TIMES its normal fare during snowstorms in New York
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New York's attorney general says the car service Uber has agreed to limit prices during emergencies, natural disasters or other market disruptions consistent with the state's law against price gouging.
The firm came under fire in December when huge snowstorms left people stranded - and Uber charged up to eight times its normal fare.
Under the new agreement, it will set a cap during 'abnormal disruptions of the market,' limited to the range charged in the preceding 60 days and excluding the three highest prices.
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Uber came under fire in December when huge snowstorms left people stranded across the Northeast - and Uber charged up to eight times its normal fare.
HOW UBER WORKS
Customers can see the driver's name and photo before they arrive and receive an email of their route to ensure they have not gone around the houses.
Uber takes a cut, usually 11 to 20 per cent, of the fares, which are taken from customers' credit cards at the end of the journey — when they can also rate their trip.
Journey costs increase during busy periods, but customers are not encouraged to tip because the gratuity is factored into the metered fare.
Attorney General Eric Schneiderman said it will apply to UberX, Uber Black, Uber SUV and Uber LUX.
'This agreement represents the thoughtful application of long-established law to new technology,' said Attorney General Schneiderman.
'It provides consumers with critical protections to which they are entitled under the law – and it provides Uber with clarity from government about how the law will be applied to its innovative pricing model.
'This agreement also serves as a model for the kind of effective collaboration that should exist between government and technology companies like Uber.'
The firm came under fire following snowstorms in December when ome rides cost 8.25 times the standard price.
Salman Rushdie took to Twitter to complain about surge pricingm while digital media expert Tim O'Reilly accused the service of price gouging.
Travis Kalanick, C.E.O. and co-founder of Uber, said, 'This policy intends to strike the careful balance between the goal of transportation availability with community expectations of affordability during disasters.
'Our collaborative solution with Attorney General Schneiderman is a model for technology companies and regulators in local, state and federal government.'
On Monday, Uber said it is temporarily cutting New York City prices in a bid to compete with taxis.
The San Francisco-based company is expected to apply the same cap policy for its services nationally.
Snow surge: Under the new agreement, Uber will set a cap during 'abnormal disruptions of the market,' limited to the range charged in the preceding 60 days and excluding the three highest prices.
It is already locked in a battle with New York's iconic yellow cabs
The move discounts prices by 20 percent, and follows similar price cuts in a slew of other cities including San Francisco, Chicago, and Atlanta.
Uber, which recently raised $1.2 billion in new funding, stressed the new pricing would only be available for a limited time - but hinted they could stay.
But 'the more you ride,' the company claimed in a blog post, 'the more likely we can keep them this low!'
Uber has expanded around the world at an astonishing rate, taking on cab firms in major cities around the globe.
Described as 'one of the most rapidly growing companies ever,' earlier this month it was valued at $18.2bn, one of the highest valuations ever for a Silicon Valley startup.
The firm, which relies on an app and software to match riders and drivers, was started in 2010 - and now operates in 128 cities across 37 countries.
The firm has raised $1.2 billion from mutual funds and other investors in a funding round valuing the fast-growing rides-on-demand service at $18.2 billion.
Uber says its new pricing will undercut yellow taxis across New York, showing these examples
Uber Chief Executive Officer Travis Kalanick announced the funding round on Uber's blog Friday.
The funding, eclipsed only by the likes of Facebook Inc before it went public, is a vote of confidence by investors in four-year-old Uber's growth potential.
'Uber is one of the most rapidly growing companies ever, and we believe there are opportunities for continued tremendous growth,' Joan Miller, a spokeswoman for Summit Partners, an investor in the funding round, said by telephone.
Investors hope the company, which allows users to summon a ride on their smartphones, can expand globally and diversify into logistics.
The investors in the round valued Uber 'pre-money' at $17 billion, the blog post said.
The $1.2 billion infusion took the startup's valuation to $18.2 billion.
Fidelity Investments put in about $425 million, Wellington Management added $209 million and BlackRock Inc contributed $175 million, according to a person familiar with the matter.
Venture firms Summit Partners, Kleiner Perkins Caufield & Byers, Google Ventures and Menlo Ventures also participated in the round, a person familiar with the matter said.
Kleiner's investment came from its Digital Growth Fund, run by former stock analyst Mary Meeker, known for her bullish recommendations during the first dot-com boom.
UBER'S BATTLES
While Uber has grown rapidly since its 2010 launch in San Francisco, it has run into serious regulatory issues. Ordinances keep it out of cities such as Las Vegas, Miami and Vancouver, British Canada.
In some places, including Chicago, San Francisco and Washington, D.C., Uber and similar companies face lawsuits from taxi companies hoping to keep the new competition out.
In Colorado, Governor John Hickenlooper signed a bill on Thursday that legalized drive-for-hire services in consumers' own vehicles, including UberX.
In California, ridesharing is currently regulated through the state's Public Utilities Commission, although taxi drivers and Uber itself are challenging that authority.
Her fund has had recent hits, including traffic app Waze, acquired last year for $1.1 billion by Google.
Uber, which did not give details about its latest investors, operates in 128 cities across 37 countries.
Kalanick said he expected to close a second round of funding from strategic investors of about $200 million.
Uber originally started with a luxury town-car service, but in many cities has since added UberX, a low-frills service with nonprofessional drivers using personal cars.
Competitors to Uber include Flywheel and Hailo, which connect passengers and taxis; and Lyft and Sidecar, which link passengers and drivers who use their personal vehicles.
Uber sometimes offers promotional deliveries, such as roses around Valentine's Day or Christmas trees.
Earlier this year, it launched a regular courier delivery service for small packages in Manhattan.
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