Uber's Battles (7/30)     Print Email

By Jamie Connolly, European Affairs Editorial Assistant

Innovative companies such as Uber are beginning to revolutionize urban transport through today’s latest technologies. Their success reflects a drive towards an ever-increasing “gig-based economy” and its ability to challenge established economic models through their use of disruptive technology.

jamiechartSince its inauguration in 2009, Uber has rapidly expanded into a worldwide phenomenon that is currently valued at a staggering $50 billion.[1] Available in 58 countries,[2] Uber offers its users drastically reduced cab fares [when demand is low], whilst offering a more luxurious service through its UberXL service. But, the ride-booking company that connects drivers and clients through a Smartphone app is facing tough criticism both in the US and Europe for differing reasons.

The latest battleground was New York City, where Mayor Bill Di Blasio had to back down from his plans to place a cap on the number of Uber drivers allowed to operate within the city, and follows recent clashes between UberPOP drivers and traditional cab drivers in Paris.[3]

In New York, Di Blasio’s campaign was centered on a fear of “excessive congestion” within the city. Indeed, Uber is seeking to add a stunning 25,000 drivers to its New York service by the end of 2015 – a figure that will continue to breed resentment and anger from traditional yellow taxicab companies, but will unavoidably add further congestion to the cities streets.

The heated standoff came as Uber’s aggressive business model has come under increasing scrutiny, accused of breaking employment laws and intimidating its competitors. In a twitter crusade presumably directed towards Di Blasio, Uber CEO, Travis Kalanick countered City Hall by claiming that “Uber pays for more insurance, pays more in taxes, and Uber drivers make more per hour.”[4] Ultimately, Uber was allowed to continue its business as usual, with Josh Mohrer, Uber’s general manager in New York, urging new drivers to continue joining the company.[5]

Uber’s New York win, however, could be short lived. In order to continue its operations, the company must agree to a four-month study on its effect on the city’s traffic with another review likely to take place sometime in November leaving a degree of uncertainty over the company’s future growth within the city.

Across the Atlantic, a European version of Uber, UberPOP, offers users the choice between being linked to licensed or unlicensed drivers.

jamiepictureProtests erupted after France’s licensed cab drivers claimed that their incomes had been reduced between 20-30 per cent since the introduction of UberPOP, with angry protestors targeting Uber vehicles in and around the country’s airports with some travelers having to walk along busy highways in order to catch their flights.[6]

 

The introduction of the Thevenoud Law, which primarily targets unlicensed cab drivers, comes after Uber was initially banned last October,[7] but proved difficult to enforce culminating in June’s violent demonstrations. Thibaud Simphal [Uber’s operations manager in Paris] labeled the Thevenoud Law as “unfair, adopted in haste and one which slows down the development of the sector.”

Indeed, the French government appears to be coming round to the idea of an app based car-sharing service. French Economic Minister, Emmanuel Macron, this week [Monday 27 July] called for a new taxi legislation to be adopted in light of the “new dynamics of the sector.”[8] Mr. Macron was speaking at a start-up function that was also attended by British Finance Minister, George Osborne where he later confirmed that ride-sharing companies like Uber had created “a demand” for their services.

While current efforts to curtail Uber’s expansion have been most visible in New York and Paris, these are but two fronts in a widening confrontation. In its home state of California, Uber is now fighting serious regulatory challenges: a move to reclassify its drivers as employees rather than independent contractors, and a requirement to make data from every Uber ride available to state officials. Both challenges could, if upheld, upend Uber’s business model, offer growing room to its’ main local competitors Lyft and Sidecar, and encourage even greater regulatory scrutiny of its operations. All disruptions that this poster child of the “gig-based” economy could do without.

 

[1]http://www.forbes.com/sites/chrismyers/2015/05/13/decoding-ubers-50-billion-valuation-and-what-it-means-for-you/

[2]https://www.uber.com/cities

[3]http://www.nytimes.com/2015/06/26/business/international/uber-protests-france.html

[4]https://twitter.com/travisk

[5]http://www.nytimes.com/2015/07/23/nyregion/de-blasio-administration-dropping-plan-for-uber-cap-for-now.html

[6]http://www.bbc.com/news/world-europe-33267581

[7]http://www.bbc.com/news/world-europe-33281896

[8]http://www.businessinsider.com/r-taxi-laws-need-post-uber-rethink-french-economy-minister-says-2015-7