CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Uber hopes to become the Amazon of travel. Will its latest effort to take on Expedia and Booking.com succeed?

April 6, 2022, 5:00 PM UTC

It’s been five years since Uber’s rash of unseemly scandals peaked under then-CEO Travis Kalanick. Yet to this day, I still wince a little every time I open the company’s app, irrationally wondering if I’m being a tiny bit complicit in the sins of Uber’s past.

As a ride-sharing company, Uber has survived the hits to its reputation, largely by offering an in-demand service with only two major rivals (Lyft and taxis). It’s the reason I still fire up Uber from time to time.

But the strength of Uber’s brand recovery will face a new test in the coming years, as the company looks to expand into a potentially lucrative but highly competitive sector: travel booking.

The Financial Times reported Tuesday that Uber is piloting its so-called superapp strategy in the U.K., where users will soon be able to book airline flights, intercity train rides, and buses. Uber officials added that a hotel booking option could arrive next year. If all goes well, the new features will become part of the Uber app worldwide.

Uber officials told the Financial Times that they plan to team up with existing travel-booking services, rather than building their own platform. However, no partners have been announced. 

For Uber, which eked out its first two profitable quarters in the second half of 2021, the foray into travel booking represents a natural expansion. 

Kalanick’s replacement, Dara Khosrowshahi, has spoken for years about turning Uber into a superapp, with visions of transforming the company into the Amazon of transportation

“Cars are to us what books were to Amazon,” Khosrowshahi, former CEO of travel company Expedia Group, said at Fortune’s Brainstorm Tech conference in 2018. “Just like Amazon was able to build this extraordinary infrastructure on the back of books and go into additional categories, you are going to see the same from Uber.”

Those ambitions took a back seat to the pandemic, as Uber skillfully pivoted to food delivery, but the potential for an all-in-one travel app remains well within reach. While numerous booking sites already own significant market share—Booking.com, Expedia, Kayak, Trivago, Hotwire, Google, to name just a few—Uber benefits from ubiquitous name recognition and a huge advertising war chest.

If successful, Uber’s travel booking service could provide a much-needed unit that operates at healthy margins. In 2019, its last full pre-pandemic year, Uber’s top potential rival in the travel space, Booking Holdings, reported a net operating margin of 32% on $15.1 billion in revenue. (The other major competitor in the sector, Expedia Group, only managed a 5% net operating margin in 2019, contributing to the resignation of the company’s CEO and CFO.)

For Uber, the question is whether consumers will want to use its app for their planes, trains, and automobiles—especially when they can get those services from more-established companies without a checkered past.

A few years ago, that prospect appeared dim. As the Washington Post reported in 2019, Uber’s reputation still stunk. A half-billion-dollar marketing campaign couldn’t mask the stench of the Kalanick era.

But time appears to be healing some wounds. While Uber hasn’t disclosed internal metrics showing improved reputation, the company has largely avoided any major scandals under Khosrowshahi’s smooth, disciplined leadership. The huge demand for Uber Eats—gross delivery bookings hit $13.4 billion in the fourth quarter of 2021, up from $4.7 billion in the last pre-pandemic quarter—in a crowded food-delivery field signals an appetite for the company’s product.

Uber’s past ventures into new territory have been decidedly mixed. Its autonomous driving and freight businesses fell flat, while its delivery service appears poised next month to post its first profitable quarter. An addition of in-app car rentals last year has yet to make any waves, though the company hasn’t reported any financials tied to the unit.

Despite its track record, Uber has good reason for its latest expansion. It’s probably not going to become the Amazon of anything, but a stronger, more profitable Uber would suffice.

Want to send thoughts or suggestions for Data Sheet? Drop me a line here.

Jacob Carpenter

NEWSWORTHY

A total coincidence? Twitter will begin internal testing of a long-awaited “edit” option on its social media service later this year, company officials said Tuesday. The announcement coincided with a poll posted Monday by new Twitter board member and current Tesla CEO Elon Musk, who asked his 80 million–plus followers whether they want an “edit” button on the site. However, Twitter executives said they have been working on an edit feature for several months. In a separate development, Musk refiled a securities disclosure Tuesday that indicates he will become an active investor in Twitter after becoming the company’s largest shareholder, Bloomberg reported. His initial filing suggested he would take on a passive role.

VC to the rescue. Sky Mavis, the developer of popular non-fungible token game Axie Infinity, raised $150 million in an investment round to help pay back players who lost $625 million worth of cryptocurrency in a hack of the company’s platform last month, CoinDesk reported Wednesday. Crypto exchange Binance led the fundraising round, while several venture capital firms, including Andreessen Horowitz and Paradigm, joined the campaign. The hack of Sky Mavis’s Ronin network ranks among the largest cryptocurrency thefts on record, prompting renewed scrutiny of blockchain security. 

Readying to take on America. The U.S. affiliate of cryptocurrency exchange Binance has raised $200 million in its latest fundraising round, bringing its value to $4.5 billion as the brand seeks a stronger presence in the States. Binance.US, an offshoot created to avoid the regulatory constraints that leave Binance unable to operate in America, plans to use the money on staffing, advertising, and other buildup costs. While Binance ranks as the world’s largest crypto exchange, Binance.US lags well behind the nation’s highest-volume exchange, Coinbase

Out in a blaze. The once-promising online payments upstart Fast announced it will cease operations after running out of money amid growing competition from well-established rivals, Protocol reported Tuesday. The company raised $120 million in investments as it tried to pioneer technology that allowed users to fill out payment information and identify themselves online with a single click. However, Fast failed to raise additional capital as other companies, including Shopify, PayPal, and Amazon, produced similar offerings for their own products.

FOOD FOR THOUGHT

Merchants of doom? There’s a showdown brewing between banks and the two largest U.S. credit card companies. The Wall Street Journal reported Wednesday that several major banks, including JPMorgan Chase and Bank of America, are debating whether to promote their jointly owned payment option, Zelle, at checkout points across the country. The move would cut out Visa and Mastercard, which charge fees for every credit and debit card transaction. Banks could lose billions in fees they also collect from card payments, but they could gain more control over transaction terms by pushing merchants to accept funds via Zelle, which transfers money directly between bank accounts.

From the article:

Wells Fargo and Bank of America are in favor of expanding the service to retail payments, according to people familiar with the matter, eyeing the popularity of such offerings in Asia. Bank of America customers made more Zelle transactions than wrote paper checks for the first time ever last year.

Executives at JPMorgan, America’s largest bank, aren’t convinced it is the right time for a Zelle expansion and are urging first more focus on protecting consumers from fraud, the people said. U.S. Bancorp and Capital One Financial Corp. are undecided, they said.

IN CASE YOU MISSED IT

March Madness is over—but the sports betting companies looking to cash in on college fans are getting started, by Michal Lev-Ram

Move over, Photoshop: OpenAI just revolutionized digital image making, by Jeremy Kahn

Stealing crypto is easy, security experts say, but spending it is so hard that some hackers prefer to just hold the loot ransom, by Taylor Locke

Trump supporters want Elon Musk to push Twitter’s board to reinstate the former president’s account, by Jonathan Vanian

Mark Cuban is ‘very bullish’ on the upcoming Ethereum ‘merge.’ Here’s why he says the upgrade is so important for the cryptocurrency, by Taylor Locke

Boris Johnson defies his own regulators by jumping headfirst into Web3 and NFTs, by Marco Quiroz-Gutierrez

BEFORE YOU GO

Everyone has an opinion. Pretty much every tech writer published a take Tuesday on Elon Musk joining Twitter’s board (your Data Sheet scribe included). To save you some time, here are three particularly interesting pieces published in the past 24-plus hours. Platformer’s Casey Newton examined whether Musk will use his position to undermine new Twitter CEO Parag Agrawal, who (at least publicly) welcomed the Tesla chief with open arms. At The Atlantic, Marina Koren examined Musk’s history of hypocrisy on free-speech matters, pondering the implications of any meddling on the topic at Twitter. Meanwhile, the Wall Street Journal’s editorial board hoped that Musk will show Big Tech censorship can be corrected through market forces, rather than government regulation.

This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.