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Protests and Prosecution: The Rocky Rise of Uber

Car Rental & Rail | Brian Major | September 11, 2015

Protests and Prosecution: The Rocky Rise of Uber

PHOTO: Taxi drivers have been protesting Uber in Brazil for months, as in this photo from June, culminating in thousands taking to the streets of Sao Paulo last week. Photo via Tania Rego / Agency Brazil

Controversy is as much a hallmark of Uber, the app-based, ride-sharing firm, as the service it provides to city dwellers and travelers around the world. Uber-directed rancor continued this week as lawmakers in Sao Paulo, Brazil voted Wednesday to ban the service from operating within the city limits.

The vote followed a protest in which thousands of taxi drivers blocked streets and avenues in Brazil's largest city to protest Uber. Sao Paulo’s mayor, Fernando Haddad, now has 15 days to approve or veto the proposed legislation. Similar bans are being considered in Rio de Janeiro, which will host the 12016 Summer Olympics, and in Brasilia and Belo Horizonte, two of the country’s largest cities.  

The Sao Paulo city council vote shows strong support for Brazil’s taxi drivers’ union, whose members contend the service amounts to unfair competition because Uber drivers are not required to pay industry fees or follow regulations imposed on licensed taxi drivers.

In response, officials at San Francisco-based Uber say the service complements, rather than competes with, licensed taxis in Sao Paulo. Fabio Sabba, Uber’s communications director in Brazil, told the Wall Street Journal that the company supports additional regulations and taxation. He said a ban would reduce consumer choice and effectively scuttle digital innovations that might address Sao Paulo’s traffic congestion.

The Sao Paulo outcome mirrors opposition Uber has faced in other cities around the world. Since 2014, anti-Uber protests have been held in Germany, India, Spain, Colombia, France, Italy, China and England, among other countries.

This summer, two Uber executives were arrested in France for running an “illegal” taxi service. Also earlier this year a Berlin court upheld a ban on Uber, saying the service did not follow German laws on passenger carriage. The court said Uber operators failed to employ drivers or use vehicles that were licensed to carry passengers, and drivers did not carry full insurance coverage.

Uber is also facing disputes with local governments in the U.S. and Australia. However Uber, now valued at $50 billion according to company officials, continues to grow. The service seems to offer particular appeal in municipalities under-served by traditional taxis. In Sao Paulo for example there are only 35,000 licensed taxis for the city’s’ 12 million residents according to the Wall Street Journal report.

Meanwhile in New York, where yellow- and green-colored licensed taxis are ubiquitous and share the streets with livery cars, upscale “black” cars and also multiple public transportation options, officials have shown recent support for the Uber model. More significantly, the New York officials seem to appreciate the transportation option the service represents.

In fact on the same day that Sao Paulo’s city council voted to ban Uber, a New York Supreme Court judge in Queens dismissed lawsuits by taxi companies that claimed Uber operates illegally.

The taxi companies had joined with credit unions that finance New York’s highly valued medallion licenses to bring the suits, which argued that city law only allows yellow and green cabs to pick up street hails.

On Wednesday Judge Allan Weiss ruled that summoning an Uber car via the smartphone app is not a street hail. Weiss said New York’s New York Taxi & Limousine Commission “having the authority to promote technological innovation and new services may treat the new companies somewhat different from the traditional companies."

TLC’s chairwoman praised the ruling. “This decision is a victory for the riding public and leaves no question as to the appropriateness of our regulatory approach to app-dispatched services,” said Meera Joshi said in a statement.

“Passengers will remain free to continue to enjoy the many transportation options available to them, whether new, more traditional, or both,” she added.

While the Uber-based angst displayed in other cities has certainly not been absent from the Big Apple, city officials seem to have adopted an approach that embraces the ride-sharing concept while implementing some form of regulatory structure for a service that simply did not exist less than a decade ago.

Uber, and other app-based ride-sharing services like Lyft, will also have to report data breaches to the TLC and must also inform customers of their right to complain to the commission, which can suspend or revoke a driver’s license.

City officials in Toronto are working along similar lines, having recently produced the first guidelines for municipal regulation of Uber. The guidelines, which must still undergo an extensive approvals process, would include rules for Uber’s operation and include a regulation that Uber drivers be covered by appropriate insurance.

Toronto Mayor John Tory said the municipality should seek to regulate the company rather than ban it. “In the end, this is about choice for people,” he said, adding “Uber and technologies like it are here to stay.”

There’s little doubt that Tory is on the right track. Uber and other app-based services provide a genuine benefit to travelers and municipal residents in cities around the world. The business model is new and may conflict with existing laws in some areas, but the answer should be study and effective regulation, not draconian bans that reduce traveler options.

Regardless of the name or the technology, be it Uber, Lyft, Smuber or Huber, more choice is always in the consumer’s best interest.

Personally I’ve yet to take my first Uber ride. As a New Yorker, I have plenty of taxi and car service options. I just haven’t had the chance (or inclination) to utilize Uber. But I recall returning to JFK airport earlier this year after a long overseas flight only to be faced with an equally long line for a taxi.

My home in Brooklyn is only about 20 minutes from the airport, so I wasn’t too impatient. But the reporter I was traveling with lived a lot farther away, in Harlem. To him that line was unbearable.

So he whipped out his smartphone, fired up his Uber app and in about six minutes a driver met him on the line and escorted him to a car. I have to admit I felt a little jealous. Choice is a good thing. 

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