Harvard Professor Suggests Uber Restrictions Stifle Competition
The decision by ride-sharing powerhouse Uber to cut off a Boston startup’s access to vehicle location and pricing data, could violate antitrust law, according to a Harvard Business School associate professor.
According to Harvard’s Ben Edelman, the Uber (UBER) contract covering its application programming interfaces (APIs) gives third-party developers access to real-time information about vehicle location and current surge pricing. But there’s a huge caveat in that they “must agree not to include Uber API data in any tool that Uber deems competitive,” according to Edelman’s recently released research.
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A little background for non-geeks: APIs are the connective tissue of modern applications in that they allow developers to cobble together data from different providers into a sort of composite software application.
Uber itself, for example, used APIs to connect existing services—Google for maps; Braintree Payments which is now part of PayPal (PYPL) for mobile transactions; and Twilio for mobile messaging. Without APIs, Uber would have had to build or buy all those components.
For more, read: Uber in $100 Million Settlement With Drivers
Which brings us back to today’s issue. UrbanHail, a startup with Harvard Business School roots, was using Uber’s API to get data to provide pricing comparisons between Uber, Lyft, Fasten, SafeHer, and other Boston area ride-hailing services. If you’re looking for a ride home late at night, instead of having to open all the different apps to get pricing, you hit one app (UrbanHail) to run the comparisons for you. Handy. no?
An Uber spokeswoman said the company’s API, which is used by thousands of developers worldwide, has “a few guardrails in order preserve the integrity of the Uber experience for users across all apps.”
Amber James, one of UrbanHail’s co-founders, said Lyft has similar restrictions in its API contracts but has not enforced them. Fasten and as-yet-unlaunched SafeHer, a women’s ride service for women, are fully aboard with the comparison shopping app.
For more on Uber, watch
Edelman, who has a sparkling academic resume but has also attracted criticism for conflict of interest, notes there have been precedents for what Uber is doing—ones that might fall afoul of antitrust laws intended to protect competition.
Back in 2008, Edelman testified before the U.S. Senate that Google (GOOG) restricted the use of its Adwords APIs so that a company could not download its data from Google for use in an ad campaign running on rival Yahoo (YHOO) or Microsoft (MSFT) Bing search services. Google ended up amending its wording to settle a suit from the Federal Trade Commission.
As to whether Uber is headed for a similar fate, Edelman wrote that the company may dispute that it is big enough to trigger antitrust law.
Yet, he added, “Uber’s general position on competition is clear. Uber struggles to chart a path that lets it compete with taxis without the permits and inspections required in many jurisdictions—but doesn’t let comparison shopping services compare Uber’s prices with taxis, Lyft, and other alternatives.”