The Algorithm Scandal Behind Uber's $4+ Billion Cash Grab

A new bombshell research report published today has exposed what gig workers and industry watchers have suspected for years: Uber’s algorithms aren't neutral. They're designed to extract maximum profit from the people who create the platform company’s value and booming profits.

Professor Len Sherman's explosive research from Columbia Business School reveals that Uber has systematically transformed its marketplace into a $3.9 billion annual profit-extraction machine (in the U.S. alone) through what the company euphemistically calls "upfront pricing." The numbers are staggering, the methods are deceptive, and the validation for GigU's mission is undeniable.

The Algorithm's Dark Truth

Sherman's analysis of more than 24,000 actual Uber trips tells a story that should make every driver—and rider—angry. Since launching "upfront pricing" in Q3 2022, Uber has engineered a $12 billion cash flow swing globally by fundamentally breaking the social contract with its drivers.

Here's how the scheme works: Only 22% of 2024 trips were priced within normal, distance-and-time parameters, compared to 86% in 2019. The other 78% of trips now use algorithmic manipulation to charge riders more while paying drivers less. 

Uber's take rate has jumped from 32% to over 42%—a massive wealth transfer from working people to shareholders. While riders pay 6-11% more for objectively worse service (40% longer wait times).  Also, drivers receive little to no additional compensation despite handling multiple passengers.

But it gets worse: 

Sherman documents "surge bonus shaving" where drivers don't receive the full value of advertised bonuses, "bait-and-switch rider discounts" where base prices are inflated before applying discounts, and systematic "price probing" to extract the maximum amount each individual rider will pay.

The Human Cost

Behind these algorithms are real people struggling to make ends meet. The crisis is deeper than many realize: according to GridWise Analytics, Uber drivers' earnings have plummeted over 20% from 2022-2024, while DoorDash drivers now earn just $12.23 per hour. 

As we noted in GigU's U.S. launch on May 14, this isn't just a statistical blip—it's a systematic hollowing out of driver livelihoods through algorithmic manipulation.

This persistent decline isn't an accident—it's by design. Sherman's research proves that platform’s AI can maintain profitability by systematically cutting driver pay while raising rider prices, all hidden behind the opacity of "proprietary algorithms."

This systematic exploitation explains the growing state-by-state rebellion against the Lyft/Uber rideshare duopoly that drives 90% of the U.S. market. Chicago's City Council is fighting for a $21.51 minimum hourly rate for drivers. Oregon has advanced comprehensive protections including guaranteed minimum pay, paid sick leave, and transparent fee structures. Wisconsin lawmakers are debating similar measures, with drivers preferring direct pay increases over benefit packages.

These aren't isolated incidents—they're part of a national awakening to platform exploitation. The question isn't whether companies should profit—it's whether they should profit by systematically deceiving the workers who create their value.

Academic Proof of Driver Exploitation 

When we published GigU's manifesto, "Driving the Gig Economy's Dignity Revolution," we argued that transparency isn't just about fairness—it's about survival. Sherman's research provides the smoking gun evidence that algorithmic opacity isn't just unfair, it's theft with a smartphone interface.

Most tellingly, Sherman's report explicitly identifies the threat that transparency tools pose to platform profit extraction. He notes how Uber deploys "aggressive technical and legal tactics to prevent data service providers from providing useful decision support tools for riders and drivers"—naming GigU and Obi as platforms that make "prices and pay rates more transparent."

This isn't a coincidence. It's validation. When a respected academic researcher studying platform economics identifies your transparency mission as a direct threat to exploitative business models, you know you're fighting the right fight for the history books.

Drivers Are Losing the Information War 

Sherman's research reveals why Uber fights so hard against transparency tools like GigU. The company's entire profit model depends on information asymmetry—knowing what riders will pay before negotiating with drivers, while keeping both sides in the dark about the true economics. 

As Sherman notes, this gives Uber enormous leverage because "knowing the price that one party is willing to buy or sell at before negotiating the price with the other side gives the market-maker a big advantage." It's the reason why smart homebuyers would never use the same broker as the seller—except in gig work, drivers don't get a choice.

The regional regulatory momentum we're seeing across Chicago, Oregon, Wisconsin, and other states isn't just about pay—it's about the fundamental right to understand how human drivers’ work is valued. When platforms resist basic transparency requirements, they're admitting their business models depend on keeping workers in the dark.

GigU's Cherry Picking Remedy

The convergence of academic validation, investigative journalism, and legislative momentum creates an unprecedented opportunity for driver empowerment tools. 

For example, Sherman's research doesn't just expose the problem—it proves that solutions like GigU aren't just helpful, they're essential for driver survival.

Every metric that demonstrates platform extraction creates a corresponding value creation opportunity. Where platforms deploy algorithmic opacity, GigU provides complete trip data access. Where platforms fight transparency laws, GigU supports all disclosure requirements and offers trip-optimization recommendations.

GigU's cherry picking remedy turns the tables on platform manipulation. 

Instead of algorithms designed to extract maximum profit from drivers, we provide tools that help drivers cherry pick the most profitable opportunities. It's transparency as a competitive advantage—the antidote to algorithmic exploitation and within the limits of the independent contract system relationship Uber has built its business model.

This is our response to the $4 billion extraction scheme. 

This is why transparency matters. And this is why "The Gig Report" will continue exposing the truth about how gig economy platforms really work—not how they claim to work in their marketing materials, but how they actually function when you follow the money.

The algorithmic emperor has no clothes. Professor Sherman's research just handed us the receipts. Now it's time for drivers to get the transparency they deserve—and the dignity they've earned.

“The Gig Report” is a monthly analysis of the forces shaping the gig economy in the U.S. market from the perspective of those who believe technology should empower workers, not exploit them.