Many years ago, all taxi cabs were unregulated. A person could just throw a taxi sign on their car and a new business was created. Problems developed, of course, because not everyone is trustworthy to drive a cab. Government started to regulate the industry to put a curb on the abuses.
In the movie Stripes, Bill Murray plays a cabdriver. In the opening scene, an obnoxious customer has many bags of luggage and treats him with disdain. He takes her on a ride around New York City—a long ride—and stops in the middle of a bridge, throws the keys in the river and walks away. Some people are just not meant to be cabbies.
Uber has already had its share of mishaps along the way. In 2014, Uber driver Syed Muzaffer struck and killed a 6-year-old girl. He already had a reckless driving conviction on his record. In June of the same year, UberX driver Daveea Whitmire was charged with battery. It turns out Whitmore had multiple felony convictions and was on probation for battery at the time of the incident.
There have been other Uber incidents: a passenger was choked; another driver went on a racist rant and attacked a patron; one woman claimed to be kidnapped—UBER blamed a bad route. All these stories can be found here or by simply Googling “Uber horror stories.”
The traditional taxi industry has been through many of the same incidents Uber is currently experiencing. And this is why the taxi industry is now regulated.
Local governments now do background checks, issues permits to drivers, takes their picture, gives them a number and regulates their fares—all because of the past abuses of a few. You can still get an excessively long cab ride, in which the route from point A to B has a few extra letters in between, but regulation has made the ride safer for the general public.
Due to the growing number of court cases, Uber has gone on the defensive. Its top-notch technology allowed it to work around the cab system, while “contracting” out for services drivers allowed the company to avoid an “employee” model. But a court recently struck down that business model, insisting that Uber does meet the definition of employer. The decision will cost Uber millions in taxes and employee compensation if it stands on appeal.
Here in Silicon Valley, the city of San Jose and Mayor Sam Liccardo have insisted that Uber do some minimal background checks and play by some of the same rules as existing cab companies. Uber is balking and utilizing its sizable revenue stream to hire lobbyists to make their case. (Full disclosure: I have worked with tax cab associations in the past but am not currently under contract with any company or association.)
In the final analysis, Uber won’t succeed in remaining free of regulation. The horror stories are sure to increase and their model, while utilizing new technology efficiently, is still basically a taxi service. Taxi drivers who currently play by the rules, as they pay permitting fees extracted by local governments, rightly see Uber as unfair competition.
Elected officials really have no choice but to regulate Uber in the interest of fairness and public safety. This was the reason the taxi industry was regulated in the first place.