January 30, 2024

How Does the Uber Algorithm Work?

When a rider requests a new trip on the Uber app, the algorithm matches them with the driver closest to their current location. But this simple match method can create longer wait times for riders who are not in close proximity to drivers. So Uber uses a more complex algorithm that takes a wider variety of factors into account, including the value riders place on short wait times and drivers’ availability.

Using machine learning, the algorithm takes into account historical data and current rider activity to predict demand patterns. It also estimates driver availability in the area and adjusts prices to balance supply and demand. This is called dynamic pricing and it is one of the main ways in which Uber keeps prices low during high demand periods.

The algorithm also calculates the fare for the ride, taking into account various external factors like traffic patterns and tolls. It then charges the rider’s payment method and takes a commission before paying the driver.

The algorithm also tracks driver performance and rewards drivers accordingly. For example, it deactivates or fires drivers who receive low ratings from passengers. This rating system has angered many drivers who argue that it is an exploitation of their working conditions, especially because Uber drivers lack ample legal protection under American labor laws given their contractor status. The author of the book Uberland, Alex Rosenblat, has documented this controversy by interviewing drivers and riding around with them for thousands of miles.

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