All Major Cities Should Monitor New York's Uber Saga

When it was established eight years ago, few suspected that in so short a time, Uber would not only become the standard-bearer for the ride-hailing, ride-sharing services industry, but also America’s largest privately owned tech firm. “Since it first came on to our streets Uber has broken the law, exploited its drivers and refused to take responsibility for the safety of passengers,” according to the general secretary of London’s Licensed Taxi Drivers Association, which oversees that city’s cab industry. His remarks were made as the group moved to revoke Uber’s license to do business in London in the fall of 2017.

Though Uber has faced legal challenges over its business and hiring practices in U.S. cities such as New York, Seattle, its home city of San Francisco, and in other countries such as France and Germany, the company’s response to challenges by competitors and government regulators has, at times, been nothing short of draconian.

In Austin, Texas, several passengers charged that they were assaulted or raped by Uber drivers. The city ordered Uber to do more complete background checks of its drivers; in response, Uber pulled out of Austin.  It ultimately returned, but not before using its sizable lobbying operation in the state to successfully influence the Texas legislature to overrule the city’s action.

“Ground zero” of all the benefits AND detriments of ride-hailing/ride-sharing vs. traditional taxicab/livery industry is right here in New York City. While this new option has offered more economical ways for people to get around town, it has also helped lay waste to the livelihoods of taxi drivers and compromised the city’s oversight of the livery industry in ways never before experienced. Leaders such as Mayor de Blasio and Governor Cuomo have been stymied, while state lawmakers and New York’s City Council seem ineffectual in establishing a fair, even-handed strategy to deal with these problems.

One of many examples of such inequities surrounds the city’s Taxi and Limousine Commission requirement that its yellow taxis must undergo a 200-point safety inspection every four months in order to maintain their obscenely expensive medallions to operate in the five boroughs. But curiously, the commission mandates the same 200-point inspection for ride-hailing app- based for-hire services once every two years, just like livery and limousine services.

This is one example of the differences in how the industries are regulated. There continues to be intense debate as the taxicab industry has seen the value of medallions crater, thereby pushing many drivers into financial crises which are alleged to have caused several despondent cab drivers to commit suicide in recent months. 

Ride-hailing app carriers have shattered the boundaries between traditional cab licenses and less expensive and less restrictive livery or black-car licenses.  Even though the value of taxi medallions has shrunk to around $200,000 from a high not long ago of $1.3 million, the drop in taxicab driver income as a result of ride-sharing/hailing dominance finds many other taxicab license holders losing their medallions because they can’t keep up with their payments to the Commission.

Ride-sharing companies could soon be facing a new brand of competition. Scooter rental companies like Lyme and Bird are drawing private equity investors like bees to honey. Bird alone got over a billion dollars in PE money in a single week back in late May, and both scooter rental companies are busy on the West Coast and in the Sun Belt.  Hopefully, this time local governments will see the value of getting ahead of the curve in dealing with changes in the transportation service industry.