Taxis Go to War with the Über App

May 28, 2014
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As I waited for a shuttle bus at O’Hare airport, I noticed a small green Toyota Corolla with no visible signage park diagonally ten feet or so ahead of the taxi station and its trunk popping open.  An Indian man in a turban got out of the car, greeted a couple who came out from inside the terminal and began loading their luggage into his car. Just then three men got out of their signed taxis and began jostling the Indian man. One of the men began smashing the Toyota’s windows with an aluminum baseball bat, which is when the police showed up and I got moved on.

Taxis Go to War with the Über App

According to WGN TV News the next morning, this little incident is “part of an ongoing war.” There has always been competition, especially at airports, between official state- and city-sanctioned taxicab companies and illegal ‘gypsy’ services, only now competition has become much fiercer because of the Über app.

After being bolstered by a US$258m investment from Google Ventures and TPG, the taxi-hailing app Über operates in almost 120 cities worldwide, over twice as many as six months ago. As a result of this massive expansion, it has faced court challenges from taxi unions, government fines, threats of violence against its drivers worldwide and, in couple of cases in Brussels and Montreal, actual bodily harm.

Über’s stated mission, to become “everyone’s private driver” is a cause of much anger and disruption in spite of desperately needing an ordered environment to begin to thrive. Transportation policy may intersect and clash with a lot of legal regimes and heavily worshipped cash cows. In Chicago, for example, taxi companies (or sometimes single owners) have to pay $300,000 to the city for a shield allowing them to charge for fares or rent their taxis out to freelancers.

Last week, according to Crain’s Chicago Business, Über drivers in Brussels were threatened with €10,000 fines for carrying private passengers. “Outrageous,” said Neelie Kroes, the European Union’s digital commissioner. Yet, two days later, a Berlin court sided with the local taxi association against Über, ruling that its drivers are in effect rental car businesses rather than taxis. And this June, London’s famous black Hackney cab drivers plan to block the city’s traffic to a standstill in protest against Über.

Taxis Go to War with the Über App

Such service classifications, allowing professional limos or part-time ‘rider-share’ drivers are getting trickier and trickier to litigate. Additionally, new Überstyle startups like Lyft operate in Dallas and Boston and will do so until cities produce concrete new rules to halt them. Whatever happens, having been valued at more than $3bn last year, Über cannot afford to step on the brake.  Lyft, its chief Silicon Valley rival, recently received a $250m investment which places the ride-sharing start-up’s total funding up there with Über, the Alibaba-backed Kuaidi Dache in China and London’s Hailo. Yet they face ruthless enemy in federal, state and municipal bureaucracies and the traditional taxi business.

 Clearly the position Über and its allies will take is that these municipalities and administrations are unfriendly toward enterprise and innovation. Still, in September 2013, California became the first state in the US to regulate ride-sharing, creating a new category of “transportation network companies” that are required to train drivers, run background checks and provide insurance.

Unfortunately, in a world where litigation is king and juries are capricious, the lawsuits never end. Atypically, on New Year’s Eve, an Über driver killed a six-year-old girl in San Francisco. Über chose to deny responsibility because the driver was not carrying a passenger when the accident happened. Nevertheless, as the child’s family sued the company, the Californian Public Utilities Commission is about to reopen its inquiry into ride-sharing. This caused Über to update its $1m insurance policy last month to add commercial liability coverage between trips. Who pays for this? Well, a week ago Über added a new $1 “safe rides fee” to cover increased costs associated with future development of safety initiatives. Thus, as it litigates to keep its fares lower than those of licensed taxi drivers. it ended up taking on extras of its

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  1. Another example of how the Internet is disrupting a very old industry. I see the cabbies winning this one though.

  2. I’m a Chicago cabbie and I do UberTaxi. I have not been able to find the story on WGN TV, or an other news source, of this attack that this unattributed author claims to have witnessed at O’hare.

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