Weekly Roundup: FTC and 21 States Expand Lawsuit Against Uber Over Uber One Subscription Practices

FTC and 21 states expand lawsuit against Uber. Uber CEO says AI tools generate “hundreds of millions” in value. Wedbush downgrades Lyft to $16 price target. New York rideshare insurance rates to rise 25% over three years, adding up to $1,500 annually for drivers. Uber and DoorDash sue NYC over delivery worker tipping law requiring 10% minimum prompt at checkout. We break it all down for you.

FTC and 21 States Expand Lawsuit Against Uber Over Uber One Subscription Practices

SOURCE – CNET

The Federal Trade Commission, joined by 21 states and the District of Columbia, filed an amended complaint against Uber alleging the company charged consumers for Uber One subscriptions without consent, failed to deliver promised savings including $0 delivery fees, and made cancellation difficult. The complaint seeks civil penalties for violations of the Restore Online Shoppers’ Confidence Act and state consumer protection laws.

• The FTC claims canceling Uber One can require navigating as many as 23 screens and 32 actions, contradicting Uber’s assertion that cancellations take 20 seconds or less.

• States joining the lawsuit include Arizona, California, New York, Pennsylvania, Illinois, and others, escalating legal pressure on Uber’s subscription business model.

• Uber argues the lawsuit could “upend how virtually every modern subscription service operates” and maintains its sign-up and cancellation processes follow the law.

Uber CEO Says AI Tools Generate “Hundreds of Millions” in Value, Engineers Become “Superhumans”

Uber CEO Dara Khosrowshahi revealed that AI is delivering “hundreds of millions of dollars of benefit” to the company and has transformed 80% to 90% of developers into more productive workers using AI tools. Rather than reducing headcount due to increased productivity, Khosrowshahi says he’s hiring more engineers because “every engineer got more valuable to me” as AI turns them into “superhumans.”

• Khosrowshahi said the company uses AI for practical applications including pricing, payments, matching, routing, identification, and customer service rather than “space-age stuff.”

• ​​AI agents now constantly monitor Uber’s systems and help diagnose problems, eliminating the need to keep scores of engineers on call spending “hours and hours” troubleshooting issues.

• Uber describes itself as an “applied AI” business that’s benefiting from riding on top of tech giants’ massive data center spending without having to build the infrastructure itself.

Wedbush Downgrades Lyft on Autonomous Vehicle Disruption Risk, Cuts Price Target to $16

SOURCE – Seeking Alpha

Wedbush Securities downgraded Lyft to ‘Underperform’ from ‘Neutral’ and lowered its price target to $16 from $20, citing the company’s high risk from disruption due to its concentrated U.S. rideshare exposure and undiversified offerings. Analyst Scott Devitt warned that AV operators will likely prefer direct distribution over platform partnerships, and the market is “underestimating the negative terminal value impact that AVs may have on Lyft’s DCF value.”

• Meanwhile, Wedbush expects Tesla to successfully launch robotaxis in over 30 cities in 2026 and begin scaling Cybercab production.

• Lyft shares fell 3.6% in premarket trading to $19.15 following the downgrade.

New York Rideshare Insurance Rates to Rise 25% Over Three Years

SOURCE – Insurance Journal

New York officials notified rideshare companies and driver representatives that insurance policy rates will increase by an average of 25% over the next three years starting March 1, 2025, potentially adding up to $1,500 per year in costs for drivers. The rate increases are part of remedial measures to stabilize the for-hire vehicle insurance market following the insolvency of American Transit Insurance Co., which held nearly 60% market share by offering unsustainably low rates.

• The phased-in approach allows time to identify ways to bear costs, including potential passenger fare increases, though the state cannot mandate fare changes.

• The New York Taxi Workers Alliance, representing more than 28,000 drivers, criticized the increase and proposed seed funding for a driver-owned mutual insurance company as an alternative.

• Just five insurance companies control over 95% of the for-hire vehicle insurance market in New York, limiting competition and options for drivers .

QUICK HITS

• DoorDash is partnering with OpenAI to enable grocery shopping directly within ChatGPT. – WSJ

• Stic, the startup that pays gig drivers to turn their cars into mobile billboards, raised $10 million in a bridge round at a $200 million valuation. – LinkedIn

• Want to learn more about the robotaxi industry? Subscribe to The Driverless Digest, our new newsletter and podcast dedicated to the future of autonomous vehicles.

Must Listen Or Watch RSG Content

Here are this week’s featured podcast episode and YouTube videos:

• RSG268: Uber’s NEXT Big Move? Taxis!

• Uber Just “Deactivated” PhDs… Welcome to the Driver Experience

• Did Uber & Taxi Apps Team Up to Charge You MORE? Lawsuit Drops Bombshell

• What to Do When a Drunk Uber Passenger Won’t Wake Up

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