Cities Trying to Protect Taxi Biz Against Uber Onslaught

Uber

I hate the overuse of the term “disruption.” It may be descriptive but it has become a cliche. It clearly applies, however, in the case of Uber, and similar ride-sharing services Lyft and SideCar.

While the taxi business is still healthy in New York it has dramatically declined in other US cities. For example, an article appearing in the San Francisco Chronicle cited this remarkable statistic about the fall off in ridership:

The number of trips taken by taxi plummeted 65 percent in just 15 months, according to a report presented to the San Francisco Municipal Transportation Agency board Tuesday…

The average number of trips per taxi has been on a steady slide – from 1,424 per month in March 2012 to 504 this July.

The reason for this is clear. Notwithstanding that Uber is ethically challenged, the user experience is superior to conventional taxis — from the condition of the vehicles to the app experience, tip-free pricing, mobile payments and emailed receipt. The payments experience is one of the primary reasons I use Uber.

District Attorneys in San Francisco and Los Angeles have reacted to the near-mortal wounding of local taxi businesses by threatening a crackdown on Uber et al. The DAs sent letters to the ride-sharing companies last week citing a number of laws that they’re allegedly breaking. The companies disagree and have protested.

There may indeed be ways in which Uber and its peers are not in full compliance with the law (e.g., insurance requirements). Yet I also believe that at least part of the DAs’ motivation for sending the letters is lobbying by the taxi industry. This is a case of vested interests being threatened and using government to try and stop or slow a competitive development in the market.

It’s also the case of change happening too quickly for government officials. In Europe reactions against Uber, etc. have been stronger. Uber is perceived as a kind of threat to a way of life. And in a way it is.

Uber is an interesting example of several things. Like AirBnB, it’s an end-to-end local marketplace. It’s an example of how mobile payments are being successfully implemented for offline services.

But for purposes of this post it represents a radically better user experience demolishing a relatively poor one. While taxis are entitled to try and “level the playing field” by getting Uber to comply with regulations they must adhere to, in the end taxis must fundamentally change how they operate or face further losses.

Though it happens all the time, it’s ultimately folly for vested interests to use government to block or put the brakes on upstarts and competitive pressure. That only delays the inevitable.

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