Uber is a transportation outlaw

Should popularity trump statutes and regulations?

THIS LEGISLATIVE SESSION, the Massachusetts House and Senate will most certainly take up debate on the controversial issue of so-called “rideshare” companies.  These are companies that use an app to connect customers with drivers, most using their own personal vehicle. The largest of these companies by far is Uber, whose business plan and actions to date should send a shiver down the spine of every elected and regulatory official.

For if Uber is successful in jamming their square peg into the round hole of transportation-for-hire laws and regulations by claiming they are “just an app” and not a transportation company, then why should any industry care about existing law, or more importantly those who enact and enforce them? Will popularity and customer support trump state statutes and regulations and the opinions of elected and regulatory officials?

What happens when an app is developed to bring those who offer plumbing and electrical vendors into contact with consumers, but the workers are not licensed plumbers and electricians? Will the banking industry no longer be required to follow banking regulations for customers who use an app for banking purposes? I use an app for travel, but I am fairly certain that the airlines and hotels are licensed and insured. Why should Uber’s drivers be any different?

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Uber began operations in the Boston area in the fall of 2011. As was the case in cities throughout the world, it was questionable to some and certain for others that Uber’s business model was in violation of existing state and municipal statutes. It may come as a surprise that the one who knew that best of all was, well, Uber.

That’s right. Uber knowingly enters into markets in violation of existing laws. This “disruptive” business model is nothing new. Think Napster, which facilitated the illegal sharing of music in violation of copyright laws. Disruptive business philosophy is based primarily upon the concepts of Ayn Rand and Clayton Christensen, who Uber CEO Travis Kalanick cites as early influencers of his business philosophy. The approach is to employ strategies that disregard both current business models and governmental regulation.

For instance, even if the government requires you to carry a certain level of insurance to conduct business as a ride-for-hire entity, you simply don’t do it. If drivers in the industry are required to have criminal background checks sufficient to ensure the safety of passengers, you simply don’t do it. Other examples are available, but you get the picture. These companies simply ignore the law and hope product popularity will cause elected officials and regulators to balk at shutting them down. When officials do take action, Uber’s response is to continue with business as usual, as evidenced by their refusal to comply with cease and desist orders and court orders across the country and internationally that are too many to track.

But the manner in which Kalanick and his senior executives have conducted themselves in bringing this “disruptive” model to the transportation-for-hire industry has a new twist. It includes an elitist and arrogant attitude toward anyone who dares question their behavior. Uber’s senior vice president, Emil Michael, once suggested Uber would spend “a million dollars” to hire four top opposition researchers and four journalists to help Uber fight back against the press. Focusing on a particular reporter—Sarah Lacy, the editor of the Silicon Valley website PandoDaily—he said they would look into “your personal lives, your families,” and give the media a taste of its own medicine. Shockingly, he still works at Uber.

Let’s also consider the following quote from Kalanick in an article in Re/Code by Liz Gannes. He was discussing his approach to competing with the taxi and livery industries. “We’re in a political campaign, and the candidate is Uber and the opponent is an asshole named Taxi,” Kalanick said.  Later, he added, his intention was to “kill” the taxi industry and hire seasoned political operatives to do so. So much for Ayn Rand. He also suggested renaming the company “boober” in response to a question on whether or not his success has enhanced his love life.

Uber’s behavior might not be so troublesome if the consequences were not so personal and real. In the last 12 months, there have been reports of 25 sexual assault or rape charges brought against Uber drivers, including two in the Boston area this year alone. On one night, the Boston Police Hackney Unit had to issue a consumer alert due to three alleged assaults that took place within a three-hour period on a Saturday night in January. There have also been assault, kidnapping, robbery, and other allegations and convictions, all due mainly to Uber’s demand that the company, and the company alone, should decide the level of a background check administered to those who drive for the firm.

The consequences of government officials not holding Uber accountable are easily seen by searching local and national media stories. Uber and other so-called transportation network companies that use app technology to facilitate a ride are violating ride-for-hire statutes, abusing employees, harming customers through predatory pricing practices, refusing to comply with state and municipal cease and desist orders, contracting with driver partners who lack appropriate insurance, and threatening reporters who write negative or critical stories about them.

These actions have placed them in a situation where they are currently being sued by their competitors, their driver partners, their customers, dozens of governmental bodies, and the taxi and livery industry for everything from overcharging, wage issues, insurance fraud, regulatory violations, and unfair trade practices, to cite just a few. Elected officials would normally return campaign contributions from executives at companies like this.

So the real question is, why does Uber even have a seat at the table, never mind two hands on the wheel when shaping transportation legislation? And what caused this sudden transformation from “disruptor” to a company willingly working with government to create laws allowing transportation network companies, albeit in a manner separate and distinct from the current market, while retaining the existing regulatory hurdles on taxi and livery companies.

If Uber really just disagrees with—and wants changes to—old laws that bar competition, then the taxi and livery industries are willing to work with the company. Let’s make all companies providing ride-for-hire subject to identical background checks, insurance requirements, vehicle inspection, driver licensing requirements, and business permits. Let’s have a true level playing field.

Meet the Author
Stephen Regan is the spokesman for the Massachusetts Regional Taxi Advisory Group (MRTA), which is managed by The Nolan Group.  The MRTA is comprised of a growing list of taxi and livery owner/operators, industry vendors, stakeholders, and consumers who seek fairness in competition.

“Ridesharing choices must be protected” — Click here to read response from Uber’s general manager for Massachusetts and Rhode Island.