Uber is having crises – it is cutting more workers. Last time, it was marketing, but this new one includes engineering and product units. But yet, these cuts will not help Uber. Its fate is simple: Uber and Lyft will come together very soon. Yes, everyone will see that these companies are not making money and could be allowed to survive through merger; similar rivalries have ended together: Elance/Odesk (now UpWork), Groupon / LivingSocial, Sirius / XM and Rover / DogVacay.
For the second time in three months Uber is cutting staff in an effort to boost its bottom line.
The company confirmed on Tuesday that it has laid off 435 employees—265 from engineering and 170 from the product team. In July, the company cut 400 employees from its marketing department following the departure of Chief Operating Officer Barney Harford and Chief Marketing Officer Rebecca Messina.
“This is some bad news coming out of Uber as the company continues to go through some bumpy roads since its IPO,” said Dan Ives, analyst at Wedbush Securities. “This is not the news The Street wanted to hear, and it speaks to the challenges the company is contending with.”
Yet the real challenge is ahead for the gig economy which Uber is a guardian: California state senate passed a bill to classify workers doing things like driving for Uber and Lyft as full-blown employees, not independent contractors, thus blowing up the business model. The bill still has to be approved by the state assembly and signed by the governor, Fortune notes.
The California Senate passed a bill that could force Uber and other gig economy giants to reclassify their workers as employees. Such a change would secure labor protections for thousands of people across the state and deal a significant blow to companies that built multi-billion dollar businesses on independent contractors.
Under the new law, Assembly Bill 5, people in California could generally only be considered contractors if the work they’re doing is outside the usual course of a company’s business. Companies like Uber Technologies Inc. and Lyft Inc., which rely on armies of drivers to service their customers, would likely fail that test without transforming how they do business. Employees are entitled to a minimum wage and overtime pay, neither of which is a common protection within the gig economy.
By the time few other states follow California, Uber will call Lyft for a meeting; Lyft could also initiate the call.