Uber Kept New Drivers Off The Road To Encourage Surge Pricing And Increase Fares

As reported by The Verge: Andrew Lane is a regular Uber customer with some fond memories of the service. Last year on President's Day he was the lucky rider selected for an "Ubercade" upgrade. "They sent over a free limo with secret service agents and everything. I got my girlfriend and we cruised by her ex-boyfriend's place. It was awesome." 

"We didn't activate new drivers to make earnings even higher this weekend." 

But this Valentines day, while traveling through San Diego in an Uber car, Lane heard something that disturbed him. "The driver had a Ford Sync system, and it read his text messages out loud." The message, which came wedged between numerous texts about a promotion for free roses, said, "UberX is very close to SURGE. It's Valentine's Day! People will be out all night and we didn't activate new drivers to make earnings even higher this weekend."

Uber’s surge pricing has been a controversial feature of the company’s business for some time. It uses an algorithm to raise and lower the price based on demand. At extremely busy times, especially holidays, rates can be as many as seven times the normal price. The company's CEO, Travis Kalanick, has been front and center defending this model.  

"Surge pricing only kicks in in order to maximize the number of trips that happen and therefore reduce the number of people that are stranded," he told Wired in an interview. Kalanick has always maintained that Uber is a neutral party, a technology platform that helps to most efficiently connect drivers and riders. "We are not setting the price. The market is setting the price. We have algorithms to determine what that market is."

"We are not setting the price. The market is setting the price." 

When Lane heard the Uber text message, he understood it to mean that the company was keeping current drivers off the road, limiting the supply to raise rates. To Lane it seemed Uber was favoring drivers over riders. "It made me angry, you know," says Lane. "Basically they are trying to rig the system to jack up fares on customers like me."

A law professor briefed on the text message says it may be suspect, given the company’s public framing of surge pricing. "This certainly sounds deceptive," says Arnold Rosenberg, assistant dean at the California Western School of Law in San Diego. "Something like this violates state laws around unfair business practices as well as Section 5 of the FTC act."

Uber says the whole thing is a misunderstanding.  Uber confirmed the text message, but says the whole thing is a misunderstanding. The company did not artificially restrict the number of drivers who were able to come on to the system on Valentine's Day — a particularly busy day for Uber rides — says spokesman Andrew Noyes. He explained the text simply noted that Uber did not onboard as many San Diego drivers as they could have that week because in the two weeks prior, a very large number of new drivers were added to the system. Earnings had been low, and the company wanted to reward new drivers with a strong holiday paycheck.

In other words, this wasn't Uber specifically tweaking the number of drivers at a given time to tip things over into a surge. It was a big-picture strategy to make their new drivers happy. Noyes points out that during the week of the 10th, when this trip took place, only 5.6 percent of the trips on the Uber network were affected by surge pricing.

"That is a slap in the face to customers." 

Regardless of when and why the additional drivers were withheld, the larger tension still stands: Uber insists that it's a marketplace, a neutral technology platform that works solely to connect drivers and riders with maximal efficiency. But it is also a business, and so may sometimes tilt the scales to keep drivers, its employees and contractors, happy.

The company’s explanation didn’t sit well with Lane. "Honestly it feels worse. Uber specifically withheld supply on a busy holiday weekend even while it predicted that doing so would create significantly higher prices," he said. "Best-case scenario it’s fleecing customers to enrich drivers, worst-case scenario it’s fleecing customers to enrich the broker (Uber). That is a slap in the face to customers."

Why You Could Soon Be Buying Your Electricity From Tesla

As reported by Quartz: Last week, it was argued that Tesla’s most disruptive product might not be its cars.  

Today, Morgan Stanley has provided further detail around this thesis, which is gaining increased traction on Wall Street. Tesla shares have soared about 13% this morning and are trading at fresh highs.

In a note published this morning, the investment bank posits that Elon Musk’s electric car company, which will unveil its plans to build  the world’s biggest lithium-ion battery pack facility this week, is poised to disrupt the $1.5 trillion electric utility industry. Tesla doesn't just make high-performance automobiles, Morgan Stanley analyst Adam Jonas argues, it’s also producing a mobile fleet of electrical grid storage.  The 40,000 Tesla vehicles already on the US roads contain about 3.3 gigawatts of storage capacity, roughly 0.3% of US electrical production capacity and 14% of US grid storage, he estimates.

By 2028, Morgan Stanley (which, it must be said, is among the most bullish of all Wall Street banks when it comes to the car company) estimates there will be 3.9 million Tesla vehicles on US roads. They will have a combined energy storage capacity of 237 gigawatts, some 22% of today’s US production capacity and nearly 10 times larger than all US grid storage that exists today.

Tesla’s “giga-factory,” where the lithium-ion battery packs will be produced, will probably cost $1 billion to build, Morgan Stanley estimates. But there will be myriad opportunities for the company to reap returns from that investment beyond sales of its own cars.

Plenty of questions remain about Telsa’s competency in the field of battery production and energy storage. At the moment, Tesla’s batteries are produced by Panasonic, which some expect to be a partner in the giga-factory.  At any rate it’s worth remembering that multiple battery fires last year sparked a federal probe into the company. (There were no injuries, and Musk has forcefully argued that there is “absolutely zero doubt that it is safer to power a car with a battery than a large tank of highly flammable liquid.”)  

Last week a Barron’s report  (paywall) said Tesla’s lofty valuation “exceeds fundamental reasoning.” But if Tesla really can become the world’s low-cost producer in energy storage, as Morgan Stanley predicts, then maybe it’s not so insane, after all. 

Rolls-Royce Is Developing Drone Cargo Ships

As reported by The Verge: Drones are already patrolling the skies, and eventually Rolls-Royce wants to see them take over the seas too. According to Bloomberg, Rolls-Royce Holdings is developing unmanned cargo ships that can be remotely controlled by captains using a virtual-reality recreation of a vessel's bridge. Development on the ships began last year, and it expects the unmanned ships to eventually offer a safer, cleaner, and less-expensive option for moving cargo.

"Now the technology is at the level where we can make this happen, and society is moving in this direction," Oskar Levander, a marine engineering and technology executive at Rolls-Royce, tells Bloomberg. "If we want marine to do this, now is the time to move."

While now may be Rolls-Royce's time to start moving, it's far from the time when these ships will set sail. As Bloomberg points out, there are quite a few regulatory and financial hurdles in the way of unmanned vessels, including international minimum crew requirements and an ineligibility for being insured by major providers. And, as when it comes to self-driving cars taking over the roads, there are already plenty of concerns about what could go wrong when humans are removed from the picture.

Levander acknowledges to Bloomberg that it won't be a quick transition, and he makes it clear that Rolls-Royce Holdings — the aircraft and ship engineering firm now separate from the BMW-owned automaker — is instead trying to get ahead of the pack. Its vision is appealing: by removing the crew, the bridge, and other equipment needed to support good living conditions, ships would reportedly be 5 percent lighter and burn 12 percent to 15 percent less fuel. Supporting the crew reportedly accounts for around 44 percent of total operating expenses on a large container ship as well, so there could eventually be an obvious path to savings.

Bloomberg reports that it could be a pricey path to get there though, as Rolls-Royce will have to develop new safety and backup equipment to handle potential machine failures. "It’s a given that the remote-controlled ship must be as safe as today," Levander tells Bloomberg. "But we actually think it can be even much safer than today." There's no word on how long development of the systems might take or what Rolls-Royce is doing to address its regulatory hurdles, but at least with self-driving cars, we've seen that lawmakers have been open to letting machine-controlled systems begin testing — so long as the right safety systems are in place.

Google Sets Roadblocks To Stop Distracted Driver Legislation

As reported by Reuters: Google is lobbying officials in at least three U.S. states to stop proposed restrictions on driving with headsets such as Google Glass, marking some of the first clashes over the nascent wearable technology.

Some eight U.S. states are considering regulation of Google Glass, a tiny computer screen mounted in the corner of an eyeglass frame. Law enforcement and other groups are concerned that drivers wearing the devices will pay more attention to their email than the road, causing serious accidents.

So-called wearables such as Google Glass, smart watches and sophisticated health devices may represent the next big shift in technology, just as smartphones evolved from personal computers, and enthusiasts predict billion-dollar markets. Google, which is still testing Glass, charges $1,500 per pair.

Google Inc has deployed lobbyists to persuade elected officials in Illinois, Delaware and Missouri that it is not necessary to restrict use of Google Glass behind the wheel, according to state lobbying disclosure records and interviews conducted by Reuters.

Legislators who introduced similar bills this year in three other states, New York, Maryland and West Virginia, say they have not yet been contacted by Google. Officials in New Jersey and Wyoming did not respond to inquiries from Reuters.

Courts are just beginning to consider the matter. Last month in San Diego, for instance, a woman's traffic ticket for wearing Google Glass behind the wheel was dismissed because there was no proof the device was operating at the time.

Google's main point to legislators is that regulation would be premature because Google Glass is not yet widely available, the state elected officials say.

Illinois state Senator Ira Silverstein, a Chicago Democrat who introduced a Google Glass restriction bill in December, responded that it was clear the merchandise was heading for the broader public. "Who are they fooling?"

Silverstein said he recently met with Google lobbyists trying to "kill" the bill, a position Silverstein suggested is driven by market considerations for the company.

State records show the month after Silverstein introduced his bill, Google retained John Borovicka, a former political director for President Obama's former chief of staff and current Chicago Mayor Rahm Emanuel. Borovicka visited Silverstein to lobby against the legislation, the state senator said.
Borovicka did not respond to a request for comment.

Asked about its lobbying efforts, Google said tech issues are a big part of current policy discussions in the states. "We think it is important to be part of those discussions," the company said in a statement.
Google has been scheduling Glass demonstrations across the country in an effort to educate the public on how the technology works.

"While Glass is currently in the hands of a small group of Explorers," the company said, "we find that when people try it for themselves they better understand the underlying principle that it's not meant to distract but rather connect people more with the world around them."

PERSUADING THE POWERFUL
Campaigns against distracted driving have gained significant traction in the United States. In 2012, over 3,000 people died due to crashes where texting or other activities were in play, according to Distraction.gov, a U.S. government web site devoted to the issue.

Delaware state Rep. Joseph Miro was one of the primary sponsors of a bill that banned texting while driving, and he also introduced legislation targeting Google Glass. So far, no states have passed Google Glass restrictions.

"I'm not against Google or Google Glass. It may have a place in society," said Miro, a Republican. "My issue is that while you are driving, you should have nothing that is going to impede the concentration of the driver."
According to Miro, a Google representative lobbied against the bill by forwarding a news article about the San Diego court case, as an attempt to show that the courts are taking a dim view towards prosecutions. His bill passed committee and could receive a floor vote this spring, Miro said.

Google's position is at odds with groups like the Delaware Developmental Disabilities Council, which in a letter last year said it supported restrictions on drivers' use of headsets such as Google Glass, believing it will lead to more accidents, causing more spinal cord and traumatic brain injuries.

Google advises people engaged in Glass field tests to abide by state laws that limit use of mobile devices while driving.

"Above all, even when you're following the law, don't hurt yourself or others by failing to pay attention to the road," the company said in guidance posted online.

Not all legislators pushing a Google Glass restriction have been visited by the company, however. In West Virginia, House of Delegates member Gary Howell, a Republican, said he has heard from out-of-state Google Glass users opposed to the bill but not from the company itself.

For Maryland House of Delegates member Benjamin Kramer, the San Diego traffic case shows a need for clear state laws. When a driver is pulled over, it will always be extremely difficult for law enforcement to prove whether Google Glass had been operating, said Kramer, a Democrat.
"The way to get around it is just to prohibit them altogether," he said.

Ford to Ditch Microsoft Sync Technology for BlackBerry QNX, Sources Say

As reported by the Seattle Times: Ford, struggling with in-car technology flaws, will base the next-generation Sync system on BlackBerry’s QNX and no longer use Microsoft’s Windows, according to people briefed on the matter.

Using QNX will be less expensive than licensing Microsoft technology and will improve the flexibility and speed of the next Sync system, said the sources, who asked not to be identified because the decision hasn’t been made public.

Ford has more than 7 million vehicles on the road with Sync using Microsoft voice-activated software to make mobile-phone calls and play music.

The switch may help Ford, the second-largest U.S. automaker, address customer complaints about malfunctioning technology systems and touch screens, which have hurt it in surveys by J.D. Power & Associates and Consumer Reports.

For BlackBerry, it’s a vote of support for a company that lost 95 percent of its value from mid-2008 to November and saw the collapse of a proposed $4.7 billion buyout.

“This would be a huge infusion of trust and confidence to have BlackBerry and QNX expanding into a Ford,” said Thilo Koslowski, auto analyst for researcher Gartner. “This is really the crown jewel in BlackBerry’s crown and could make the rest of the company shine as well.”

BlackBerry stock rose 6.6 percent Monday while Microsoft stock slipped 0.8 percent.

“We do not discuss details of our work with others or speculate on future products for competitive reasons,” Susannah Wesley, a Ford spokeswoman, wrote in an email. Spokesmen for Redmond-based Microsoft and QNX declined to comment.

Ford has said the quality of its vehicles has been “mixed” each of the past three years and fell short of its plan to improve those results in 2013. CEO Alan Mulally was said to be a candidate to become Microsoft’s chief until early this year.

Improving Sync is crucial for Ford to draw car shoppers who are increasingly looking to be connected at all times.

In-vehicle technology is the top selling point for 39 percent of auto buyers, more than twice the 14 percent who say their first consideration is traditional performance measures such as power and speed, according to a study by the consulting firm Accenture released in December.

Ford and Lincoln ranked Nos. 26 and 27 out of 28 brands in Consumer Reports’ annual auto-reliability survey released in October.

While the Lincoln luxury line matched the industry average in J.D. Power’s Initial Quality study in June, the namesake finished 27th out of 33 brands.

Technology companies are competing to win business from automakers as in-car technology becomes an increasingly important selling point.

Google announced an alliance with General Motors, Honda, Hyundai and chipmaker Nvidia in January to bring the Android operating system to cars. Apple is working with BMW, Mercedes-Benz, Nissan and others to introduce its iOS operating system to cars with devices such as the iPhone.

BlackBerry’s QNX Software Systems can be found in cars made by Volkswagen’s Audi unit and BMW, according to its website. QNX and Microsoft are the main suppliers of automotive operating-system software, according to researcher IHS iSuppli.

The switch would be a significant blow to Microsoft’s automotive-software business because Ford is by far its biggest customer, said Gartner’s Koslowski. Microsoft also has software in Kia Motors, Fiat models, Nissan and BMW models, according to its website.

Getting into the Ford system will expand QNX’s industry-leading position for automotive entertainment operating systems, which Koslowski said he estimates is as high as 70 percent.

QNX has done a better job of integrating compatibility with other operating systems, Koslowski said.

“The industry is realizing it has to do a better job to create a unique experience for its customers,” he said.

SpaceX Falcon Rocket to Test Landing Legs

As reported by Discovery News: Space Exploration Technologies is installing landing legs on its next Falcon 9 rocket, part of an ongoing quest to develop boosters that fly themselves back to the launch site for reuse.

This time, however, SpaceX hopes to cushion the rocket’s destructive impact into the Atlantic Ocean by restarting the Falcon 9’s engine and extending landing legs that will be attached to the booster’s aft section. The goal is a soft touchdown on the water.

Falcon 9 “will continue to land in the ocean until we prove precision control” from hypersonic all the way through subsonic regimes, SpaceX founder, chief executive and design engineer Elon Musk said on Twitter.  

SpaceX has been chipping away at that challenge in a related series of technology development initiatives.

In October 2013, SpaceX completed a program called Grasshopper to develop precision landing techniques. From a launch pad in McGregor, Texas, SpaceX flew a 10-story, first-stage Falcon rocket that ultimately reached an altitude of .46 miles (744 meters) before touching back down.

An expanded program is due to begin this year from a new test site at Spaceport America in New Mexico. The new prototype, known as Falcon 9R, will be outfitted with nine Merlin 1D engines, rather than just the single motor flown on Grasshopper, to reach higher altitudes and faster descent rates.

Next month’s test will be SpaceX’s second using an operational rocket.

The company’s September 2013 debut of its upgraded Falcon 9 rocket (flying for the first time from California) included a restart of the spent first-stage to slow the rocket’s descent.

The first of two planned engine restarts was successful. The second one failed because the rocket was spinning. Centrifugal force cut off the flow of fuel.

Musk said afterward that landing legs should help stabilize the rocket.

Four legs, which are made of carbon fiber with aluminum honeycomb, will be placed symmetrically around the base of the rocket. They will be stowed along the side of the vehicle during launch and extended down and outward for landing, SpaceX’s website shows.

Musk said the legs used for next month’s test will have a span of about 60 feet.

"Given all the things that would have to go right, the probability of recovering the first stage is low ... but we’re getting closer," SpaceX spokeswoman Emily Shanklin wrote in an email to Discovery News.

The Falcon 9 rocket due to fly on March 16 will be carrying a Dragon cargo capsule for the International Space Station. The mission is the third of 12 under SpaceX’s $1.6 billion contract with NASA.

The company, based in Hawthorne, Calif., also is working on version of Dragon to fly people.

A Plan to Lower Speed Camera Error Rates By Reversing the Incentives

As reported by The Atlantic Cities: Baltimore's particular speed camera problem first came to light in 2012, when the Baltimore Sun revealed that at least seven of the city's 83 radar cameras, all of them owned and operated by Xerox State and Local Solutions, were prone to issuing fines to drivers who were not exceeding the speed limit. Xerox itself claimed it found only five cameras that didn't work, and shut them down. The city, meanwhile, downplayed the problem even further, claiming the error rate for Xerox speed cameras was "one-quarter of one percent." In short: Nothing to see here!

Xerox's contract with Baltimore ended in 2012, but the deal is making headlines again thanks to a recent audit showing the company's cameras performed worse than even the Sun realized. The big takeaway? That error rate of "one-quarter of one percent"—promoted by city officials!—was actually upwards of 10 percent; 26 percent of issued citations were "questionable." 

The Sun, which first reported on the leaked audit last month, explains the ramifications: "The city issued roughly 700,000 speed camera tickets at $40 each in fiscal year 2012. If 10 percent were wrong, 70,000 would have wrongly been charged $2.8 million." And that's the low-end projection for how much Baltimore and Xerox may have bilked from citizens. 

But wait, it gets worse. The administration has also refused a request from the city council to officially release the audit, conducted by URS Corp. at a cost of $278,000, because doing so would violate a contract with Xerox that prohibits Baltimore from "referring or relating to, or reflecting, each party's internal considerations, discussions, analyses, and/or evaluations of issues raised during the settlement discussions."

Baltimore's speed camera fiasco does at least have something resembling a silver lining. In December 2013, the city announced it would no longer engage in revenue sharing with traffic camera vendors—a practice that Maryland Governor Martin O'Malley has decried as a "bounty" system. While Xerox got a cut of each fine its cameras issued, the decision actually resulted fromproblem cameras owned and operated by Brekford, the company Baltimore brought in to replace Xerox. 

But Maryland legislators aren't content to see Baltimore simply abandon the bounty system (which is supposedly illegal under state law anyway). They want to completely flip the incentives for camera operators: instead of paying companies for each citation they issue, pending legislation would require operators to be fined $1,000 every time they issue a citation in error. "This gives the vendors great incentive to make sure that they have done their homework," says Baltimore County Delegate Jon Cardin, the bill's sponsor.

You'd have to build a fine like that into any vendor contract, which could scare away companies (Xerox, Brekford) that have histories of fleecing drivers. A flat fee to vendors combined with penalties for faulty citations might even mean cities would be unable to find a company to operate speed cameras. Considering that traffic cameras are mostly for revenue generation (despite promising that the Xerox contract would reduce speeding in Baltimore, the annual haul from the cameras increased every year), that probably wouldn't be a bad thing. But insofar as there's a case for speed cameras, eradicating the incentive to wrongly ticket good drivers should clearly be part of it.