The Uber app application with a map of New York City is seen on an Apple iPhone mobile phone in this photo illustration Warsaw, Poland on 21 September, 2022.
Nurphoto | Nurphoto | Getty Images
In some ways, Uber and Lyft are back to square one.
With federal regulators set to tighten Trump-era labor standards that let Uber and Lyft, as well as food-delivery services like Doordash, treat gig workers as independent contractors with few protections under labor law, shares dropped sharply last week. But while a shift, the Department of Labor proposal doesn’t immediately transform gig workers into employees entitled to overtime pay, unemployment insurance and other benefits.
What’s clear is that the ongoing conflict over how these on-demand companies treat their drivers isn’t going away, since an estimated one in six Americans has worked in the gig economy in one way or another. Analysts and pundits following the rideshare industry think the future holds some series of compromises that will give drivers at least limited benefits — a model known as independent contractor-plus — with some believing that the Biden administration’s pro-union stance will lead to workers being classified as employees eventually.
Both solutions would be likely to raise Uber and Lyft’s costs — and create a different business model for the entrepreneurs using their cars to run, in effect, small businesses of their own. And each highlights the unrealized promise of ridesharing business models: The absence of self-driving cars that investors once believed would make profits at the companies soar and put most drivers out of business.
“It seems like the start of a Game of Thrones battle between the Department of Labor and the gig economy,’ Wedbush analyst Dan Ives said. “When pressure was confined to the states, it was one thing. It has added another variable.”
For now, the rules proposed by the DOL won’t make drivers into employees, who would also be entitled to benefits such as minimum-wage protection, overtime pay, and to be paid when they are at work but don’t have a passenger in their car. Such a move would likely also cause pressure on the companies to offer the drivers health insurance and vacation pay, especially for the minority of drivers who do gig work full-time, though Morgan Stanley analyst Brian Nowak said state-level litigation could also force such change.
For now, the DoL rules will apply a broader series of tests to determine who is a truly independent contractor and who’s not. The companies point to the flexibility of rideshare employment, which lets drivers set their own hours, as a sign that drivers are independent contractors. Advocates for drivers being treated as employees argue that Uber and Lyft set workers’ pay, dispatch them to trips, and monitor their work as closely as they would an employee’s, even using technology to ask passengers in mid-ride whether their driver is acting erratically based on a vehicle’s speed.
The shift in federal policy, largely restoring the status quo under the Obama administration (and most of the Trump years, since the last administration didn’t loosen the rules until early 2021), comes at a delicate time for both rideshare companies.
Each has been promising Wall Street that it will soon turn profitable. By some standards — especially the more lenient earnings before interest taxes, depreciation and amortization — they have gotten there. But neither makes money under formal accounting standards, and neither has had positive free cash flow over the last 12 months, though Uber was positive in the second quarter.
Both businesses were hammered by the Covid pandemic, which made both drivers and passengers use car services much less often. Each company lost more than half of its value in 2020, recovered to new highs by last year, and has seen shares pounded anew in 2022.
And that pain has been passed along to drivers, who have seen their pay cut since before the pandemic, said Nicole Moore, president of Rideshare Drivers United in Los Angeles and a rideshare driver herself.
“They got America hooked on cheap rides, and drivers hooked on what they got paid,” Moore said. “Now passengers are paying more, and drivers are getting paid less.”
Uber believes the Department of Labor is focused less on ridesharing and more on industries such as construction that also use gig workers, pointing out that the proposed rule doesn’t single out rideshare drivers.
“The Department of Labor listened to drivers, who consistently and overwhelmingly state that they prefer the unique flexibility that comes with being an independent contractor,” Uber head of federal affairs CR Wooters said in a statement. “Today’s proposed rule takes a measured approach, essentially returning us to the Obama era, during which our industry grew exponentially.”
The company also disputes Moore’s claims. It says driver pay has risen, reaching $37 per what Uber calls a utilized hour. The company’s 10-Q filing doesn’t disclose an average utilization rate – or percentage of hours a car is carrying passengers while a driver is on the clock – but Sergio Avedian, senior contributor at industry blog The Rideshare Guy, said it’s about 60%. Uber drivers also supply their own cars and gasoline, though the company in March added a per-trip fuel surcharge that goes directly to drivers.
Uber and Amazon Flex drivers protest the fuel price serge and demand more money outside an Amazon warehouse in Redondo Beach, California, March 16, 2022.
Mike Blake | Reuters
The risk of change in the legal environment is pushing the companies toward a new kind of business model, similar to what has happened in Washington State already under a new law, said Avedian, who is a driver for both Uber and Lyft himself.
In Washington, drivers are still considered contractors, but Seattle drivers are guaranteed $1.65 a mile, which he said is more than double the prevailing rate in California, effective next Jan. 1. (Rates will be lower elsewhere in Washington). They also will get worker’s compensation insurance, paid time off and a right to appeal if they are effectively terminated by the companies.
“The only reason to be involved in the gig economy is the flexibility,” Avedian said, referring to policies that let rideshare drivers set their own hours. “Uber’s not going to do that and give you employment rights. If you put [health insurance, Social Security taxes and other benefits] in, Uber will go to zero.”
New Jersey, New York and Massachusetts are working with the companies on deals similar to the one reached in Washington, Nowak said. Uber and Lyft have coped with new requirements in Washington with little impact and would be able to weather any hit to profits as the model spreads, he wrote.
“Reaching an agreement in those states was important 24 hours ago (before this announcement), and it still is today,” Nowak said in relation to the DoL rule proposal.
Both companies said they are willing to work on such deals with state regulators, exchanging better pay for continuing the flexibility that independent contracting allows the companies. “It’s incumbent on us to make it appealing to drivers, because they have lots of options,” said Uber spokeswoman Alix Anfang, referencing the tight labor market.
Surveys by The Rideshare Guy also show that most drivers prefer to be independent contractors.
Any increase in expenses from classifying drivers as employees, or otherwise raising their pay, is likely to be recovered in the form of higher prices because the companies have already cut their fixed expenses hard, said CFRA Research analyst Angelo Zino. How much costs may rise isn’t known, but the range of possibilities runs from 10 percent to 30 percent, he said. Uber is also pursuing advertising revenue, which may produce as much as 20 percent of the company’s profit before interest, taxes and non-cash expenses within three years, he said.
The need to prevent drivers from claiming full employment benefits, if regulators ever do classify them as employees, is likely to mean the companies pressure drivers to work less than full time, Moore said. Companies like Amazon that also use quasi-independent drivers may face some of the same issues as Uber and Lyft, Nowak said.
All of this would matter less if the companies were closer to implementing self-driving vehicles on a large scale, which would have let them reduce the cost of drivers. Uber’s federal disclosures ahead of its 2019 IPO predicted the company would become a hybrid of automated and human-driven transportation, and Lyft’s filings said self-driving cars would “be a critical part of the future of transportation.”
Last week, Lyft president John Zimmer, who had previously predicted majority self-driving by 2021, said he got it wrong, but he added, “I really think in the next two to three years that kind of actual no driver, driverless vehicle will be something you can order pretty easily on the Lyft platform.”
Gig workers are likely to remain on the scene, and their business models will change, Avedian said. The question is whether they will change fast enough for drivers and regulators.
“If it’s enforced, we will have status, benefits and pay that is guaranteed to employees under the law,” Moore said. “99 percent of drivers want to be independent — but we’re not.”
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The logo of LG Electronics is seen on the opening day of the Integrated Systems Europe exhibition in Barcelona on January 31, 2023.
Pau Barrena | Afp | Getty Images
South Korea-based LG Energy Solution announced Wednesday that it had signed a $4.3 billion contract for supplying batteries to a major corporation, without naming the customer.
The effective date of contract — receipt of orders — began Tuesday and will conclude at the end of July, 2030. During this period, the counterparty will not be disclosed to maintain business confidentiality, the company’s filing with the Korea Exchange showed Wednesday.Reuters reported that Tesla was the counterparty.
Earlier this week, Tesla CEO Elon Musk confirmed that the EV maker was behind a previously undisclosed $16.5 billion chip contract with South Korea’s Samsung Electronics.
LG Energy said in its filing that details of the contract such as the deal amount were subject to change and the contract period could be extended by up to seven years.
“Investors are advised to carefully consider the possibility of changes or termination of the contract when making investment decisions,” the company cautioned. It’s shares were trading 0.26% lower.
The filing did not clarify whether the lithium iron phosphate batteries would be used in vehicles or energy storage systems. Its major battery customers include American electric-vehicle makers Tesla and General Motors.
The company has been expanding its battery production in the U.S., and is constructing a plant in Arizona that will produce lithium iron phosphate batteries.
LG Energy Solution and Tesla did not immediately respond to CNBC’s requests for comment.
Nikesh Arora, CEO of Palo Alto Networks, looks on during the closing bell at the Nasdaq Market in New York City, U.S., March 25, 2025.
Jeenah Moon | Reuters
CyberArk shares soared as much as 18% on Tuesday after The Wall Street Journal reported that cybersecurity provider Palo Alto Networks has held discussions to buy the identity management software maker for over $20 billion.
Cloud security is becoming an increasingly critical piece of the enterprise tech stack, especially as rapid advancements in artificial intelligence bring with them a whole new set of threats, and as ransomware attacks become more commonplace.
Founded in 2005, Palo Alto Networks has emerged in recent years as a consolidator in the cybersecurity industry and has grown into the biggest player in the space by market cap, with a valuation of over $130 billion. CEO Nikesh Arora, who was appointed to the job in 2018, has been on a spending spree, snapping up Protect AI in a deal that closed in July, and in 2023 buying Talon Cyber Security, Dig Security and Zycada Networks.
But CyberArk would represent by far Arora’s biggest bet yet. The Israeli company, which went public in 2014, provides technology that helps companies streamline the process of logging on to applications for employees.
CyberArk faces competition from Microsoft, Okta and IBM‘s HashiCorp. Another rival, SailPoint, returned to the public markets in February.
With Tuesday’s rally, CyberArk shares climbed to a record, surpassing their prior all-time high reached in February. The stock is up 29% this year, pushing the company’s market cap to almost $21 billion, after jumping 52% in 2024. Palo Alto shares, meanwhile, slid 3.5% on the report and are now up about 9% for the year.
Representatives from Palo Alto Networks and CyberArk declined to comment.
During the first quarter, CyberArk generated around $11.5 million in net income on around $318 million in revenue, which was up 43% from a year earlier.
It’s been an active stretch for big deals in the cyber market. Google said in March that it was spending $32 billion on Wiz, its largest acquisition on record by far, and a purchase intended to bolster its cloud business with greater AI security technology.
Networking giant Cisco also made its biggest deal ever in the security space, buying Splunk in 2023 for $28 billion. Splunk’s technology helps businesses monitor and analyze their data to minimize the risk of hacks and resolve technical issues faster.
Spotify shares dropped about 4% Tuesday after the music streaming platform fell short of Wall Street’s expectations and posted weak guidance for the current quarter.
Here’s how the company did versus LSEG estimates:
Loss: Loss of .42 euros vs earnings of 1.90 euros per share expected
Revenue: 4.19 billion euros vs. 4.26 billion expected
The Sweden-based music platform’s revenues rose 10% from about 3.81 billion euros in the year-ago period. The company posted a net loss of 86 million euros, or a loss of .42 euros per share, down from net income of 225 million euros, or 1.10 euros per share a year ago.
Third-quarter guidance came up short of Wall Street’s forecast.
The company expects revenues to reach 4.2 billion euros, compared to a 4.47 billion euro estimate from StreetAccount. Spotify said the forecast accounts for a 490-basis-point headwind due to foreign exchange rates.
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Monthly active users on the platform jumped 11% to 696 million, while paying subscribers rose 12% from a year ago to 276 million.
For the current quarter, Spotify said it expects to reach 710 million monthly active users, with 14 million net adds. The company expects 5 million net new premium subscribers in the third quarter to reach 281 million subscriptions.
During the period, Spotify said it rolled out a request feature for its artificial intelligence DJ. The company said engagement with the offering has roughly doubled over the last year.
In 2024, Spotify posted its first full year of profitability. Shares are up 57% this year.