Uber wins French court battle, but still fights global war
If you want to understand why Uber is under pressure in France—where its low-cost uberPOP narrowly avoided being banned on Friday—you have to understand that Uber is caught in a fight that extends way beyond ridesharing. At stake is how the country’s vast regulatory powers can withstand the Internet age and still maintain the generous benefits French cherish—state-funded retirement, free schooling and public health care, to name three.
But if you want to understand the ride-sharing service’s growing popularity, try getting home from a Christmas party near midnight in Paris.
Here are your options. One, walk several blocks in the freezing cold, carrying your exhausted eight-year-old boy, in the hope of finding a taxi depot and an available driver who is willing to go your way. Two, call a medallion taxi company, stay on hold for five minutes, wait another 10 minutes for the driver to arrive and eventually pay about €15 (cash only) when you arrive home.
I chose the third option on Thursday night. I pressed the uberPOP button on my iPhone, put on my coat and my child’s coat, and headed to the elevator. By the time we reached street level, the driver Ahmed had already called to say he was waiting outside. He momentarily got lost amid the Christmas bedlam on the Champs Elysée. But who cares? The total cost on my credit card: Five euros.
Call me a medallion-cab wrecker, but I’m hooked.
Uber Technologies Inc.’s global image has been battered in recent weeks, with revelations in the U.S. that its God View software snoops on high-profile passengers and suggestions that its executives monitor unfriendly journalists. A New Delhi driver with a decade-long rap sheet is in custody for allegedly raping a passenger; the Indian capital suspended the service on Monday. In Europe, months of enraged protests from medallion-cab drivers have led to several court cases. The Netherlands on Monday banned uberPOP (which splits fares with drivers who use their own cars) on the grounds that its employees do not have professional taxi licenses. On Tuesday, a Spanish court suspended Uber for unfair competition. Belgium did the same last April and Germany followed in October.
Now comes France, where the company says it has about 500,000 subscribers, and offers a full range of services, from uberPOP to black-car service. This month Parisians can even have Uber deliver their Christmas trees.
No wonder then that taxi companies have battled to shut down Uber. Friday’s ruling Paris centered on uberPOP’s use of non-professional drivers, which taxi companies say is unfair competition. A Paris commercial court decided not to ban the service, but Uber’s problems are not over in France; its use of non-licensed drivers now goes to a higher court for a final ruling. “Justice will prevail but not today,” Paul de Rosen of Transdev PLC, one of the tax companies that brought the action against Uber, told the Wall Street Journal. The action came after a French judge ruled in mid-October that the company was falsely advertising uberPOP as a carpooling service, apparently to skirt taxi rules. An earlier law passed in September allows only licensed taxis to use GPS to show where their cars and customers are, and requires drivers to return to a depot between each ride, as Parisian medallion cabs do (there’s no hailing one with your hand), but Uber and others routinely flout those rules. And in another attempt to stop Uber from swallowing up Paris medallion companies, the government has imposed a 15-minute delay in pickups after someone orders a car—something Ahmed and other Uber drivers I have simply ignore.
But loosening state control is not easy, and taxis are not the only sector bound by the 400,000 or so pages of French rules and regulations. The government for example also regulates how many ounces of food kindergarten children receive in school lunchrooms. Seriously.
In August, President François Hollande, whose poll ratings have sunk to about 12%, appointed the 36-year-old ex-Rothschild banker Emmanuel Macron as Economy Minister to power through changes, perhaps calculating that a dashing young politician who speaks flawless English might have a better shot than himself.
On Thursday Macron made it clear that he backed Uber, suggesting to a Silicon Valley crowd at the three-day LeWeb tech conference outside Paris that the system of allowing only medallion cabs to operate was likely over. “It’s not about buying a license,” he said. “When they [rideshare companies like Uber] provide the right level of security, if they can hire young people, then it’s fine, it’s good.”
In truth, taxicab companies are very late in challenging the newcomers and now there seems little way to turn back the clock.
Uber’s rivals in France include French startups LeCab and Chauffeur-Privé, whose popularity is growing fast. BlaBlaCar, another French startup that launched in 2006, offers long-distance shared rides in 13 countries. (LeCab joined the legal action against Uber, since unlike Uber, it is not permitted to have non-commercially-licensed drivers.) SnapCar, a French rideshare company, announced this week it had raised €2 million in venture capital to build out its B2B business.
Indeed, it is no surprise Paris has proved fertile territory for transportation apps. As most Parisians know, there are too few taxis, and they are expensive. And French people who own cars have jumped on driving for uberPOP as a way of boosting their income; every Uber driver I have encountered is behind the wheel as their second job.
Friday’s ruling on Uber ensures that the French government will probably not try to stop people from earning that extra money. If it does, I might have to skip the next Christmas party, and stay home.
Update 12/15/2014: French government to ban UberPop from next year