Uber started using 'algorithmic pricing' in Canada. Is that a good or bad thing?

Uber rolled out an AI-powered pay model this week in Ontario, a change drivers worry will cost them income — and consumer advocates say may lead to higher prices for passengers. 

And the change, which launched in B.C. in September, is raising questions in the industry about how ride-hailing and delivery companies use the data they collect as a form of power over their workers.

"Uber has found a way to take more money from us," said George Wedge, an Uber driver in Toronto.

Compensation used to be based primarily on the time and distance of each ride and, in part, surge pricing, which was driven entirely by demand. The new system, however, uses an AI algorithm to calculate a driver's pay using a host of other factors, like where a rider is picked up or dropped off or the day of the week.

The "upfront offers" system, which Uber has been using in the U.S. for two years, still includes surge pricing.

With the new system, Uber says drivers will see how much they'll be paid before they accept a ride. 

Keerthana Rang, a spokesperson for Uber Canada, said the change was made based on driver feedback and offers them "more transparency and choice when deciding whether to take a trip."

It also gives drivers "a detailed breakdown of where the money customers were charged went," including third-party charges, government fees, taxes and the company's service fee, which will typically be lower for longer trips and higher for shorter trips, according to the statement Rang sent to CBC News.

But Wedge, who is also president of Rideshare Drivers Association of Ontario, says the new system may be transparent about how much someone will be paid — but it's not clear how Uber determines the value of the factors that go into that calculation.

"It's based on something that's absolutely unknown to us," he said, saying he worries about how the data collected from each ride will be used. 

And since the system launched in B.C., Wedge said drivers there have told him they're making less money than before the change came into effect.   

In a December 2023 online post, Uber said driver earnings "have grown nearly 30 per cent in the last six years, faster than inflation." 

Passengers advocates say they're worried the new pay model could be bad for riders.

Brendan Agnew-Iler is the co-founder of the Toronto based RideFair Coalition, a not-for-profit focused on equitable and sustainable urban transportation.