Uber, the world's largest ride-hailing company, will lay off 3,300 employees, about 10% of its total office staff. It is the largest restructuring since the COVID-19 pandemic. The move aims to streamline a bloated organization and cut expense while securing capacity to invest in future businesses such as robotaxis. Growing competitive pressure in its core businesses, including losing ground to DoorDash in the U.S. food delivery market, is also cited as a reason behind the layoffs.
On the 2nd (local time), the Financial Times (FT) reported that Uber plans to lay off 3,300 office workers and reduce the number of managers in the organization by 20%. It will also cut in half so-called "micro teams" with one or two employees and reduce the number of employees who are seven or more layers below Uber Chief Executive Dara Khosrowshahi on the organizational chart.
In a message to employees, CEO Khosrowshahi said, "As the company has grown rapidly in recent years, more layers, coordination, and distributed responsibilities have increased organizational complexity." A structure that worked when the business was smaller no longer functions properly at Uber's current scale.
Citi estimated that the restructuring will allow Uber to save about $825 million (about 1.12 trillion won) in expense annually. Ronald Joshi, a Citi analyst, said, "At least in part, this (layoff) was likely possible because Uber's investments in artificial intelligence (AI) have improved efficiency."
◇ Cutting people but 'betting' $10 billion on robotaxis
While Uber is shrinking its organization and workforce, it is investing aggressively in the robotaxi business. Uber has decided to invest more than $10 billion (about 13.6 trillion won) to expand its robotaxi network. It judges that its platform, which has more than 200 million users worldwide, can be an advantage in the race to commercialize self-driving cars.
Uber plans to operate robotaxi services in at least 15 cities this year. Waymo, an Alphabet autonomous driving company, and Tesla, led by Elon Musk, are expanding robotaxi services in major cities, intensifying competition.
Uber is also accelerating robotaxi commercialization. On the last month, Wayve, Uber's U.K. partner, received approval from Transport for London (TfL) to begin a commercial robotaxi service with a safety operator seated in the driver's seat.
◇ 'Red light' in the delivery market… competitor DoorDash holds a 64% share
Intensifying competition in the food delivery business is also behind Uber's push for organizational efficiency. Uber Eats is increasing its share of the food delivery market in the United Kingdom, France, and Germany, but in the United States, one of its largest markets, it is losing ground to DoorDash. According to market research firm YipitData, DoorDash's U.S. food delivery market share is about 64%, the highest level since the end of the COVID-19 pandemic. In contrast, Uber Eats' share stands at 31%.
In this environment, Uber is also reorganizing its food delivery business. It is integrating operations for couriers, restaurants, and the retail institutional sector, while looking for suitable candidates for new global delivery head and head of sales roles. The delivery division is currently being temporarily led by Uber President Andrew Macdonald. Since delivery chief Susan Anderson left in Jun., a permanent head has yet to be appointed.
This restructuring is seen as Uber's move to simplify its existing organization and expense structure and focus the savings on future growth businesses such as robotaxis. Uber shares are down 7% this year. As competition intensifies in ride-hailing and food delivery, the question for Uber will be how much it can turn the investment capacity secured through organizational efficiency into competitiveness in future businesses such as robotaxis.