Since the introduction of Uber in 2009, ride-sharing services grown significantly. These services have become very popular among the younger generations and popular in city and urban areas. Some people are already aware but the easy to access ride comes with some overlooked issues. Restrictions like insurance requirements, handicap access, and rate restrictions are in place for taxis but not currently applicable to ride-sharing services.
With the added convenience for users, ride-sharing services have created a very competitive and challenging situation for businesses like taxi companies. With less restriction and added convenience it is hard for taxi companies to compete with the growing and unregulated ride-hailing services. Many taxi drivers are quitting and taxi companies are closing due to the lack of profit as a result of this competition. I argue that restrictions, like rate restrictions, must be put into place in order to avoid the negative legal impacts, as well as the unfair economic and social implications that ride-sharing services bring along.
GROWTH AND IT’S IMPACTS
The introduction of ride-sharing services was a confusing time. The success they found was a big surprise and many people did not know how to classify the service system. This cloudy and unsure option allowed for ride-sharing services to grow at rapid and aggressive rates. This growth was due to competitive pricing which allowed them to beat out the existing competition like taxi companies. The rates that ride-sharing services are offering are so competitive because they are often not restricted by local, state, or federal governments. Many reports can support that claim. For instance, The Technology Policy Institute even released a peer reviewed article that states that “The rapid growth of ride-sharing has upended the taxicab industry,” (Wallsten 2). This rapid growth is seen wherever ride-sharing services like Uber are left unrestricted.
The chart to the left of the page shows very interesting data that concerns ride-sharing services compared to taxis. The chart is showing an overall increase in the amount of pickups but a much stronger increase in that of Uber. Based on the taxi increase which just indicates an increase in user volume. Since Uber shows a much larger increase than taxis it can be inferred that Uber is growing at a rate much higher than Lyft and the taxi industry.
This chart below uses the same dataset as the first chart above. This differs from the last chart in that the data is of drop-offs instead of pick-ups. Also, instead of comparing Uber to the taxi industry this chart compares Uber’s growth to other ride-sharing services like Lyft and Wingz. By giving this comparison it shows viewers how Uber’s growth is out of the normal trend amongst ride-sharing companies. Clearly the way that Uber is run outside of the rules of the taxi regulation has allowed Uber to grow with an almost exponential trend. Uber is exceeding both the taxi industry and its fellow ride-sharing companies. The fact that other ride-sharing services do not show the same growth leaves infer that Uber is the front runner and those that follow in its path will be seen as knock-offs or lesser than the wildly popular and successful parent company of Uber.
Both of these visualizations use data that comes from a Linkedin article by Athan Rebelos, who writes on Uber and is the US Western Business and Sales Manager with Verifone, as well as the President of a consulting and management corporation.
REGULATING THE BEAST
This growth is coveted by the ride-sharing services and protected like a dog protects a bone. Ride-sharing services like Uber are known to work around the law until it becomes expensive for them to do so. A University of Chicago Law Review article describes the behavior as “extremely aggressive toward competitors and seems to disregard the law when convenient” (Abt 87). Without specific regulation ride-sharing services will be able to continue to work around the rules while snuffing out their competition from doing so.
Regulations will also level the playing field for the competing taxi companies. The outrage from the taxi industry has been seen widely. Some cities have outright made Uber illegal and “In some of the most violent protests against Uber, 3,000 taxi drivers this week blocked main roads in Paris, including routes to airports, and burnt tyres” (Guardian 1). Allowing the two entities to clash over an unfair playing field would make no sense in a society based on equality.
The different aspects of ride-sharing all have areas that could be legally or economically concerning. The ability to change pricing or apply a “surge charge” allows ride-sharing services to take advantage of customers. Drawing them in with low prices but raising the price during a “surge” when a user needs a ride desperately. While the surge may range from still being less expensive than a taxi to multiple times as expensive as a taxi. A law journal from Ohio State describes Uber saying, “enjoys an unfair advantage because it need not medallions or comply with consumer protection or pricing regulations” (Rauch 904). There are many people who are very conscientious about their spending normally but are willing to pay the ridiculous charge for a 2-mile ride once they are drunk downtown. While it does rest on the individual to be responsible for their own spending once they are impaired in any way, which is typically the case at the surge times, they do not think to change their source of transportation.
Many local governments have considered making the regulation changes that are needed to make ride-sharing fair to all. For example, the Journal of Corporation Law article, “Introduction to the Sharing Economy and Uber Technologies,” focuses mainly on how and why ride-hailing services need to be regulated. Specifically, they state the dangers of not regulating the services as, “First, no extensive safeguards ensure consumer protection. Second, allowing a similar industry to operate unregulated while holding another responsible for pages of regulations violates anticompetitive policy. Finally, predatory pricing threatens to drive out established businesses that do provide protections for consumers” (Iowa 745). This addresses major issues that consumers may have with ride-sharing services while also addressing the idea of fairness to pre-established businesses like taxi companies who already protect their consumers. This new system cannot simply be allowed to come in and squash the old taxi industry because taxis are still the dominant way for people to request rides and the rapid growth of ride-sharing services cannot sustain itself.
Many local governments have already made ground on establishing regulation for the ride-sharing services like Uber. They have also come to address the uniqueness of ride-sharing services. Being both an innovative service and unlike anything done before it they must be defined as something outside of the norm. An Economic Times article describes how “The regulatory framework has been evolving” (Times 1), since Uber came to be and how local governments have moved to “establishing a new category called Transportation Network Company, ride-sharing companies like Uber were mandated to obtain a license, conduct criminal background checks on drivers, set up a driver-training program and offer a commercial insurance policy coverage of $1 million per incident” (Times 1). This addresses the problems of customer safety while still not hindering a ride-sharing service’s ability to succeed in a competitive market.
TAXIS ARE NEEDED AND SO IS REGULATION
If ride-sharing services like Uber were allowed to squash the competition, there will be no reason for the competitive pricing. Then without the need for lower prices and no legal restrictions in place to protect both customers and employees, ride-sharing services will be able to boost their prices and take advantage of the dwindling competition. So, in order to prevent ride-sharing services from taking advantage of their customers and employees the basic policy of establishing a way to classify ride-sharing services, set boundaries for pricing, obtaining licenses and background checks on employees, driver training, and insurance coverage.
THEY NEED YOU!
41 Iowa J. Corp. L. 727. (Spring, 2016): 15831 words. LexisNexis Academic. Web. Date Accessed: 2016/10/18.
Abt, Clark C. “The Social Costs of Uber.” Social Indicators Research2.2 (1975): 175-90. The University of Chicago Law Review. The University of Chicago. Web. <https://lawreview.uchicago.edu/page/social-costs-uber>.
Rauch, Daniel E.; Schleicher, David. “Like Uber, but for Local Government Law: The Future of Local Regulation of the Sharing Economy.” Ohio State Law Journal 76.4 (2015): 901-964.
Rebelos, Athan. “The Numbers Revealed for Uber, Lyft and Taxi – Raw Data from SFO.” Linkedin. N.p., 16 July 2015. Web. 15 Nov. 2016. <https://www.linkedin.com/pulse/numbers-revealed-uber-lyft-taxi-raw-data-from-sfo-athan-rebelos>.
“Uber expansion meets global revolt and crackdown; Cities around the world are banning Uber because of its lack of safety measures and knowledge, while licensed cabbies protest at the unfair competition.” The Guardian. (July 3, 2015 Friday 12:52 PM GMT): 927 words. LexisNexis Academic. Web. Date Accessed: 2016/10/18.
“Uber runs into trouble with governments all over the world.” The Economic Times. (August 28, 2016 Sunday): 2317 words. LexisNexis Academic. Web. Date Accessed: 2016/10/18.
Wallsten, Scott. “The competitive effects of the sharing economy: how is Uber changing taxis?” Technology Policy Institute (2015).