Uber upbeat about Foodpanda acquisition

Delivery Hero, the owner of Foodpanda, announced earlier this month that its business in Taiwan would be sold to Uber Eats for US$950 million, with the merger subject to regulatory approval. The Fair Trade Commission would soon scrutinize how the transaction between the nation’s two largest food delivery service providers would change the competition in the food delivery market. Uber Technologies Inc chief legal officer Tony West on Tuesday spoke with Shelley Shan of the ‘Taipei Times’ in Uber Eats’ office in Taipei about how the acquisition would benefit delivery partners and consumers

Taipei Times: Uber Eats previously worked with the Taiwan Delivery Industry Union Alliance to discuss enhancing the rights of delivery partners based on three principles, and proposed a regulatory framework that include these key points. Could you elaborate on these principles and points?

Tony West: Uber is the largest source of flexible work in the world. One of the things that we have talked about consistently is that Uber ought to stand for a different approach when it comes to flexible work.

The traditional framework is that either you are employees with benefits and protections, or you are an independent operator or contractor, who can choose when they want to work, but without any of the benefits and protections.

Photo: Hu Shun-hsiang, Taipei Times

In a world where people are increasingly choosing to work flexibly and using digital platforms to access work, independent operators ought to be able to have the same types of benefits and protections that employees get. They should not have to choose between flexibility and protection.

We call it independent contractors plus (IC+), which is what we have been talking about in this agreement that we reached with the delivery union alliance. The regulatory reform for delivery partners has three elements: minimum earning standards, basic protection and benefits and review of platform account deactivation.

Details of what IC+ looks like differ from country to country, but those broad principles are consistent throughout the world. We have placed this model, where flexible gig workers are getting access to benefits and protections, in markets in Europe, UK, France, Australia and Canada.

California voters approved Proposition 22 in 2020, passing with 58.63 percent of the vote. It classified workers of transport network companies and delivery network companies as “independent contractors,” and gave them access to new benefits and protections, including a minimum earnings guarantee, a healthcare stipend and occupational accident insurance.

The government in Taiwan has talked about enhancing gig work with protections and a minimum earnings guarantee. We support those efforts. As we engage with stakeholders, the government and the workers, we would be offering proposals supporting the government’s efforts to enhance gig work.

TT: What kind of assistance do you hope to receive from the Taiwanese government?

West: What we want is a regulatory framework that allows independent operators to be able to have these benefits and protections.

Gig work is good work, but it has to be done with dignity and quality, as so many people rely on it to make a living. It is important for us to operate in a legal framework which allows individual delivery partners to have benefits and protections they deserve. The legal status that the UK government has granted to independent workers allows them to do so under the law in a seamless manner. We would love to see more of that in other countries.

TT: How do you plan to resolve differing opinions between Uber Eats and the workers’ union regarding the implementation of the agreement?

West: I think engagement is always the best way to resolve differences of opinions. The most important thing is that we agree on the big principles.

There is a broad agreement that gig work could be improved with benefits and protections and that gig workers have good earnings. We have a responsibility to help create an opportunity, be transparent and explain how they are paid.

The disagreements are in the details, and the way you resolve them is by talking with people, understanding their point of view and what it is important to them, and sharing with them what your point of view is. I have found that when both sides are coming to the table with sincerity, you can actually get a lot more done and find a lot of common ground.

TT: Uber Eats has proposed a regulatory framework, while the union has suggested that a special law be passed before the government reviews the merger. What is your view on this matter?

West: It is important to note that the regulatory process around the acquisition and the work to reform gig work, although happening at the same time, are two separate processes. One is Taiwan-specific, in which the acquisition would go through a process and would be reviewed by Taiwanese regulators. There would be a period where we get input and feedback from a number of different stakeholders.

The regulatory work to reform gig work is a global effort, of which Taiwan is part.

We should look at them as separate, but parallel processes. You do not want to hold up one because of the other.

TT: Do you want the government in Taiwan to accelerate the reform on gig work?

West: We are not going to tell regulators how to do their jobs. We will follow the government process and engage with the government as it sees appropriate.

TT: Uber Eats recently announced third-party liability insurance for about 70,000 delivery partners on the platform. However, the union believes it should cover the period before and after accepting orders, and include delivery partners who walk or ride bicycles. Would you consider expanding this insurance coverage?

West: I am incredibly proud that Uber is the first, and so far the only, platform to offer this kind of third-party liability protection. One of the things I saw when I visited markets around the world is that wherever Uber enters the marketplace, it tends to raise the bar. There are safety features that we now take for granted, but did not exist before, such as audio recording functions on apps and emergency safety buttons.

This is an example of raising the bar: How do we make delivery work better and safer?

Offering third-party liability insurance is the way to do that. There would be discussions on how we improve that program going forward.

The new insurance program is to start on Saturday. We would see how it works and how it improves the platform experience, and then take lessons from that and the engagement we have with individuals.

TT: Speculation about Uber’s acquisition of Foodpanda’s Taiwan business have long persisted, with past reports indicating negotiation setbacks. What pivotal moments influenced the renegotiation process? How is Taiwan unique to Uber Eats’ business globally?

West: This deal is important is because Taiwan is an incredibly important market. Uber’s delivery business contributed more than NT$80 billion (US$2.47 billion) to the Taiwanese economy last year, so we recognize it is a very important market and business for us. That also means we feel a special responsibility to make sure we are doing everything we can to make it the best experience for consumers, delivery partners and restaurants.

Our platform has about 75,000 delivery partners and about 80,000 restaurants on it, many of which are small mom-and-pop restaurants.

It is a really dynamic market that we want to continue to deepen our connections to. That is why this deal is so important and attractive.

I cannot get into the day-to-day details of negotiations over the deal, but what is important is that we come to a mutual understanding and agreement.

We announced it publicly and we are going through a normal regulatory process for it.

Let me just say this: We believe this acquisition, if it is approved, would give consumers more selections. We also believe it would provide delivery partners with more earning opportunities, and small and medium sized businesses on our platform with a stronger demand.

That is not only important to the company, but also to the Taiwanese economy, so we think it is a worthwhile acquisition. It is frankly a real sign of how we view the opportunities in the Taiwan market.

It is a place where we want to continue to deepen our investment and presence. It is also a good signal to other US companies that Taiwan is a place that welcomes innovation and this type of investment.

TT: What can you say about the cost of the transaction, which is higher than some people had expected?

West: In any deal, you might see values and opportunities that someone else might not appreciate. The acquisition of Foodpanda is similar, in terms of seeing where we can unlock more opportunities for delivery partners and restaurants, and more importantly, where consumers can have more selections.

TT: There is significant concern about Uber Eats’ increasing influence on the delivery market and its control over delivery partners, merchants and consumers. How do you plan to safeguard the rights of these three parties?

West: Delivery platform business is one of the most competitive and dynamic markets and would remain that way. That is a good thing, as we welcome competition.

I do think the acquisition would give us an opportunity to better serve our customers, delivery partners and restaurants. Sixty percent of our revenue on the delivery platform comes from small and medium-size businesses.

That is a very important relationship to us. We do not want to do anything to jeopardize that; our aim is to deepen and enhance it.

One of the restaurants I visited sells cold noodles. The owner talked about how important the platform is to sustain her business, which has been around for 30 years and almost disappeared during the COVID-19 pandemic.

It is a reminder of how important it is to make sure that we continue our relationship with these mom-and-pop businesses, which are a big part of Taiwan’s culture and texture.

If we thought that the acquisition would harm those businesses in any way, we would not do it.

TT: Why is Taiwan important to Uber?

West: You have millions of people on this platform, which matters in many people’s lives. That a majority of our revenue comes from small businesses is a great example to other markets. I would like to see us replicate this model in other markets.

Small businesses tend to be the engine in any economy. In the US, more jobs are created by small businesses than by big companies. Trying to support that engine of job growth and economic activities is very important.

Taiwan is an example we can hold out to the rest of the world and say: This is how you can do it.

It is important, because it is a place where we have a number of innovations, and we see how they perform in the marketplace. Taking those knowledge and lessons, and applying them in other markets is important.

Taiwan is also receptive to reforming gig work, so independent contractors can have the flexibility that they crave, along with the benefits and protections they deserve.

TT: How do you plan to convince consumers and independent merchants who love Foodpanda services, and have questions about how they can benefit from the mergers?

West: I would ask them to give us an opportunity. We do not grow if those small businesses do not grow. Again, 60 percent of the revenue on Uber Eats comes from these small businesses.

More importantly, our product is trust. If consumers do not trust us to give them the best prices for what they are ordering, if delivery partners do not trust us to pay them fairly and give them opportunities, if the merchants do not trust that we are helping their business grow, there are a lot of other businesses out there that would earn that trust.

These relationships are absolutely essential to the success of Uber. We would not do this acquisition if we thought it would jeopardize those precious relationships.

Uber Eats last year contributed about NT$81.5 billion in economic value to the Taiwanese economy.