The business model

It all goes out the window once you have to treat people as employees just because they're doing all the work for you.

A San Francisco-based driver for smartphone-based ride-hailing service Uber is an employee, not a contractor, according to a ruling by the California Labor Commission.

The ruling, filed on Tuesday in state court in San Francisco, was the latest in a host of legal and regulatory challenges facing Uber and other highly valued start-ups in the United States and other countries.

The commission said Uber is "involved in every aspect of the operation."

Classifying Uber drivers as employees opens the company up to considerably higher costs, including Social Security, workers’ compensation and unemployment insurance. That could affect its valuation, currently above $40 billion, and the valuation of other companies that rely on large networks of individuals to provide rides, clean houses and other services.

Uber, of course, insists that it's merely an app.  All these drivers are just using the service as independent contractors. Other than that, the company doesn't have anything to do with them or their business.

Uber has landed in hot water before for tracking the movements of passengers without their permission. But what about tracking its own drivers? Obviously, the company needs to do that in order to know where drivers are in real time so that it can supply rides. According to the Wall Street Journal, though, this past weekend in Hangzhou, Uber found another use for that GPS data: scaring drivers into staying away from a protest over its service:

In two short messages sent to Uber drivers in Hangzhou and circulated online—verified with Uber in China by The Wall Street Journal—Uber urged its drivers not to go the scene and instructed those already there to leave immediately. Uber said it would use GPS to identify drivers that had refused to leave the location and cancel its contracts with them. The messages said Uber’s actions were designed to “maintain social order.”

Well.. okay.. sure. Somebody's got to "maintain social order." What better use can you think of for an app, really?