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.