Uber gets regular regulatory headaches, but this week it’s suffering a full-on migraine.
The company’s European travails, in particular, suggest that its recent attempts at an international charm offensive are not going so well. Back in January, Uber CEO Travis Kalanick pitched the company’s potential for creating jobs to local authorities across the European Union, claiming that many taxis there operate “off-grid” and that Uber would be a great way of formalizing them, boosting compliance and tax revenues.
That pitch may have appealed to certain municipal politicians, but it has not had the desired effect on the courts and national administrations that are handling complaints by angry cab drivers.
The Paris raid followed a decision by the French government in December to shut down the UberPop “ride-sharing” service over insufficient driver licensing and insurance – a decision that Uber said it would flout as a court hadn’t told it to shut down. Around 250 UberPop drivers reportedly have been fined since the anti-UberPop policy kicked off in January, but the service has kept on rolling. Now the offices of Uber France have been searched by police, who have seized company equipment.
The German ban, meanwhile, followed a lengthy court procedure (and local bans in cities such as Hamburg). The Frankfurt Regional Court actually imposed a temporary nationwide ban last September after complaints by the Taxi Deutschland trade association, though it lifted the injunction a few weeks later on procedural grounds. At the time, the court held off from ruling on the legality of UberPop, but now it has echoed the now familiar cabbie refrain that Uber’s drivers are neither properly licensed nor insured.
The same logic, incidentally, is what has prompted the South Koreans to declare Uber to be an illegal taxi ring.
The thing is, the taxi drivers and the courts are correct in saying Uber is flouting the rules. The company’s oceans of funding are intended for rapid expansion, partly to fend off rivals such as Lyft, but also to colonize new markets so quickly that any complainants are playing catch-up with an already-entrenched service. This is a highly aggressive model, and so far it has worked. Uber may have seen plenty of local bans, but it’s successfully defied almost all of them, with the notable exception of a brief shut-down between December and January in New Delhi.
So when Taxi Deutschland asserts that “Uber based its business model on a breach of law,” it’s not blowing hot air.
What’s genuinely unpalatable about Uber’s approach to regulation is that the company keeps trying to play by its own rules and – far from being “off-grid” – its older competitors are generally very highly regulated. Those traditional taxi drivers have to pay high license and insurance fees for the privilege of doing their job. They usually have to undergo intensive training and be able to demonstrate intimate knowledge of the streets they roam.
It may be that those strictures are out-of-date in the age of GPS, and stifling to newer business models like Uber – although it should be noted that car-hailing apps developed alongside the traditional cab drivers, such as Taxi.eu, engender far less animosity. In order to embrace the possibilities afforded by modern technology, the rules should evolve to create a new, different level playing field that combines the best of the past and present. Even if that evolution is not to the liking of the entrenched taxi industry.
If forced, Uber could step up its licensing and insurance requirements for drivers and, as the company showed in New Delhi that it is capable of adapting its service to include new safety mechanisms. If those issues are dealt with, the taxi industry’s argument could be whittled down to an untenable one based on protectionism and little else.
However, until the regulators step on the gas and create more forward-looking frameworks, it is no surprise at all to see the level of push-back that’s taking place now. Honeyed words will only get Uber so far while it’s banking on a strategy of regulatory arbitrage that puts law-abiding competitors at an inherent disadvantage. In the meantime, it can expect to see increasingly aggressive resistance from drivers and authorities alike.
David Meyer (@superglaze) is a technology writer based in Berlin, covering issues ranging from policy and privacy to emerging technologies and markets.