Uber Hits The Skids
Unless you live under a non wifi enabled rock, you pretty much must know of the company called Uber. According to Wikipedia, Uber is an app-based transportation network and taxi company. Basically you use their app to hail a taxi. The real difference here is that the Taxi may be a taxi, it may be a private car. See, Uber isn’t much for following local regulation, and part of the initial spin of the app was that not only did it allow for taxis, but it also allowed for private cars to be used, good for people wanting to earn some extra money.
Uber hasn’t had it easy, faced with plenty of protest and complaint around the world, their attitude that local rules don’t matter has put them solidly on the radar of licensed taxi operators and municipal governments worldwide. Their “service” has been poked, prodded, banned, and restricted in all sorts of ways. However, the last few months have been particularly painful, with two separate cases of drivers raping female passengers (one in India, the other just reported in Boston), as well as reports of drivers attacking passengers and other unseemly issues. These are truly tragic events, but honestly not entirely out of the realm of the normal world of taxis. It’s Uber’s seeming desire to shirk it’s responsibility that is truly causing the problems.
Uber basically points at their terms and conditions and says that the safety of the ride is the consumers’ responsiblity. They are a logistics company, providing the service of hailing Taxis, but does not actually operate them. Yet, they provide all the services around the ride, from the hailing to the payment – it’s all done through Uber. They seem not to want to deal with or accept responsibility for the actual dirty work of providing the (safe) product to the consumer.
Uber has also gotten in a lot of trouble for their pricing model, one of the features being that the rates are variable based on demand. In times of high demand, Uber raises the prices on rides (so called surge pricing). The company claims this isn’t to profit, but rather to encourage more drivers to get to work to make more money. However, surge pricing has kicked in during natural disasters and even more recently in Sydney during a hostage taking situation, leaving the company running to repair the damage done by this policy. Pricing like this goes against the rules of operating a taxi in almost any city, and smacks of profiteering (it should be noted that Uber’s income is a percentage of the total fare, and that during surge times, they too appear to be making more money per ride).
The key to Uber is that it attempts to bypass and ignore local Taxi and hire car regulations. It tries to bypass what it seems as obstructionist or restrictive laws, but in doing so they also tends to ignore the safety standards and rules in place. Much of the conflict of Uber has been about the use of private cars and drivers without a taxi license or medallion to provide service. There has also been much made about insurance issues, including the question of appropriate insurance for non-taxi / commercial cars as well as when the coverage would apply. Again, much of it is the dirty work of actually providing the rides in the real world, and it seems to be something that Uber is both not very good at and a poor student when it comes to learning about it. Much of their “improvements” in these area have come as the result of incidents and legal issues, and not by forethought or planning.
For me, the issues of Uber and other “killer apps” that touch real world services is that they have a very hard time crossing the line from “great technical idea” to “actual legal service”. Uber seems to think that they can use terms and conditions to wave a magic wand over their service and make the nasty, dirty, and real world pieces become someone else’s problems. They seem to feel that regulations built up over decades just don’t apply to them, and that local authorities should have no control over them in any manner. They feel they should be able to profit not only from cutting out the middle man, but by ignoring all the regulations in place which make the services legal and in compliance with local regulations and rules.
Are those local rules and regulations too onerous? Are things like taxi Medallions or limits on numbers of licensed taxis a block for new services to enter the field? Are some rules created not to protect the consumers but in fact to cost them money? The answer is yes, and it’s why to some extent the idea of Uber is great. However, the attitude of Uber (and others) that they can pick and choose the rules and laws that they want to follow and f–k the rest is a huge issue, and one that cannot be tolerated. What would come if Uber decided that their drivers don’t have to pay attention to traffic lights or stop signs, or that they are “authorized vehicles” and they could do U-turns in the middle of highways and drive the wrong way down one way streets? They are all just rules and laws, choosing to ignore some today raised the question of what else could be ignored in the future.
Are those extreme examples? Of course they are. However, consider the idea of Uber moving all of the payments offshore, and giving the drivers access to the funds without reporting income, as an example. Or for that matter, consider the idea of Uber helping people to register their cars in states with lower insurance requirements or costs so that they can make more money. There are any number of things that a large international based company can do to bypass what it seems as local, regional, or even national restrictions on their services and the profits of their company and their drivers. Perhaps they could shift to some sort of Ubercoin to pay for rides, or use Bitcoin and not report the transactions for tax purposes.
All of this of course with the background of the company disavowing as responsibility for the rides, the drivers, the cars, and the actions of those people involved in the actual providing of the service. They want to profit from the service, but they don’t want any legal responsibility for it. This attempt to both have their hands in the pockets of consumers and drivers while not actually accepting any legal standing for doing so is what will be their downfall. Local regulations are being adapted and changed in many areas to either outlaw or restrict the service, including requirements that their apps be certified as taxi meters – which may be all but impossible under existing regulations.
Uber is likely here to stay. Companies such as Baidu in China have put a lot of money into the game, and certainly in areas with less regulation or easily bought off officials, Uber may prosper. But in the western world, my guess is that they have about 2-3 years left under their current devil may care operating systems before they will have to pivot and become a true logistics provider for local taxi companies, and nothing more.