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A judge ordered Uber and Lyft to convert drivers to employees, but it's not a done deal

The coronavirus pandemic may actually be an ideal time for the companies to reset their business, judge Ethan Schulman argued.

An Uber and Lyft driver in California

A San Francisco judge said Uber and Lyft drivers should be employees.

Photo: Frederic J. Brown/AFP via Getty Images

A San Francisco judge ordered Uber and Lyft to convert their drivers to employees after a "prolonged and brazen refusal to copy with California law."

"Defendants may not evade legislative mandates merely because their businesses are so large that they affect the lives of many thousands of people," wrote San Francisco Superior Court judge Ethan Schulman.

The catch: Schulman stayed the injunction so it won't go into effect for 10 days, giving the companies a window to appeal the ruling. Both are expected to file an appeal and ask for another, longer stay pending that outcome, meaning there could be another protracted legal fight and delay before drivers actually become employees.

Regardless, it's still a symbolic win for the state of California and labor advocates who argue the drivers should be classified as employees. In May, California state attorney general Xavier Becerra sued Uber and Lyft for worker misclassification. In the ruling, the judge sided with Becerra and delivered an injunction forcing Lyft and Uber to comply with A.B. 5, the gig economy law that would convert many independent contractors to employees.

Meanwhile, in addition to their appeals, Uber and Lyft are backing a proposition in the November election that would exempt their businesses from A.B. 5. That may be another monumental test for this contractors vs. employees debate. "Drivers do not want to be employees, full stop," Lyft said in a statement. "We'll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers."

"The vast majority of drivers want to work independently, and we've already made significant changes to our app to ensure that remains the case under California law," Uber said.

While some drivers are against A.B. 5, the judge said that driver surveys did not factor into his decision. "A.B. 5 may be unpopular among some of the Defendants' drivers, but a lawsuit is not a popularity contest," he wrote.

An Uber analysis previously showed that the law could raise rider prices between 20% to 40% in San Francisco and San Diego, and as much as 80% to 100% in other California cities like Palm Springs or Fresno.

Both businesses have also seen demand plunge during the pandemic, but the judge viewed it as an ideal time for both companies to reset their business plans. (Uber disagreed, arguing that state leaders "should be focused on creating work, not trying to shut down an entire industry during an economic depression.")

"Now, when Defendants' business is at an all-time low, may be the best time (or the least worst time) for Defendants to change their business practices to conform to California law without causing widespread adverse effects on their drivers," he wrote.

While nothing changes overnight, the ruling is the most significant decision Uber and Lyft have faced yet. Going forward for the two companies, it's a matter of appealing long enough to find out the outcome of the November ballot measure.

Protocol | Enterprise

Alphabet goes deep into industrial robotic software with Intrinsic

If it succeeds, the gambit could help support Google Cloud's lofty ambitions in the manufacturing sector.

Alphabet is aiming to make advanced robotic technology affordable to customers.

Photo: Getty Images

Alphabet launched a new division Friday called Intrinsic, which will focus on building software for industrial robots, per a blog post. The move plunges the tech giant deeper into a sector that's in the midst of a major wave of digitization.

The goal of Intrinsic is to "give industrial robots the ability to sense, learn, and automatically make adjustments as they're completing tasks, so they work in a wider range of settings and applications," CEO Wendy Tan-White wrote in the post.

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Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

As President of Alibaba Group, I am often asked, "What is Alibaba doing in the U.S.?"

In fact, most people are not aware we have a business in the U.S. because we are not a U.S. consumer-facing service that people use every day – nor do we want to be. Our consumers – nearly 900 million of them – are located in China.

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J. Michael Evans
Michael Evans leads and executes Alibaba Group's international strategy for globalizing the company and expanding its businesses outside of China.
People

To combat disinformation, centralize moderation

There's more to content moderation than deplatforming.

In addition to interplatform collaboration, big tech companies would also benefit from greater collaborations with academic researchers, government agencies or other private entities, the authors argue.

Image: Twitter

Yonatan Lupu is an associate professor of political science and international affairs at George Washington University. Nicolás Velasquez Hernandez is a lecturer at the Elliott School of International Affairs and a postdoctoral researcher at GW's Institute for Data, Democracy and Politics.

Florida Gov. Ron DeSantis' signing of a bill that penalizes social media companies for deplatforming politicians was yet another salvo in an escalating struggle over the growth and spread of digital disinformation, malicious content and extremist ideology. While Big Tech, world leaders and policymakers — along with many of us in the research community — all recognize the importance of mitigating online and offline harm, agreement on how best to do that is few and far between.

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Protocol | Fintech

Marqeta turns to a fintech outsider

Randy Kern, a Salesforce and Microsoft veteran, is taking a plunge into the payments world.

Randy Kern is joining Marqeta after decades at Microsoft and Salesforce.

Photo: Marqeta

Marqeta has just named a new chief technology officer. And it's an eyebrow-raising choice for a critical post as the payments powerhouse faces new challenges as a public company.

Randy Kern, who joined Marqeta last month, is a tech veteran with decades of engineering and leadership experience, mainly in enterprise software. He worked on Microsoft's Azure and Bing technologies, and then went on to Salesforce where he last served as chief customer technology officer.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

Protocol | Policy

What can’t Jonathan Kanter do?

Biden's nominee to lead the DOJ's antitrust section may face calls to remove himself from issues as weighty as cracking down on Google and Apple.

DOJ antitrust nominee Jonathan Kanter's work as a corporate lawyer may require him to recuse himself from certain cases.

Photo: New America/Flickr

Jonathan Kanter, President Joe Biden's nominee to run the Justice Department's antitrust division, has been a favorite of progressives, competitors to Big Tech companies and even some Republicans due to his longtime criticism of companies like Google.

But his prior work as a corporate lawyer going after tech giants may require him to recuse himself from some of the DOJ's marquee investigations and cases, including those involving Google and Apple.

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Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

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