Opinion: With the plan to license its technology, is Uber extending an olive branch to its rivals or clinging to straw?

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By Therese Poletti

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Uber said it can license its logistics technology to taxi and public transportation agencies. AFP / Getty Image

As Uber Technologies Inc.’s main travel business continues to suffer during the pandemic, company executives made some intriguing statements on Wednesday, including the possibility of licensing its technology to its taxi and transit rivals.

Earlier Wednesday, Uber reported another quarterly loss, with a 51% year-on-year drop in revenue in its travel business, which Uber calls its mobility business. Mobility revenue fell to $ 1.47 billion, down from $ 3.05 billion a year ago. The delivery, however, made up of Uber Eats and now Postmates, increased with people stuck at home ordering take-out, almost reaching mobility levels. Delivery soared 220% to $ 1.35 billion. Uber UBER, + 5.99% executives were cautiously optimistic about the slow reopening of some cities around the world, noting a 90% recovery in their business in Brazil and a gain of 60% in Taiwan. “The recovery in these markets demonstrates the pent-up desire of consumers to get moving again,” said Uber CEO Dara Khosrowshahi. He then dropped the most interesting part of the earnings call: “While Uber continues to gain share versus other modes of transportation, over the next six months we will begin to prepare our business to move from preservation mode to refurbishment.” In terms of “overhaul”, Khosrowshahi said the company is now looking to offer new mobility products and potentially partner with taxi companies and public transportation systems by offering its software and data analytics. It‘s unclear if Uber wants to include taxis and public transportation as part of its “super app” concept, as it seeks to offer rides and multiple delivery services in a single app, but that could be a logical choice. “I am even more optimistic about the investments that we are making, and other modes of transport and helping the world’s transit agencies to recover and recover, to power taxis with our routing technology, our e-hail technology, our pricing technology, etc…. I think it essentially adds to a platform for any type of transportation in your city, and a unique platform in terms of scale and global reach, “he said. Whether taxi and transit agencies will want to partner with the company that has caused many of their losses in recent years is a bigger question, but those rivals may also be swayed by the power of Uber’s logistics software. “Dara is taking a very broad strategic approach to the market and sees taxis as potential technology partnerships as well as public transportation,” said Dan Ives, an analyst at Wedbush Securities, in an email. “After the pandemic, Uber will be a different company and will extend the olive branches to different modes of transportation for additional revenue opportunities.” The Uber CEO also said that he believes that in 2022 or 2023 its mobility business will grow again at “substantial double-digit rates” and that the company will have break-even earnings sometime in 2021. Ives said Uber’s goals are achievable. With the coronavirus vaccine now here, and with a mass distribution likely by the summer, “we expect consumer demand for Uber to show a significant setback over the course of 2021, and the company could return to the amount of pre-COVID users in early 2022 “Ives said in a note. Still, investors have a lot to sift through many optimistic predictions, some perhaps overly optimistic, as they try to determine how feasible any of them really is. In after-hours trading, Uber’s shares fell nearly 5%. Uber’s potential recovery for most of its business is clearly dependent on the world returning to some normalcy, which is really impossible to predict accurately at this point.