Uber has a wild new plan for global ride-hailing domination

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On a cold and damp January morning in Berlin, Christoph Weigler, the boss of Uber in Germany, held a one-man protest outside the offices of the CSU political party, part of the country’s coalition government.Weigler, who was demanding urgent transportation reform from the politicians inside, had decided to bring an eye-catching prop with him: a 1980s DeLorean, made famous by Back to the Future. He believes it’s a not-so-subtle nod to Germany’s struggles with innovation.
Since coming to Germany in 2014, Uber has spent more time in courtrooms than on the road — its ambitions thwarted by incumbent taxi firms. But bosses at the San Francisco ride-hailing platform say they’ve cleaned up their act. And now Uber is on the brink of striking a €1 billion deal that would wipe out its largest competitor and accelerate its bid for European domination.


Uber is reportedly in talks to buy rival FreeNow, formerly MyTaxi, the ride-hailing company owned by German car manufacturing giants BMW and Daimler.
The deal would hand Uber access to FreeNow’s 50 million customers and 750,000 drivers in more than 130 cities. In return, the German carmakers would recover some of their losses which, in 2019 alone, totalled €750 million.
To find a home in Germany, Uber has throw out its own playbook. After years of ramming up against regulatory roadblocks, the ride-hailing giant has changed its tune. Where once it promised to “hit Europe hard”, now it promises to play nice. “It was a big lesson for our company in general, that you can’t copy and paste your approach from California to Germany,” says Weigler.
Uber learned the hard way. Its first entry, UberPop, which let car owners start working as drivers without the required licenses, was deemed illegal in 2015 and had to stop operating. Uber tried again, subcontracting jobs to qualified private hire vehicle firms piggy-backing on their licences.


Rather than a slick, app-based operation, Uber had to introduce human dispatchers and obey Germany’s “return to garage” rule. This rule was introduced in response to an “explosion” of private hire vehicles in the 1980s and fears that cities would be congested with idling cars.
It now forces Uber to send drivers back to bases, often on the fringes of the city, after each trip – instead of pointing them back towards demand. While that might avoid clogging up city centres, Weigler argues it’s bad for the environment, hurts Uber’s ability to expand into rural areas and is hampering the firm’s efforts to electrify its fleet. He wants it scrapped.
Taxi Germany, an association that represents the country’s 255,000 fully-licensed drivers threatened by Uber’s arrival, sees things differently. “That was the only duty [private hire vehicles] had and then came Uber and said, ‘This returning policy is totally crap, we don’t want it. It’s bad for the environment, we just don’t care’,” says Markus Burgdorf, a spokesperson for the group.
Taxi Germany isn’t Uber’s only opponent. From protests, to petitions, vandalised cars, and spying, Germany has proven one of the most hostile markets in the world for its business model.


Uber insists it obeys the rules now — even going so far as to design proprietary software that kicks drivers off the platform for 20 minutes if they don’t drive toward the garage after each trip. But many drivers have found ways to hack the system: by driving at a crawl, via busy hotspots, or logging out and hopping onto a rival app.
“The return to garage rule forces drivers to drive empty miles,” says Weigler. Supporters of the rule — the taxi trade — say they too spend half their time driving empty. That’s because taxis, unlike the mini cab firms used by Uber, cannot pick and choose the jobs they do, so they often end up in quiet suburbs.
A shake-up of Germany’s passenger transport laws is making its way through parliament this year. Politicians promised to modernise regulations, remove a ban on pooling, and abolish the return to garage rule. But Weigler argues that pledge has been watered down: the latest draft includes a compromise that would permit companies to rent city centre parking spaces and use them as bases. Neither side is pleased.
Peter Fintl, head of digital at technology consultancy Altran, says the reforms will help Uber, particularly its pooling business. “It’s not a gift. It’s definitely an improvement.” Despite these constraints, Uber currently has a presence in eight German cities. The acquisition of FreeNow, which is far more entrenched in the local ecosystem, would be the perfect blueprint to follow in other hostile ride-hailing cities. It would allow Uber to hit the road in around 40 more locations, and would eliminate an important rival in the market.
“Obviously, we are interested in partnering,” Weigler says. “We have learned that working with leading German companies can be a huge benefit for us.” It would be a sweet deal for Uber, Fintl agrees. “It’s all about having users and market share.” FreeNow declined to comment on the rumours of a potential merger.
In one fell swoop Uber could upend years of struggle and evolve from outsider to the outright market leader in Germany. It would also become the dominant ride-hailing force in Europe, an industry that is projected to be worth €46bn a year by 2026. FreeNow has a strong presence in South America, too, which would help Uber further increase its global marker share.
When FreeNow started as My Taxi in 2009, it was an app used by fully-licensed taxis to pick up extra jobs. In 2019 it became FreeNow and went into direct competition with Uber, using private hire cars. In what was already a price war, it stole a march on the competition by offering €5 flat fares anywhere in inner cities.
Still, FreeNow has its critics. Burgdorf describes FreeNow as a “parasite”, using taxi drivers for growth and advertising, while claiming that using their app would benefit drivers. “But then they started their own PHV-fleets with substantial subsidised fares,” he says. “There is a feeling of betrayal.”
FreeNow, like Uber, is yet to make a profit. Ola Källenius, chief executive of Daimler, which owns Mercedes-Benz, told an industry conference in November 2020 that “the [FreeNow] harvest may come in the next decade”. This didn’t sit well with many of the manufacturing unions who asked why the company was burning cash on costly projects while struggling to reckon with the insurgent threat from electric vehicle-maker Tesla.
Analysts agree that the deal makes strategic sense for both companies. Nils Stieglitz, president of Frankfurt School of Finance and Management, says German carmakers now need to focus on core businesses if they are to “weather the storm” brought on by electric mobility. “Markets in Asia are becoming more important,” he adds. “Both companies really need to focus on these challenges. This is a good time for Mercedes and BMW to shift gears.” Stieglitz argues that while it’s difficult to calculate the long term effects, “initially it is going to be good news for the customer”.
For those behind the wheel the deal would have an impact. One FreeNow driver, who asked to remain anonymous, says he gave up working for Uber because the company’s rules allowed passengers to cut trips short midway through, but is in favour of anything that removes confusion for passengers and the race-to-the-bottom price war. “One app, one price,” is his succinct argument.
Another driver who uses both apps is more apprehensive. He claims Uber takes a greater cut than FreeNow. “Everyone prefers FreeNow. If I make €50, Uber takes €18 or €19,” he says. For now, drivers know they’re at mercy of the platforms, no matter the owner.

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