#DeleteUber: The Changing Face of Consumer Boycotts?

In late January 2017, 200,000 Uber users deleted their accounts in just one week. Meanwhile, the company’s closest competitor, Lyft, surpassed Uber in the number of daily iOS downloads for the first time. This consumer action formed part of the #DeleteUber campaign on social media. Given the campaign’s impact, it is important to ask how it differs from more traditional consumer boycotts and what investors can learn from it.

#DeleteUber is a consumer boycott that used social media as a form of protest against the company’s perceived support of the Trump administration and some of its more controversial policies – most notably the executive order that limited travel to the U.S. from certain countries. Prior to the executive order, many Uber users already used social media to express their disapproval of CEO Travis Kalanick’s decision to serve on the Trump administration’s economic advisory team. Then, on 29 January 2017, Uber slashed its surge charges to and from JFK airport during a protest and taxi strike against the so-called “travel ban”. This was perceived as an attempt to undermine the taxi strike, which Uber had declined to participate in.

What makes #DeleteUber different?

The #DeleteUber campaign was notable for two reasons: Firstly, it was effective in mobilizing a large number of consumers very quickly and prompting a rapid response from both Uber and its rival, Lyft. Lyft announced a USD one million donation to the American Civil Liberties Union (ACLU), an NGO that opposed the administration’s executive order, while Kalanick resigned from Trump’s economic council and issued a public apology.

Secondly, even though #DeleteUber was primarily political it can be argued that it specifically targeted the company’s values and leadership. Traditional consumer boycotts, in contrast, would typically target a specific corporate practice or policy and end as soon as consumer demands were met. For example, Nestlé enacting policies to improve the way it marketed infant formula in developing markets or Nike addressing labor abuses at its factories in Bangladesh. #DeleteUber expressed a desire for more than a mere policy change.

Consumers identify with brands that embody certain values, ideals and even lifestyles. This is especially true for consumer-facing industries. Offering a high-quality product with responsible procurement practices is no longer sufficient to ensure brand loyalty. #DeleteUber is an example of the power and changing scope of consumer activism in an increasingly digital economy connected by social media. I believe companies will become increasingly exposed to the risk of similar campaigns related to environmental, social and governance (ESG) issues, such as natural resource use, indigenous rights, clean energy and gender equality.

In fact, #DeleteUber was quickly re-appropriated a couple of weeks later when a former engineer revealed allegations of sexual harassment and gender bias. The CEO’s quick response, including calling for an external investigation by a former U.S. General Attorney, can likely be attributed, at least in part, to the success of the original #DeleteUber campaign.

It should be noted that for a company with an estimated value in excess of USD 60 billion and 40 million monthly active users worldwide, the #DeleteUber campaign will have limited lasting financial impact, as most consumer boycotts do. Over time, Uber has creeped back up in app rankings as well. But #DeleteUber has impacted change at the highest level – prompting immediate action from Uber’s CEO to salvage the company’s image and appease a key demographic.

And, when combined with notable legal and operational risks related to Uber’s business model within the sharing economy, and continued bad press linked to a recently leaked video of Kalanick arguing with a driver about prices, a tarnished image in a key market should not be overlooked. Most recently, three early investors have publicly criticized the company’s lack of transparency in addressing the sexual harassment allegations. Such public criticism is uncommon for Silicon Valley venture capitalists and may be linked, at least in part, to the consumer boycott.

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