How Uber’s algorithm took more from everyone

Two Ivy League-backed studies say Uber’s pricing algorithm raised fares and slashed driver pay without telling anyone. Is it AI optimization, or algorithmic exploitation?

For the second time in under a week, another prestigious university has published research into the algorithmic misdeeds of taxi company Uber.

Columbia Business School analyzed 24,532 trips from one US driver, along with 2 million trip requests, and found Uber used "algorithmic price discrimination" to systematically raise fares and cut driver pay.

The paper explicitly stated that Uber has “raised rider fares and cut driver pay on billions of … trips, systematically, selectively, and opaquely," asserted lead researcher Len Sherman.

The hidden cut

What’s more, after thorough number-crunching, the academic team also found that Uber's “take rate” (the money it keeps from each ride) increased from 32% to 42% between 2022 and 2024.

This represents a quiet way for platforms to increase profit without raising prices directly, by slicing more off the same pie.

Last week, the University of Oxford revealed that it had linked the new “dynamic pricing” algorithm to lower driver earnings.

In the UK, the “take rate” increased from 25% to 29%, sometimes by over 50%.

How it works (or doesn’t)

In the US, Uber uses what is known as “upfront pricing,” as introduced in 2022.

Here, the rider sees the final price before the trip, while the driver sees expected pay, time, and distance.

In this model, the algorithm sets the price without direct correlation to driver pay.

On the other hand, in the UK they use “dynamic pricing,” which is not just surge pricing – it adapts based on real-time demand and supply, with the added layer of internal behavior signals.

In this model, Uber has been accused of personalizing pricing in opaque ways – knowing which riders will pay more and the drivers who will accept less.

Both studies show a significant, hidden increase in this value post-algorithm rollout.

Meanwhile, Uber’s cash position jumped by nearly $7.2B from 2022 to 2024.

Flat rebuttal

The Columbia study also points out that drivers are unaware of Uber’s increasing take and that this adds to a pattern of platform control, in effect operating on asymmetrical information.

Uber flatly denied these allegations, and a spokesperson rebutted:

“Suggestions that our systems manipulate pricing unfairly or discriminate are simply false and not supported by evidence.”

The controversy generally reflects AI-powered labor exploitation becoming more apparent in the gig economy.