Uber will lay off 3,700 people from its customer support and recruiting teams, the company announced in a Wednesday regulatory filing. That figure represents 14 percent of Uber’s 26,900 employees, CNBC reports.
Uber has already frozen hiring, and CEO Dara Khosrowshahi will forego his salary for the remainder of the year, the company says.
The Information reported last week that Uber’s ride bookings have fallen 80 percent from the same period a year earlier. Uber has tried to compensate by expanding its delivery business, launching two new services called Uber Connect and Uber Direct. But rides have historically been the largest part of Uber’s business, making an 80 percent drop difficult to stomach.
Last week, Uber’s main US rival, Lyft, announced 1,000 layoffs—a 17-percent reduction of the company’s workforce.
Just three months ago. Uber was projecting that it would reach profitability by the end of 2020. Now that’s probably out of the question. We’ll learn more when Uber announces its first-quarter financial results tomorrow.
Uber is also facing a serious challenge to its business model in California, where the attorney general sued Uber and Lyft on Tuesday for misclassifying its drivers as independent contractors. If Uber loses the lawsuit, the company will likely be forced to give its drivers in California a slate of new benefits, including minimum wage guarantees and reimbursement for operating costs. The costs of providing those benefits will make it even harder for Uber to reach profitability.