Over the decade, noticeable demands and protests arose from drivers against on-demand transportation firms such as Uber and Lyft. The majority of the protest centers on an opaque, high-commission structure. Despite these developments, empirical research remains notably scarce. To address this gap, our study provides a comprehensive investigation of commission structure within the on-demand transportation ecosystem. We conducted field investigations and collected financial statements from 704 drivers. Our findings highlight that the variability in commission structure is attributed to the platform’s algorithmic management systems (AMS) that dynamically adjust the commission deduction mechanism based on drivers’ trip history, such as customer payment methods. The actual commission, tax, and total percentage deduction are within 12%, 8%, and 20%, respectively. The study makes novel contributions to the intersection of the digital labor market and on-demand transportation. Furthermore, we provide actionable insights for managers and labor regulators in the on-demand transportation industry.

Keywords

business model, commission structure, gig economy, on-demand transportation, ridehailing.