Uber, Lyft crackdown in Seattle may be followed in other cities
bizjournals.comLooking at the debates there are in local governments in the US, it's interesting to look at how Uber has been received in London.
In London, we've had a setup for licensing 'mini-cabs' for almost a decade (and they've been around for far longer than that). In essence, they are all registered and regulated by a central authority, in a similar (but much less strict) way to London's famous black cabs. The difference being that mini-cabs are normal cars, that must be prebooked.
In that sense Uber fit right in, they're just another (one of 100's, if not 1000's) mini-cab providers. So for us in London, Uber hasn't really been revelatory at all except in the app driven aspects of their service (which is great).
There's always been a tension between liveried cabs and these 'mini-cabs' in London, and that's something that's been really interesting to see played out in different markets in the US. Especially when it's tied to the more prevalent laissez-faire attitude that the US has to market regulation.
That laissez-faire attitude, to the extent it exists at all, is generally only aimed at the federal and to a lesser degree state level. At the local level the voter involvement is so low that corruption and pandering to special interests are the norm.
In Chicago all taxi drivers must obtain a Chauffeur's License before driving.
The Chauffeur's license exam includes background checks, tests for common infectious diseases (tuberculosis), and a basic knowledge test of the city.
Uber does background checks, but they don't test for TB and I've had three UberX drivers that didn't know where Lake Michigan was when we were two blocks away from it.
Also, licensed taxi drivers have a number that you can report to 311 for safety purposes.
I think Uber could have avoided a portion of this backlash if it would have taken more steps to ensure safety-parity while side-stepping the medallion limitations.
Not to sound like the classic idealist libertarian, but isn't this how uber and lyft will be better? You ride with someone who's clueless or an asshole, rate them 1-star, the ratings compound, and unless they improve quickly they're tossed out of the driver pool. Immediate impact.
I think the rating is a pretty weak way to address issues like this.
I'm a big fan of Uber, but the insistent ratings are really annoying. For example - I take a ride, the car is fine, the driver is a little annoying, there is traffic and but we get there. Is that a "5" star ride? a 4 star ride? a 3 star ride? To me, 3 stars is average. to Uber, 3 stars is "you're fired." doesn't make sense.
Not to mention - how the heck would I know if he was vaccinated? that's just gross to contemplate. What if we rate him a 5, but then i get hospitalized with some crazy sickness later? and I thought taxis were dirty - i take it back.
Maybe public health officials might know something after all.
The whole point of stricter examinations is to avoid 1-star drivers to begin with.
Do you understand that if people care about these things, they won't use Uber? Before reading your comment, I didn't know cab companies tested for TB and I never thought to care. If TB were a problem in cabs, I would care, and I would use a cab service that tested its drivers.
You and I didn't know that because the system works. Nobody gets TB from riding in cabs, so nobody knows it's a problem and nobody realizes unless they look into the regulation. This is the big problem I have with the libertarian free market ideal: it's fundamentally reactive, not proactive.
You are falling into a predictable fallacy. Predictable in that this comes up all the time when people talk about the government. The fact that the government provides a service does not imply that the service would not exist if the government did not do it. We could absolutely have cabs without the TB problem without the government. In fact, in areas where the government does not enforce its own monopoly, you see competition with government-provided services flourishing. UPS, FedEX, and DHL versus USPS. Private college loan providers. Private universities. Private schools. On and on. The idea that without the government doing it, we are going to have rampant TB-infested taxi drivers is just silly. No one wants to use such a taxi and they do not need the government to tell them that.
> "This is the big problem I have with the libertarian free market ideal: it's fundamentally reactive, not proactive."
I do not know if I should take that statement seriously. I expect if you think over that statement for even 30 seconds you can see why it is both a complete non sequitur and insane.
1) Laws are obviously reactive. I would bet all the money in my pockets against all the money in your pockets that TB testing was put in effect as a reaction to an event in which a taxi, bus, or train driver was spreading TB.
2) The free market is exactly as reactive or proactive as people are. This is its virtue. People providing other people what they want is the whole point, both of markets and, it is claimed by those who believe in the State, the government. No organization, government or otherwise, can get away from being reactive to human needs unless it provides things people do not want or need, and in what way would so doing be good?
3) It does not matter anyway. The point of all this is that people should be free to pursue their desires, regardless of the considerations of people who think they know better and are worried about things being "reactive" or "proactive". These concerns are simply petty against the moral position of freedom.
Look, I enjoy a good discussion on the internet as much as anyone. I have learned a lot from reading comments on HN. But I get the impression that you have not read any of the good arguments against your position. I am a poor substitute for any of the major thinkers in the libertarian tradition. If you want to save yourself reading, you can even watch videos of Ayn Rand, Milton Friedman, or Thomas Sowell on YouTube. I recommend Stefan Molyneux's show, Free Domain Radio. He discusses these issues often. You could even call into his show and have a long discussion with him on the topic. He entertains such calls often.
"Regular"(black car) Uber drivers seem to go through the same thing. Test on the area, background check, have to carry special class insurance, special license. I am unfamiliar with UberX specifics.
Fuck, I sincerely hope our generation (early-mid 20s) do not react like crusty sheltered curmudgeons in 15-30 years when they occupy these positions of power and are confronted with something they've never seen before. I'm not too hopeful though. One of the few constants in life is that while individually people may change, groups of them rarely do.
I hope "your generation" at some point realizes that the challenges facing Uber don't stem from "opposition to the new." People aren't shocked and confused by the sheer novelty and innovation of being able to call a cab with a phone. They're reacting to companies trampling over settled expectations and compromises. Municipalities created these regulated taxi systems, and used monopoly status as a carrot in return for imposing regulation. If they let Uber and Lyft come in and skim the cream off the top of the market, without having to follow those same regulations, they would be failing to hold up their end of the bargain.
This isn't empty scolding. As "software eats the world" and tech companies start trying to compete in "meat space" industries, it will be imperative for them to understand why things are done the way they are, and how fruitful progress can be made without creating unnecessary friction by simply ignoring settled expectations. People won't react well to someone just plucking the onion out of the varnish unless he can demonstrate that he understands why the onion was in there to begin with, and articulate convincingly why it no longer needs to be in there.
I totally agree that the structural compromise that led to taxi monopolies need to be revisited. But not because Uber and Lyft change the market dynamics in any relevant way. These monopolies need to be revisited because highly regulated markets like that have proven to become a liability over time, and the deregulation experiment in the U.S. over the last few decades has shown that lightly-regulated markets function better.
I'm with you on a lot of that, but:
"...the deregulation experiment in the U.S. over the last few decades has shown that lightly-regulated markets function better"
Uh, I'm really not interested in an economics debate, but I think many people would disagree with that blanket assertion. The deregulated electric market in California springs to mind as one counter-example.
Some of the supposedly evil taxi regulations that Uber has been fighting here in DC actually seem pretty reasonable to me. I'm OK with Uber drivers being required to have extra car insurance and the city making sure that the GPS-based meter system is accurate.
I was with you right up until the last sentence. I do not think it is fair to say that "the deregulation experiment has shown that lightly regulated markets function better". This is how we wound up with the 2008 crash, the ascendency of finance and the absurd wealth gap we currently have.
Historically in the U.S., "regulation" implied heavy-handed measures like rate setting, price controls, capacity setting, market segmentation, granting monopolies, etc. Scaling back those measures has been very successful. For example, deregulation of freight and airlines in the 1970's allowed the modern integrated delivery networks that make Amazon possible. The trend since then has been to avoid these particularly heavy-handed and market-distorting sorts of measures. I don't think even proponents of heavier banking regulations espouse regulating banks in the way we say regulated passenger railroads (which killed them).
In the context of cabs, a "lightly regulated" regime might require background checks, minimum insurance, and some sort of mechanism for verifying driver identity and reporting problems. Variables like rates, capacity, coverage area, etc, could be left to the market.
Deregulation didn't create the wealth gap. Government regulation favoring aligned interest (read: political donors) created a regulatory environment with sufficient holes and guarantees to allow this accumulation of wealth. Go look at the history of Congress, how many come out richer or become vastly richer afterward?
Deregulation does work in many industries, regulation should never be a barrier to entry into an industry but that is what it has evolved into. It is not there to keep the public safe, to ensure pricing, or even to maintain consistency of service, it is there to protect established interest and their political backers/beneficiaries.
"They're reacting to companies trampling over settled expectations and compromises. Municipalities created these regulated taxi systems, and used monopoly status as a carrot in return for imposing regulation."
Has anyone looked at if taxi companies actually hold up their end of the bargain? In Baltimore taxis routinely refuse to make pickups in various parts of town either because they are out of the way or because they are perceived to be "bad".
With something like a taxi that you hail from the street and don't know what you are getting into before you get in some light regulation is reasonable for accident and scam reduction But a brand like Uber that achieves those same goals through different means shouldn't be pushed out of existence and of all laws to pass limiting the number of drivers is just a blatant attempt to protect existing taxi's
>In Baltimore taxis routinely refuse to make pickups in various parts of town either because they are out of the way or because they are perceived to be "bad".
And Uber is solving this how? Bad neighbourhoods are bad neighbourhoods.
It sounds like one solution to this problem is to mandate that taxis cannot discriminate. That smells like regulation.
I think you are missing the point Taxi companies in Baltimore already have a regulation that they can't discriminate. They ignore it, there appear to be no enforcement consequences for doing so so why would they follow it?
Uber has no such regulation yet people who use it report having an easier time getting a cab in parts of town Taxi's discriminate against.
There are several things Uber does that make it less of a problem for them. Drivers feel safer since the interaction is pre-vetted through Uber. It's cashless so not much to rob. You know the person you are going to meet must have it together enough to have a functioning credit card, smartphone, and cell service.
Uber removes drivers that decline too many fares (good drivers accept like 90%). When a fare is offered to a driver they only have 12 seconds to accept it and they only show the driver a very zoomed in map of the location and the estimated drive time to the location. So even if one driver is discriminating the offer will be quickly routed to the next closest driver until one accepts it.
> You know the person you are going to meet must have it together enough to have a functioning credit card, smartphone, and cell service.
That's a poor heuristic. Ted Bundy had it together enough to get into law school.
Heuristic refers to experience-based techniques for problem solving, learning, and discovery that give a solution which is not guaranteed to be optimal.
To the vast majority of people outside the venture/startup scene, "disrupt" is a bad word. It means throwing the silverware on the ground and taking a dump in the punch bowl.
The fact that businesses still routinely use that piece of jargon suggests to me that they're completely stuck in the tech bubble.
> confronted with something they've never seen before
But we have seen it before, these are just illegal unlicensed cabs. There is literally nothing separating Uber from an illegal cab, except that they've got an app for that.
Highly likely. Remember what happened when the 1960s generation of free love and drugs got in power and legalised weed, and promoted sex? Yeah me either
You highly overestimate the influence that hippies had on the day to day of that era. Those guys are still into free love and weed. They just do it from inside the safety of their communes.
Maybe our perception of the 1960s generation is a good example of the spotlight fallacy.
That's like expecting the goth subculture to result in more eyeliner in congress one day.
I think it's likely that there is a correlation between the longevity of a person, and their level of conservativeness. Wouldn't surprise me if most older people are, by nature, pretty restrictive.
of course existing companies are going to fight back by any means possible. You can't expect them to lay down a carpet for Uber.
I'm genuinely curious: what is it that distinguishes these services from taxis? Why is it okay for one to be regulated but not the other -- or do proponents of these services generally think that taxis shouldn't be regulated either?
Taxis can be flagged down on the street. All you have to go on is that it looks like a taxi, and has a medallion. If they aren't part of a regulated system with mandatory fares, medallion numbers, safety regulations, you have no idea what you'd be getting into when you flag one down without some kind of regulation.
These, instead, generally count as livery services. If you are calling a specific business to be picked up, you know who you're dealing with ahead of times, and can check their rates, choose based on their reputation, etc.
At least in Boston, Uber drivers are regulated, but as livery not as taxis, as you "call" them rather than hailing them directly on the street.
Thanks, this is what I was looking for. There's a livery service in Seattle called "Seattle Town Car" and now I'm wondering what kind of regulation they face. From what I can tell, Seattle isn't quite a city like Chicago or New York where being able to flag down a cab on the street is both common and important, and I wonder to what extent that plays into the dynamic.
I wasn't generally interested in attacking or defending regulation as such, but the most compelling thing I've heard in favor of regulation is that livery services don't have the same legal obligation as taxi companies to offer vehicles which can serve handicapped people.
Regulations is not a yes or no question. Many proponents of such services are OK with certain regulations (e.g. safety), while being opposed to others (caps on number of vehicles).
Others are simply opposed to all industry-specific regulations, and a few are opposed to the concept of the State as a whole ;)
And yes, as far as I've read, many are opposed to caps on all taxis, not just on Uber/Lyft.
In a big city like NYC, taxis are part of an overall transportation system. Regulating them ensures that they are available where and when they are expected to be. People plan their activities around the functioning of that system.
Naturally, a different system might work better or worse. A worse outcome would be more people taking their own cars into the city because they need or want quick access to a vehicle.
Regulating the number of cabs probably helps deal with traffic congestion, and also makes it potentially possible for drivers to earn a living wage. However, I can see where on-call cars are a different situation because they would serve a different purpose.
Regulating them ensures that they are available where and when they are expected to be.
But does it really? A study[1] from 2000 shows that the availability is not that great in NYC. Any why should it be, if the regulations cap their number?
Regulating the number of cabs probably helps deal with traffic congestion, and also makes it potentially possible for drivers to earn a living wage.
Why, if most drivers can't afford the medallions and end up having to work for the few that can? In fact, the same study shows that as industry revenue grows, the wages don't follow.
Frankly, this is typical of regulations as they're implemented in the US and other countries (including mine). It's the Bootleggers and Baptists all around, which mostly end up feeding the capitalists at the expense of lower classes.
[1] http://www.nytimes.com/2000/03/17/nyregion/riders-know-study...
"Regulating them ensures that they are available where and when they are expected to be."
Do you actually believe that? Because I don't see how it could possibly be true. Uber does a better job of providing cars when and where they're needed than any other cab company I've ever seen. Not only to they make it easy for drivers to work part time to accommodate higher demand during peak hours they also provide service to areas of cites where taxi drivers flat out refuse to go despite their supposed regulated status to provide service to all parts of the city. I've talked to people who use Uber in Baltimore about it for example and before Uber they would routinely be stranded in bad parts of town or off the beaten path areas and the taxi dispatcher would literally laugh at them if they called for a pickup.
Note in response to responses: Admittedly my experience is limited to a few times that I've been in the more busy areas of Chicago and NYC. I'm certainly open to the idea of coming up with something better, and if an unregulated alternative works, bring it on!
If by "proponents of these services" you mean customers, then answer is that you can detect whether or not they care by seeing how they spend their money. Everyone else is irrelevant.
Last I read the bill in Georgia didn't clear the House on crossover day which is the last day a bill can be passed on to the Georgia Senate.
With regards to the restrictions, the primary backers of the bill in Georgia were existing limo companies. I would be surprised if similar groups are not the reasons for the problems such companies face in other states.
What are the arguments in favor of this regulation? I'm sure that anti-competition lobbies from limos, cabs, etc. play a role, but is there something safety-related as well? And if so, why would 150 Lyft drivers be safer than 400 Lyft drivers?
I don't subscribe to it, but:
Taxis negotiated their monopoly by giving us concessions for e.g. universal service (a taxi, unlike most businesses, is obligated to serve any customer regardless of whether their custom is the most profitable use of the taxi's time). This allows us to depend on taxis as an outsourced component of our public transportation infrastructure. If competition creams the really desirable fairs away from taxis, that might kill taxis. DSX has no desire to implement universal service and never will. This will adversely affect our most vulnerable citizens, like little old ladies who depend on the $3.50 fare to the local supermarket (whose custom taxi drivers hate) due to limited mobility.
How can we be sure drivers at DSX have adequate insurance, safe driving records, and obey the traffic laws? DSX says that they have adequate procedures in place, but DSX has basically designed those procedures itself, and on the face of it DSX seems to operate under accept-everyone-and-weed-out-underperformers, which still means that at any given time there are dozens of commercial drivers who we know nothing about operating on the streets of our fair city.
We depend on "if you screw up, you lose your medallion" to discipline taxi owners (as opposed to operators) in this city. "If you screw up, your account gets deleted and you have to move to a competing provider" doesn't apply the same level of incentive.
If Disruptive Service X (DSX) will let literally anybody with a car start working for them, how can we be sure that DSX isn't a summon-a-rapist app? Cars present a higher risk of rape/kidnapping than e.g. barber salons (n.b. which we also regulate), since a) they move and b) the passenger generally doesn't have a convenient escape out of the door.
There's also a pernicious fallacy that accompanies all these discussions, which is that DSX is either Uber or Lyft. In reality, if regulations are rolled back, DSX is going to be 100 random companies operated by some of the same yutzes that run crappy cab and limo companies.
The universal service concession is the most convincing argument to me; rape and kidnapping the least. After all, each DSX user by necessity has a mobile phone in their hand, and the entire trip from initiation to arrival is scrupulously monitored and recorded by DSX. Not much possibility of crime, at least without being quickly caught.
The arguments in favor are that the taxi cab companies and the local governments have a deal going on. A regular cab pays taxes and fees to the government and if people stop taking regular cabs, all of a sudden a stream of revenue stops coming in. Also, cab companies are losing a lot of drivers and business to services like UberX, Lyft and Sidecar. I've been in many UberX cars in San Francisco where the driver is actually a cab driver, but just hates the way the cab business is run.
The cab companies have an inferior business model and lobbying is the way they compete. Welcome to the political game.
There is no monolithic thing called "regulation" that can be turned on or off. All cars and all businesses are regulated in various ways. Here in DC, cab drivers need to get their cars inspected more often than regular drivers, need to carry additional car insurance beyond the normal minimum, and need to prove they have a license in good standing. These rules seem reasonable and it seems fair to apply them to Uber.
Same as AirBNB. If you can't beat them... lobby to ban them.
I'm fine with abolishing almost all those regulations - they are a huge barrier to entry, and they serve very little public good. However, hotel rooms are highly taxed, while most AirBNB rooms are not - apartment rents are often rented at submarket prices under rent-control schemes, yet the tenants charge full fair to rent out their rooms.
Right now, AirBNB and Uber are basically trying to avoid all regulations by pretending to be just middlemen, but that argument is transparently bullshit.
The intermediary argument is over-used, but I doubt AirBnB is trying to fight hotel on the cost aspect: most of the time, they tend to be similarly priced. They don’t really recommend price at all. My impression was more that hotels (like taxis) abuse the market by strangling the offer, and forcing people to upgrade when they don’t care about luxury.
The company was started to help political operative (the most amenable form of interns) to find a dry place to nap during conferences: that sounds like a specific, unaddressed need rather than a tax evasion scheme.
> highly taxed, while most AirBNB rooms are not - apartment rents are often rented at submarket prices under rent-control schemes,
Actually, the handful of people operating ‘hotel-like’ plans (short-term flat-share, really) that you refer too are always doing it from recently build, not rent controlled, purchased flats, for all sort of reasons; they all explicitly mention that operating anything significant from a rent-controlled flat will get you out in the street faster than you can list your flat.
The classic case is this ‘let’s limit the number of license for safety reasons’: if you want high-grade manure, that is top-shelf bullshit. I went to San Francisco once, and I never felt so much in danger than in that cab: no seat belts, speed limits were for the wuss that he was honking at through-out, he gave multi-tasking an Olympic status; even looking at the (packed) road was too much for him. To the point we felt the need to call the company, if anything to make sure whomever would surely die in there soon would have proper insurance. Let’s say we were told in no uncertain terms that we were alive, therefore our livelihood was not supposed to be our concern. Same for rats in hotels: I don't mind an accident, but I expect action, not denial. I don’t understand how limiting the market is going to have a positive impact on service when the human touch is… lacking.
I chose AirBnB because they had interesting features, as in, creative business model that make they offer relevant to XXIst century dweller: personal contact, restaurant recommendations from our host that make sense, a Wifi router that I can physically access when it needs rebooting, free access to kitchen that won’t charge me a day’s worth of wage to toast two slices of bread at night, significant rebate when staying more than a couple of days.
> hotel rooms are highly taxed, while most AirBNB rooms are not
As you point out: they are intermediaries, and I’m positive they wouldn’t care charging extra tax. I would put them on a list, and that list could be artificially limited, making them possible victim of a lobbying effort by hotel chains who want to keep a stronghold on a market, rather than admit it has evolved and adapt -- so I understand their reservations. But passing taxes is generally a business-neutral act, so I doubt they care that much. Once again: look and compare, they are not trying to be cheaper than hotels.
A few things:
- There's been several reports of SF landlords kicking out tenants from rent controlled apartments to lease out rooms on AirBnB. While I am against rent control (it's a terrible system that creates a few winners and fucks over most people who cannot get such a flat) it's obvious that this is an abuse of the system
- Until recently, AirBnB fought tooth and nail against paying hotel taxes.
I think safety regulations are mostly overkill, and I'd get rid of most of them in a heartbeat, but while those regulations exist, you cannot simply outcompete other players that are forced to follow regulations you avoid.
> There's been several reports of SF landlords kicking out tenants from rent controlled apartments to lease out rooms on AirBnB.
That’s the opposite scenario of the one describe initially.
> Until recently, AirBnB fought tooth and nail against paying hotel taxes. > I think safety regulations
You appear to be conflating taxes (that do nothing for the end user, if increase budget pressure on safety and service) and safety -- and ignoring the fact that what is generally actually enforced are quotas. There is no significant taxes on taxis for instance: it's in every case I’ve heard about a self-enforced tacit price for recommending someone for a licence once you quit; the actual tax exist, but is generally negligible.
> while those regulations exist, you cannot simply outcompete other players that are forced to follow regulations you avoid.
Actually, if your service include a reporting tool, the HUGE and unquestionably largest addition of both AirBnB and Uber, but before them eBay, you end up having to follow far stricter practice that include service, and that, unlike regulations, can adapt.
Price control, quota, safety regulation, user reports… if you confuse those, you end up presenting a false dichotomy between two ways of organising a service.
Limiting the number of drivers Uber or Lyft is allowed to have working in an area is short term thinking, likely promoted in large part by existing taxi and limo companies that want to keep their businesses going.
It's nothing compared to the regulatory push the teamsters will make when automated trucks begin to take on the existing industry. That said, I think it's a good lesson for SV companies and a warning to count on and prepare for government reaction to new technologies effect on regular jobs.
it is sad to see this but thoroughly unexpected.
all these useful and innovative startups are great, but they need to learn the most basic respect for the law and its spirit. this is the nth time something like this has happened in the startup community and its embarassing.
we have taxi driver licenses and regulations for a reason. naivete isn't an excuse for blatantly circumventing them - even if you provide a genuinely useful service that we would all like to see grow and help redefine our futures...
oh wait ... that should have been 'expected'
It is surprising that on a news site focused around entrepreneurial capitalism in technology, the majority of the commenters are statist by default. Have you not heard libertarian/free market arguments on this topic or have you found them unconvincing?