Uber Algorithm: How Does It Work?

Here’s how the Uber algorithm works:

The Uber algorithm simultaneously tracks and weighs a ton of factors.

Those include your location, the driver’s location, the best route for your trip, how long the trip will be, how much traffic is in the area, the time of day, how many people are waiting for a ride, how much the ride should cost, and more.

So if you want to learn all about Uber and how its algorithm works exactly, then this article is for you.

Let’s get started!

Uber Algorithm: How Does It Work? (All the Info)

What Is Uber?

There’s a good chance that you’re familiar with the Uber app.

You know it as the thing on your phone that lets you order a ride whenever you need one.

It’s like if taxi services were actually modernized and convenient.

On that point, Uber has given stiff competition to the taxi industry across the country, but that’s another story.

What you might not know is what Uber is in a more mechanical, functional sense.

Sure, it’s a convenient app on your phone, but what is it really doing under the hood?

That’s a large question with a lot of answers.

To get this learning journey started, I can say that Uber is a powerful computer system that coordinates massive volumes of information and actions all at the same time.

Imagine how hard it would be to coordinate just a handful of drivers and customers in one city by hand.

Someone sends a request for a ride.

You have to see where your drivers are currently located and who is available.

You pick the one who is closest, and then you send them to pick up the customer.

You calculate the fair before they even get in the car, and you navigate the route for your driver.

Just that one interaction seems like work.

Yet experts estimate that there are currently 3.5 million Uber drivers.

On top of that, the app has been downloaded roughly 95 million times, and Uber is available in over 10,000 cities around the world.

Think about the sheer magnitude of the coordination involved in this one app.

It’s massive, and that’s what Uber really is.

It’s a powerful computer system that works incredibly hard to get everyone in the right place at the right time to make the service function.

How Does the Uber Algorithm Work? (5 Aspects)

Putting Uber in those terms, it’s no wonder that a lot of people want to know exactly how it works.

From a user perspective, there are privacy and data concerns.

How much is Uber really tracking and cataloging when you use it?

From both a user and driver perspective, how is Uber calculating fares?

As for competitors, they would love to know the inner secrets of Uber so they could better compete.

There are a lot of questions to answer, and they all boil down to one central concept: the algorithm.

Uber works on a large, complicated algorithm that ultimately manages all of the data and decisions necessary to make it all work.

Now, Uber doesn’t publish their code.

No one but the computer scientists working for the company knows exactly how everything works.

That said, Uber has admitted to some facets of its inner systems, and many other things can be deduced.

I can’t take you line by line through Uber code to give you a professional understanding of the mechanisms, but I can break down the essential aspects of the Uber algorithm.

As I do, you’ll see that it’s mostly about managing a lot of different kinds of data at the same time.

#1 Tracking Traffic

It stands to reason that one of the most important things for Uber to do is keep track of traffic, right?

That’s exactly right, but even this one thing is actually multiple variables and more complicated than it might seem on the surface.

For instance, Uber tracks city-wide traffic patterns in each of its available locations.

It uses that data to figure out when people will need rides the most and how long the rides should take.

Both of these pieces of information affect Uber fares, and it helps the app coordinate drivers.

But, traffic means a lot more than how many cars are on the road.

The app itself has traffic and traffic patterns.

How many people are going to call for a ride to Truist Park during the game on Saturday?

That’s just one destination, and Uber is watching internal traffic patterns across all common destinations.

There’s a third traffic pattern that also matters.

How many drivers are available in each region at any given time?

Uber keeps a close watch on locations and times and how the number of available drivers changes with each.

All of this information is necessary to try to minimize wait times for a ride, figure out how much fares should be, figure out the best driving routes, and ensure that it all comes together nicely. And this is just traffic.

We’re nowhere near done yet.

#2 Tracking Money

Uber is a business, and it’s interested in making money.

So you better believe that Uber stares intently at the financial figures to make sure the company stays in the black.

More than that, Uber is constantly trying to maximize profits, driver satisfaction, and customer satisfaction, and those three financial numbers are often in conflict with each other.

So, in a general sense, Uber is constantly trying to figure out how much people are willing to pay for rides, and that’s not a static number.

After 11 pm on a Friday near the downtown bar scene, people are probably willing to pay a premium for a ride.

At three in the morning on a Wednesday, demand might be lower, and fares probably can’t go for as much.

While Uber hasn’t explained the details, the company has explained that it uses a dynamic pricing algorithm.

The general idea is that when demand for rides spikes in an area, the price goes up accordingly.

With higher fares, drivers get paid more, and in this way, Uber entices drivers to respond to spikes in demand to keep wait times low for a ride.

If you ask drivers and customers, this algorithm is probably nowhere near perfected, but according to Uber, that’s the motivation behind their dynamic pricing mechanisms.

All of this is to say that Uber isn’t just counting how many dollars they raked in each day.

They’re taking a complicated, intricate look at pricing across all of their regions in order to try to balance the competing interests of shareholders, drivers, and customers.

#3 Tracking Drivers

I briefly touched on this already, but it’s worth looking at a little more deeply.

Uber tracks drivers very closely, and this is about a lot more than where they are located at any given time.

Uber looks at driving stats.

The company knows how often a driver speeds, how long it takes them to complete a ride, how efficiently they navigate routes, and just about anything else a computer can glean from location tracking (and yes, Uber is constantly tracking drivers that are active).

That’s not nearly all.

Uber also keeps an eye on how much time each driver spends available for rides.

This helps them understand how many drivers are needed in a region to keep up with demand, which further informs how much they pay drivers and other aspects of their incentive structure.

There’s a lot packed into just that one aspect of tracking drivers.

And, if you’ve ever used the app, you also know that Uber tracks each driver’s customer satisfaction score.

After you complete a ride, you can rate your driver, and Uber takes those ratings seriously.

Every single driver’s score is carefully monitored.

#4 Tracking Distance

So far, I’ve explained a lot of data mining and tracking, and we haven’t really talked that much about GPS.

In a manner of speaking, Uber is a navigation app.

Sure, it’s attaching a very complicated service algorithm to navigation, but the ultimate goal is to get users to their desired destinations.

That’s navigation in a nutshell.

It’s easy to understand that Uber is constantly tracking locations and calculating distances.

One of the key aspects of the algorithm is that Uber tries to connect users with the closest available driver.

More data goes into it (as you can guess), and I’ll try to summarize all of it in the next section.

But, getting the nearest driver to a customer is usually the top priority for the app.

So, while Uber is tracking countless statistics for countless reasons, it’s weighing all of that against raw location and distance data.

It has to know where every active user is.

It has to know where every active driver is.

And, it has to calculate the best routes between users, drivers, starting locations, and destinations, and it’s doing this millions of times a day.

#5 Putting It All Together

Ok. Let’s try to put all of that together.

Think back for a moment.

Uber is tracking traffic, drivers, money, distance, and all of the different things associated with each of those metrics.

Here’s the rough approximation of how the algorithm puts it all together.

Uber tries to match each user with the closest available driver.

But, it will way drivers according to their performance ratings and driving statistics.

If you have downrated a driver before, the app will avoid pairing you with that driver again.

So, the app is trying to weigh giving you the best possible ride against how long it takes for you to get a car.

At the same time, it’s considering all of the traffic in your area, how many people have been waiting for a car longer than you have, how much it needs to charge everyone to get enough drivers into the area, and the best route for your ride once you’re in the vehicle.

We don’t know exactly how Uber rates each of these factors, and there are certainly countless smaller factors that are also part of the equation.

But, this is the gist of what is going on under the hood when you order a car from Uber.

Author

Theresa McDonough

Tech entrepreneur and founder of Tech Medic, who has become a prominent advocate for the Right to Repair movement. She has testified before the US Federal Trade Commission and been featured on CBS Sunday Morning, helping influence change within the tech industry.

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