Uber's main problem is that city governments are deeply connected with existing taxi structures - sometimes it's a matter of straight corruption, sometimes it's a matter of lobbying and existing relationships. But why can't Uber invest their money into convincing city governments into changing their regulations? Surely they have more cash to do so than individual taxi unions?
asked Apr 6, 2017 at 15:44
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6What makes you think they can't?– indigochildCommented Apr 6, 2017 at 15:56
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10That is actually exactly what they do. They enter a city, generally in an "illegal" fashion, pump a bunch of money into marking/lobbying to secure a strong foothold in the city, and once they gain a critical mass they essentially force the city to accept them.– David says Reinstate MonicaCommented Apr 6, 2017 at 16:33
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14Gotcha. Your question asks why Uber can't lobby, but googling "uber lobby" shows that they do. Sounds like your question might really be "why aren't they succesful". Is that right?– indigochildCommented Apr 6, 2017 at 16:37
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5Surely city governments are concerned about more than simply who has the most lobbying money. Why can't Uber invest their money into complying with existing time-tested regulatory regimes? As to being "illegal in all major cities" they are operating legally in New York (and their cars and drivers are licensed by the Taxi and Limousine Commission).– phoogCommented Apr 6, 2017 at 17:21
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1@phoog because their business model thrives when there are no rrgulations at all, I guess– JonathanReezCommented Apr 6, 2017 at 17:43
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4 Answers
This is actually exactly what Uber does. The common Uber practice is for Uber to enter a city under circumstances that range from legal, to questionable, to clearly illegal. They will then rush in with lots of marketing and lobbying to sway both the general population and the local government and earn a foothold in the city. Once they have secured this they will push for local legislation if it is required. In generally they are very successful in practice as they operate in over 570 cities and are a multi-billion dollar company.
For example in 2011 Uber received a cease and desist letter from its home town of San Francisco. However Uber remains legal to this day. This was in due to in large part its foothold in the populace, the work of its lobbyists and direct negotiations with the government.
Obviously though that doesn't always work. The most famous case of failure here would be Prop 1 in Austin, Texas. Both Uber and Lyft spent over $5 million trying to legalize their practice there. Ultimately though they were rejected by voters and left the city.
answered Apr 6, 2017 at 16:56
David says Reinstate MonicaDavid says Reinstate Monica
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The question seems to assume that the only reason for business licensing and regulation by local governments is because of monopolistic cronyism.
Many of the licensing requirements for taxi companies is for the benefit of the local citizens (many require that they act certain ways in procuring business at airports, that they offer services to certain areas, that they offer services specifically for the disabled, etc). These requirements to do business in those regulated categories incur costs to the companies being regulated. The cities also generate revenue from the licensing (another cost to the companies).
So, the established businesses have incurred significant costs and met regulatory standards, often for decades, and that is often a reason why they are not in favor a competitor coming in who does not have to meet those same expensive requirements that they did/do in order to compete in that marketplace.
It's not that the companies lobby to lock Uber out (might not be against it, per se), though that might be the net effect. They lobby to demand that the same standards that are imposed upon them be imposed on the new competitor.
answered Apr 6, 2017 at 17:17
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12There is something to be said about safety as well. Regulation usually requires taxi drivers to be registered, requiring background checks etc. Commented Apr 6, 2017 at 21:02
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8The main point where the government takes an interest is the absence of a pension scheme for Uber drivers -- the fares do not generate enough income to make meaningful contributions to a pension fund, so the government expects that drivers will turn out as welfare recipients after a few years, so Uber is essentially asking to be subsidized with future tax money (which comes out of the city's coffers). The cities do not have the legislative power to require proof of pension fund payments from drivers, though, so this fight is moved towards an area where the city does have power. Commented Apr 6, 2017 at 22:42
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4@SimonRichter then why isn't there a fight against McDonald's employees? They earn low wages as well Commented Apr 7, 2017 at 6:00
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7@JonathanReez, McDonald's supports 401(k) contributions for full-time employees, and (more important) the take home pay is greater than what the average Uber driver has left after expenses and taxes. Commented Apr 7, 2017 at 7:10
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7@SimonRichter - if you have a taxi company, which owns a fleet of vehicles, the wage they pay is the wage you earn. If you work for Uber, but you own the fleet vehicle, all those costs are passed to the employee, where it offsets the pay received. It's the shifting of the costs which don't get calculated in the agreed upon "wage" where the disconnect between perception and actuality happens. Commented Apr 7, 2017 at 16:23
But why can't Uber invest their money into convincing city governments into changing their regulations? Surely they have more cash to do so than individual taxi unions?
Maybe. But do they have more voters? Not only do taxi drivers have an incentive to vote against Uber, but other unions may join them. And unions are also a source of volunteers for political campaigns. Union influence in government is larger than most statistics can measure. In many places, being the clear anti-union candidate is a clear loss.
And it's not clear that they have more money. Taxi medallions cost a million dollars in New York City as recently as 2014. There are more than thirteen thousand medallions there alone. That's roughly as much as Uber has raised nationally.
Another issue is that taxi operators are local. So all their money is spent locally. Uber has to spread its lobbying out over multiple countries much less multiple cities.
But why can't Uber invest their money into convincing city governments into changing their regulations?
Because fundamentally Uber is in competition with the local government. The existing taxi system is a valuable revenue source for the governments, for doing practically nothing.
Uber fundamentally replaces or bypasses the government and connect service providers to customers.
When you take the governments candy away, they aren't going to be happy.
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18I have never heard of any city where taxis are operated by the local government. Sure, cab owners pay taxes, but so do uber drivers (at east they should).– Philipp ♦Commented Apr 6, 2017 at 20:31
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2This is the correct answer. Cab owners bribe regulators to make competition difficult. Regulators got kicks from inferior competitors.– user4951Commented Apr 7, 2017 at 4:05
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8@Philipp The more relevant issue is not taxes (for example, there are no local income taxes in the UK) but licensing fees. Cab owners pay for taxi licenses, whereas Uber operates under the fiction that its drivers are not taxi drivers but just people who happen to be be going to the same place that you're going and accepting money from you to let you sit in their car until they get there. Commented Apr 7, 2017 at 16:09
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2@phillipp No they just say who can and can not operate a taxi and how much it will cost you to get that priveledge should they choose to allow you to. Commented Apr 7, 2017 at 22:01