mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
Give us a Lyft
New York Taxi Commission Attacks Lyft Launch

One day after announcing its arrival in the Big Apple, ride-share service Lyft is under siege from tyrannical bureaucrats. The Financial Times reports:

Lyft, the ride-sharing service, faces a roadblock in its plans to launch in New York City later this week after the local taxi regulator said it was illegal and threatened potential drivers with $2,000 fines. […]

[A] day after Lyft’s announcement, the New York City Taxi and Limousine Commission warned potential drivers and passengers that Lyft’s ride-sharing service, where drivers are not trained professionals, did not meet its standards for public safety and consumer rights.

Lyft’s service is due to target Brooklyn and Queens, where, excluding the airports, less than 5% of taxi pickups occur. There are also few subway lines between the two residential boroughs. The company said that it would continue with the launch, and pushed back against the charges:

In a “New York safety commitment” it published alongside the statement, Lyft said its “gold standard” rules included criminal and driving history checks for drivers, compliance with state insurance requirements backed up with an additional $1m “excess liability” policy and a 19-point annual safety inspection for all cars.

Meanwhile, Lyft’s best known competitor, Uber, has a new plan of its own to deal with this challenge. Wired reveals that the company is using a large chunk of its new $1.2 billion investment to lower fares in New York and elsewhere, while keeping the driver’s cut the same. Uber hopes this will allow its UberX service, which competes directly with taxis, to grow quickly enough to supplant the competition, or at least put down deep roots in urban markets. The regulators, faced with a fait accompli, will then have to come to terms with the company.

Some might worry that Uber will become the next Amazon, as Wired suggests, by undercutting its competitors, both among traditional taxi services and app-based services like Lyft. But if regulators want to make sure that doesn’t happen, they should let competition flourish, instead of cracking down on one of Uber’s rivals. Just as competition between traditional taxi services and Uber benefit the customer, so too does the competition between Uber and Lyft.

Features Icon
show comments
  • Boritz

    Thomas Edison had people that combed the streets of NYC for people making movies that, in his opinion, violated his patents associated with cameras. They would dissuade the film-makers from continuing their activity. Some things don’t change.

    • LivingRock

      Thomas Edison was indeed quite the “patent troll” apparently. I like the phrase. Shall we dub taxi and car dealership commissions “market trolls”?

      • Andrew Allison

        Protection racketeers would be close to the mark. The purpose of such commissions is to restrict competition in the chosen trade or profession. Public safety and consumer rights are well-protected by general law and regulation.

    • LarryD

      And the end result of Edisons enforcement was that Hollywood, California became Americas film capital.

      Arguably, Edison was within his rights, but he was foolish. He should have asked for a small royalty, rather than trying to monopolize film-making

  • ShadrachSmith

    Innovation in established markets
    Technology brings innovation.
    Innovation threatens the rent-seekers, and regulators in the established markets.
    Rent-seekers persuade regulators to declare innovation a crime.
    Rent-seekers often do much better than you would expect.

    Reduce the power of regulators, and you largely avoid such problems. This is a time for Uber (shorthand for all such services) to go on the offense and challenge the arbitrary power and incestuious relationships of the current rent-seekers (medallion owners) and their regulators. The regulators will slit Ubers throat if they can, so why not shine light on the regulators self-serving activities.

  • Rick Johnson

    ‘the New York City Taxi and Limousine Commission warned . . . that Lyft’s ride-sharing service . . . did not meet its standards for . . . consumer rights’

    In what strange Orwellian world do we live where a government commission can attempt to shut down a service to consumers by claiming to protect ‘consumer rights’.

    The Commission is violating consumer rights by trying shut down Lyft.

    Shut down th e Commission, not Lyft.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service