Ethics and Governance: Analysis of Uber and Deliveroo Business Models

This essay provides a comprehensive analysis of the ethical and governance issues surrounding Uber and Deliveroo, focusing on their business models as examples of platform-based peer production. The essay delves into the controversies faced by both companies, including labor practices, worker classification, and allegations of unethical behavior such as sexual harassment and gender discrimination. It examines the business models, highlighting the reliance on independent contractors and the avoidance of employee benefits. The essay applies ethical frameworks, such as utilitarianism and virtue ethics, to evaluate the companies' actions and their impact on stakeholders, particularly drivers, riders, and customers. The analysis covers financial aspects, including investment strategies and profitability, as well as the companies' responses to criticisms and regulatory challenges. The conclusion emphasizes the need for ethical considerations in platform-based business models and the importance of balancing innovation with social responsibility.

Running Head: ETHICS AND GOVERNANCE
Ethics and governance
Name of the Student:
Name of the University:
Author Note

1ETHICS AND GOVERNANCE
Introduction
It is to be mentioned that Common-based peer production is a term which can be
described as an innovative model of socioeconomic production (Benkler 2016). Such model of
production usually involves a large number of working together for the fulfillment of a common
objective primarily over the internet. All the projects which are based on common-based peer
production tend to be have rigid and a flexible hierarchical structure as opposed to the traditional
models of businesses. This model of production was first coined by the Yochai Bnekler, the
professor of Harvard Law School. Common based peer production is generally facilitated by the
latest technology and the infrastructure of the internet services. Such socio-technical system of
production involves the collaboration of large groups of individuals who share technical
knowledge, cultural goods and information and do not rely on the managerial hierarchies for the
fulfillment of the goals of the enterprise. Uber and Deliverwoo are examples of platform based
peer production systems. It Is to be stated that platform economies are developing a lot in the
modern times and is expanding beyond leaps and bounds. The examples of platform based
economies include large firms like Deliveroo and Uber. However the labor issues existing in
such economies are yet to be understood.
Discussion
It can be said that there have been a lot of controversies regarding the business carried on
by the companies like Uber and Deliveroo about whether the actions of the companies are ethical
(Forbes.com 2018). The business model of Uber primarily focuses on the imperial ambitions of
the company. The transport for London has passed the decision to withdraw the license issued to
Uber for operating in London (The Conversation, 2018). It can be said that Uber has been

2ETHICS AND GOVERNANCE
involved in a lot of scandals ranging from claims of sexual harassments to acquiring the medical
records of rape victims to suppress such claims. Due to these unethical, immoral and illegal
business operations Uber’s reputation has suffered a massive blow. However, it is apparent t this
does not affect the bottom line of business of Uber. It can be stated that Uber had been exposed
in sexual harassment scandals which included employees and the customers alike. The company
has even faced the allegations that the working conditions are hostile towards women however
the HR department kept numb about the allegations. Travis Kalanick had announced that the
company would initiate an investigation in the attempt to find out the culprits behind the charges
of sexual harassments. This announcement provides evidence that the C.E.O of the company
acknowledged unethical behavior exhibited by the company
Following the results of the investigations the 20 employees of Uber were terminated
(Solon 2018). The news of the termination of the employees had been announced at a company-
wide meeting. The identities of the terminated employees were not revealed however it had been
discovered that some of the senior employees had been involved. It can be said that merely
improving PR of Uber will not get it out of the controversies that it had been involved in. It is to
be mentioned that Uber needs to take better care of its drivers and customers to survive in many
territories of the world such as London.
However in accordance with the business model of the company it can be said that the
company is least likely to incur additional cost to improve the safety of both the drivers and its
customers due to its economic model. It can be said that the business models of Uber and
Amazon are in a way similar. Amazon had been successful in becoming the dominant retailer by
investing huge amounts for the purpose of becoming a monopoly in the retail sectors. Amazon
however was able to earn huge profits due to the vast investments that funded its expansion.

3ETHICS AND GOVERNANCE
Both the companies had primarily relied on the investments by the investors which had
subsidized the prices paid by the customers in the short run for the monopoly in the long run.
Amazon had an edge over the other rival companies as it did not have to pay the establishment
and maintenance cost for the shop fronts which the retail stores were required to pay. Uber on
the other hand does not have this advantage. The taxi business is different from the retail
business. Retail businesses generally use the economies of scale for operating first in the
national market and then the international market (Massotte 2017). The taxi industry however
has remained much localized. The major costs of the taxi industry include the costs of drivers,
cars and fuel. Uber’s business model does not include such costs and introduces new costs of
establishments in the new markets. For evolving in the new markets Uber primarily subsidizes
the passenger fees and the wages of the drivers to drive growth and make up for the financial
losses sustained every year (Verschoor 2017). It can be said that Uber’s growth can be attributed
to the $11.5 billion dollars raised from the banks and the investors. The company has never been
able to make substantive profits and in the year 2016 the company had incurred a loss of $3
billion. Uber has to pay the sums back either in the form of equity or debts. Thus in light of the
aforementioned discussion it can be said that Uber cannot afford to be ethical even after adopting
measures to minimize the income of drivers as it is losing billions of dollars every year.
It is to be noted that for functioning properly in a regulated market Uber is required to
provide its drivers employment protections and provide its customers safety of travelling in Uber
cabs (Kolmar and Beschorner 2016). It can be stated that if Uber fails to achieve monopoly like
Amazon has over the online retail industry, it will continue to face competition from the local
firms it has very little hope of repaying the money to its investors.

4ETHICS AND GOVERNANCE
Another company which has been involved in controversies for not meeting with ethical
standards is Deliveroo. Managers of Deliveroo have claimed that the couriers of Delieroo who
deliver food and takeaways should be referred to as independent suppliers. Deliveroo claimed
that such suppliers are to be treated as self employed workers who have very limited
employment rights as they are not direct employees of the firm or a part of the team or staff
(Butler 2018).. Employ independent contractors have also allowed Uber and Deiveroo to avoid
obligations to pay minimum wages to the employers (Cotton 2016). The guidance that has been
provided to the Deliveroo has suggested that the company’s own staff can be confused about the
role of the riders who deliver takeaways. The document provided to the managers at Deliveroo
governs the dos and don’ts of the company. It can be mentioned that business models of the
companies like Deliveroo and Uber employ thousands of contractors and tag them as self
employed with a view to save millions of pounds in Holiday pay and sick leave
According to the document it is to be mentioned that the payment to the riders must be in
the form of invoices rather than pay slips. The list containing the dos and the don’ts has been
issued as the workers of the gig economy have claimed to take legal actions against the firm if
the distinction between the employees of the companies and the sub contractors is not clarified.
Such employees have demanded more employment rights than the sub contractors. Such
complaints had been filed by the couriers of Deliveroo claiming for more employment rights
which include sick pay, minimum wage and holiday (Recruitment-international.co.uk, 2018).
According to the report initially 20 riders had complained that their employers had not acclaimed
them as the employees where the company argued that they were merely contractors who were
self employed. It can be said according to the reports of law firm Leigh Day that over 200
Deliveroo riders have claimed that they deserve the status of employees as they are required to

5ETHICS AND GOVERNANCE
wear uniform during shift hours, carry out a shift of trial and are paid fixed rate which is below
the level of minimum wage level (Butler, 2018).
They have also stated that they have no say over the terms and conditions of their
employment as the company does not acknowledge them as employees they even stated that their
movements are tracked by the company and are subjected to performance reviews. It is
indicative that language plays an important factor in separating employees from sub contractor.
The Independent workers union of Great Britain has been fighting for the right of union
recognition for the riders of Deliveroo in Kentish town and Camden in London. The
aforementioned Union has led strikes and has been campaigning for increasing the wages of the
couriers. The Union has also applied to the arbitration committee. The arbitration committee is
yet to decide whether drivers should be classified as self employed or workers. The founder of
Deliveroo, Will Shu has reportedly stated that he had not been aware of the list of do’s and
don’ts and also added that he was of the opinion that Deliveroo provides flexible and high paying
jobs to a large number of people. He also demanded clarification from the government regarding
rules of self employment. While the riders complain of low pay the company Deliveroo has
recently raised $500 million from investors and have expanded their business in more than 140
cities in 12 countries of the world.
According to the theory of Utilitarianism it can be stated that the actions of individuals
and companies should aim to provide the greatest overall good for the most number of people de
(Lazari-Radek and Singer 2017). Therefore while making ethical decision organizations must
ensure that the consequences of such decision provide maximize the benefits over the bad
consequences. The consequences must take into consideration of factors such as happiness,
pleasure, health and satisfaction (Barrow 2015). Thus to analyze whether the operations of the

6ETHICS AND GOVERNANCE
companies like Uber and Deliveroo are in line with the principles of the theory of utilitarianism it
is first essential to identify the primary stakeholders who are affected by the consequences. In
this case it can be stated that the drivers and riders of the aforementioned companies are the ones
who are most affected by the operations. The business of Uber and Deliveroo is primarily
dependant on the drivers and the couriers respectively. However the drivers and the riders are
treated as independent contractors and suppliers so that the company can avoid the liability of
paying minimum remuneration to the employees as fixed by the law and providing them with
additional benefits such sick leave and holiday pay which others employees are entitled to get.
Additionally it can be stated that Uber has been involved in a lot of unethical activities such as
sexual harassment of customers and workers alike. Reports of gender discriminations also
provide evidence that the activities of the company are unethical judging by the principles of
utilitarianism. Further the principles of virtue ethics state that moral virtue is an acquired
disposition which is valued as the character of an entity (Van Hooft 2014). Thus it can be said
that the actions of the aforementioned companies do not exhibit integrity and are inconsistent
with the principles of Virtue Ethics.
Conclusion
Thus to conclude it can be said that companies based on platform based peer production
system make use of the latest technology and the infrastructure of the internet to bring together
many people who work together for the fulfillment of the common objectives and reject the
traditional business model involving a rigid hierarchical structure. Companies like Uber and
Deliveroo are examples of platform based peer production system and are more flexible business
structure. It is to be mentioned that there are many proponents of this system and they are in
favor of the actions of the aforementioned companies as they provide benefits the society.

7ETHICS AND GOVERNANCE
However the actions of the companies have raised a lot of controversy for not maintaining
ethical standards. It can be said that the business models of the Uber and Deliveroo focus mainly
on the growth and evolution of the same in new markets and thus tend to avoid the costs to be
incurred for maintaining ethical standards.

8ETHICS AND GOVERNANCE
Reference List:
1. Barrow, R., 2015. Utilitarianism: A contemporary statement. Routledge.
2. Butler, S. (2018). Deliveroo accused of 'creating vocabulary' to avoid calling couriers
employees. [online] the Guardian. Available at:
https://www.theguardian.com/business/2017/apr/05/deliveroo-couriers-employees-
managers [Accessed 27 Feb. 2018].
3. Cotton, E., 2016. Self-employment is precarious work. LSE Business Review.
4. de Lazari-Radek, K. and Singer, P., 2017. Utilitarianism: A Very Short Introduction.
Oxford University Press.
5. Dyer, J.H., Godfrey, P., Jensen, R. and Bryce, D., 2015. Strategic Management:
Concepts and Cases. Wiley Global Education.
6. Kolmar, M. and Beschorner, T., 2016. Locating Responsibility: An Extended Transaction
Cost Approach/Über die Verortung von Verantwortung-Ein erweiterter
Transaktionskostenansatz. Zeitschrift für Wirtschafts-und Unternehmensethik, 17(1),
p.118.
7. Massotte, P., 2017. Ethics and the New Business and Labor Organizations. Ethics in
Social Networking and Business 2: The Future and Changing Paradigms, pp.81-120.
8. Massotte, P., 2017. Ethics in Social Networking and Business 1: Theory, Practice and
Current Recommendations. John Wiley & Sons.
9. Solon, O. (2018). Uber fires more than 20 employees after sexual harassment
investigation. [online] the Guardian. Available at:
https://www.theguardian.com/technology/2017/jun/06/uber-fires-employees-sexual-
harassment-investigation [Accessed 27 Feb. 2018].

9ETHICS AND GOVERNANCE
10. The Conversation. (2018). Uber can't be ethical – its business model won't allow it.
[online] Available at: https://theconversation.com/uber-cant-be-ethical-its-business-
model-wont-allow-it-85015 [Accessed 27 Feb. 2018].
11. Van Hooft, S., 2014. Understanding virtue ethics. Routledge.
12. Verschoor, C.C., 2017. UBER culture causes big losses: harassment and mismanagement
have led to steep losses for this high-flying company. Strategic Finance, 99(3), pp.23-25.
13. Forbes.com. (2018). Forbes Welcome. [online] Available at:
https://www.forbes.com/sites/quora/2017/05/05/ubers-streak-of-scandals-is-it-getting-
bad-press-or-actually-less-ethical-than-other-companies/#2b3da79400f7 [Accessed 7
Mar. 2018]
14. Recruitment-international.co.uk. (2018). FCSA urges enforcement of minimum wage as
Deliveroo couriers pursue workers rights - Recruitment International. [online] Available
at: https://www.recruitment-international.co.uk/blog/2016/11/fcsa-urges-enforcement-of-
minimum-wage-as-deliveroo-couriers-pursue-workers-rights [Accessed 7 Mar. 2018]..