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Uber Regulated
Three’s Company: Uber, De Blasio, and Yellow Cab

Uber is making waves in New York City. The company—whose low-cost ride-hailing app faces backlash from San Francisco to South Africa—has begun an aggressive (and quite effective) campaign to fight a law proposed by NYC Mayor Bill de Blasio that would cap the company’s growth for one year. The city council could vote as early as Thursday on the proposal, but Uber isn’t taking the prospect of the restriction sitting down. NYPost:

The app-based car service will extend its multi-million-dollar TV ad campaign attacking de Blasio into August — while taxi-industry activists are ripping City Hall’s proposed one-year freeze on Uber licenses as unhelpful. […]

The extension will increase the ad buy from an estimated $5 million to as much as $10 million.

The taxi industry has pumped more than $600,000 into de Blasio-controlled committees since January 2013, and Uber’s ads accuse the mayor of “pushing the agenda of big taxi donors.”

Part of the company’s strategy has been to add a “de Blasio” feature to its app platform, which depicts a dystopian future where a user looking for an Uber ride is informed that there are no cars available (or available only after a long wait). And yet, it seems that Big Taxi is even less pleased with the proposed legislation than Uber is:

“This legislation does nothing for yellow taxis. It has the effect of legitimizing a business model that is not complying with the law. It is a charade. It is a bit of a farce,” said Todd Higgins, the lawyer representing credit unions that provide loans to medallion owners.

Essentially, Yellow Cab is arguing, New York State law provides the taxi industry with monopolistic, exclusive rights for ride-seeking travelers. The legal question, then, is whether Uber violates this law or whether the company can skirt the system because its users call cars via a mobile app. But there are bigger issues at play. The Uber debate is a microcosm of the debate over the larger changes that are ushering in a new information and sharing economy and it raises questions about how properly to regulate companies that offer superior services but which undermine and change markets both longstanding and large.

In a time when the sharing economy is on the minds of presidential hopefuls (some more positive about it than others), those, like de Blasio, who are promoting policies that seek to restrain it may find those policies a hard sell to the younger demographic. Ultimately, the simple fact is that consumers’ preferences have changed; at the end of the day, New Yorkers (and others) are just trying to get from point A to point B. Mayor de Blasio ought to get out of their way.

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  • wigwag

    If the Democrats get on the wrong side of the type of disruptive change that Uber represents, they will end up as the victims of creative destruction in the long run. Actually, come to think of it, the same thing is true of Republicans.

  • jeburke

    The “medallion taxi” industry in NYC and other major cities has long been perched on the end of destruction. Currently, a NYC taxi medallion costs nearly $900,000 in the open market, down from a recent high of $1.1 million, due to Uber. So, to operate a yellow cab, you need to purchase a car for about $30,000 and then lay out a million for the right to drive it around Manhattan (trust me, they still will only go outside Manhattan on an airport run). Once, a man could aspire to be an “owner-driver” with his own cab. No more, not when the needed license costs $1 million. The industry can only survive financially if (1) largish companies that can borrow the milliond operate fleets of cabs driven 24/7 by hired drivers; (2) drivers are nearly all recent immigrants who are poorly paid and constantly hounded to keep driving around in circles in Manhattan and keep the passenger seats filled; (3) despite all that, the City Council and Taxi and Limousine Commission are regularly bribed to keep jacking up the fares (it can easily cost you $30 to go from midtown to Wall Street); and (4) the number of cabs is strictly limited no matter how desperate people are to find a cab.

    It could not last.

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