Ride-hailing giant Uber is facing significant legal challenges demanding an immediate halt to its artificial intelligence-driven pay systems, which are alleged to have substantially reduced driver earnings across its platform.
Legal Action Launched Against AI Pay Algorithm
The non-profit Worker Info Exchange (WIE) foundation sent a formal letter before action to Uber on Wednesday, marking the first step in what could become a major collective legal case. The foundation alleges that Uber's use of AI to variably set driver pay rates breaches European data protection laws, specifically the General Data Protection Regulation (GDPR).
James Farrar, director of WIE, stated: "Uber has leveraged artificial intelligence and machine learning to implement deeply intrusive and exploitative pay-setting systems that have damaged the livelihoods of thousands of drivers." He emphasised that the case aims to secure "transparent, fair and safe working conditions for all platform workers" while holding Uber financially accountable for alleged harm caused by unlawful AI use.
Oxford Research Reveals Earnings Decline
The legal move follows research collaboration between WIE and Oxford University during summer 2023, which examined Uber driver pay patterns. The academic paper found that many Uber drivers began earning "substantially less" per hour after the company introduced its "dynamic pricing" algorithm in 2023.
This system represents an evolution of Uber's earlier "surge pricing" model and variably sets both driver pay and passenger fares. The Oxford research concluded: "Our findings suggest that post-dynamic pricing, many aspects of Uber drivers' jobs have gotten worse. Average pay per hour on the app is stagnant, and is lower in real terms in the year following the introduction of dynamic pricing."
Uber's Defence and Escalating Conflict
WIE argues that Uber trained its algorithms using drivers' historic personal data, observing their working practices without proper authorisation. The foundation claims that under GDPR, drivers are entitled to demand that Uber stop using this technology and revert to transparent pay-setting with human oversight.
Uber strongly contested these allegations, with a spokesperson stating: "The study WIE collaborated on is not accurate and relies on incomplete and selective data. The researchers themselves admit that their analysis 'does not enable [them] to isolate the causal effect of dynamic pricing on pay', making any conclusions about driver earnings misleading."
The proposed legal case is expected to be filed in Amsterdam, where Uber bases its European operations. WIE alleges that while Uber announced dynamic pricing in 2023, the "legal harm" actually commenced in 2020 with the introduction of "upfront pricing" where passengers receive set fare quotes.
If Uber fails to comply with demands to cease these practices and compensate affected drivers, WIE intends to bring collective proceedings before the Amsterdam district court under Netherlands' collective redress law, potentially setting a significant precedent for platform workers' rights across Europe.
