How Uber's algorithm decides what you’ll pay

New research reveals that Uber’s opaque pricing system may charge different riders different fares for the same trip—raising concerns about hidden price discrimination and fairness for travelers

Uber is facing renewed scrutiny over its pricing practices after a second major academic study accused the company of systematically using opaque algorithms to increase profits at the expense of both drivers and passengers. Following a University of Oxford report on UK operations, researchers at Columbia Business School have found that Uber’s use of "algorithmic price discrimination" in the US has led to higher fares and lower driver pay—raising serious questions about transparency and fairness in the platform's pricing model.

Key takeaways

• Two major studies, same accusation: Both Columbia Business School (US) and the University of Oxford (UK) found that Uber's algorithm changes since 2022/2023 systematically increased its share of fares while reducing driver earnings.
• Algorithmic price discrimination: The Columbia study claims Uber’s upfront pricing system allowed it to identify who would pay more (passengers) and who would accept less (drivers), optimizing for profit in ways that were opaque to users.
• Dramatic profit growth: Uber’s cash flow rose from a loss of $303 million in 2022 to a gain of $6.9 billion in 2024, a shift the researchers partly attribute to changes in fare algorithms.
• Rising take rates: In the US, Uber's take rate (its share of fare revenues) reportedly increased from ~32% to over 42% by the end of 2024. In the UK, the rate rose from 25% to 29%, with some trips seeing Uber take over 50%.
• Controversy echoes past scandals: These findings add to a history of Uber controversies, including labor rights rulings and the explosive 2022 “Uber Files” leak that exposed global lobbying and regulatory evasion.
• Uber denies allegations: The company maintains that its pricing algorithms are fair, transparent, and not based on personal rider or driver characteristics. It disputes the academic findings and insists drivers earn at least the national minimum wage.
• Bigger question of trust: While Uber emphasizes the benefits of dynamic pricing for reliability and transparency, critics say the lack of transparency in how prices are set undermines driver and rider trust—especially when fare shares shift so significantly in Uber’s favor.

Get the full story at The Guardian