Yes, Uber takes a cut of rides, and that is where most of their revenue comes from. They do lose money on some rides (primarily short ones) and it's not a flat percentage per ride or a rate that hasn't shifted over time, but they are definitely taking a solid chunk on average. I may be misremembering, but I think I heard The Rideshare Guy say it's been around 28% as of late. It used to be a flat 20% years ago but the model has gotten a lot more complex.

> Can individual drivers do that or will cities just hammer them?

This is a good question. Personally, I think it's a risk that many drivers would be willing to take and that enforcing this sort of law on a per driver basis would prove extremely difficult.