UberCab Ordered to Cease And Desist

http://techcrunch.com/2010/10/24/ubercab-ordered-to-cease-and-desist/

by tswicegood • 16 years ago

104 97 16 years ago

tswicegood• 16 years ago

I'm putting money on UberCab becoming a members-only service/co-op type system where you have to be a member in order to request a car. I'm not intimately familiar with the taxi laws, but I bet they don't specify what private organizations can do.

llimllib2• 16 years ago

> I'm not intimately familiar with the taxi laws, but I bet they don't specify what private organizations can do.

Huh? They have to. They don't let private limo organizations pick you up without a 1-hour reservation, for example, as stated in the article.

Furthermore, Ubercab already is a private organization.

I'm sure I'm missing something, can you explain why it would somehow become legal if it was a members-only organization?

defen2• 16 years ago

I can open a private, members only club which serves alcohol past the traditional last-call time. In the same way, Ubercab could charge a membership fee, and then only people who are members can be picked up by Ubercab. (I'm not a lawyer so I don't know if this is actually possible, I'm just trying to rephrase tswicegood's argument.)

gravesryan• 16 years ago

The regulations read that a livery services ride must be "pre-arranged".

We've not seen the hour prior requirement in any law. If it does exist please send it our way, (info@ubercab.com) but we believe that this is opinion not fact.

sp4rki3• 16 years ago

It's my understanding that the hour reservation specifics are basically FUD. Since when can you not call a limo service and say "I need a limo for right NOW! Do you have any?", because I'm pretty sure you can and they will send a limo your way if possible.

joshstrike• 16 years ago

I actually had this idea when I had dropped out of web design and became a taxi driver for a few years in 2001. It's a natural. However: "Taxi dispatchers make money on tips..." is an incorrect statement. Taxi dispatchers make money on BRIBES. Drivers do not tip out dispatchers. Nor do drivers' tips go to the company. What dispatchers euphemistically refer to as "tips" are actually bribes paid to them by some cab drivers to refer the best fares to those drivers - usually at the expense of the passenger, who has to wait outside longer for their cab because a closer driver was not dispatched. The exact reason why UberCab or similar services ARE such a good idea is that they can improve the customer experience by cutting out dispatcher corruption.

whakojacko• 16 years ago

"Taxi dispatchers make money on tips. Ubercab threatens dispatchers’ way of earning a living. Limos have to prebook an hour in advance, only licensed taxis can pick someone up right away by San Francisco law, yet Ubercab picks people up right away, yet doesn’t have a taxi license." Not like you can get a taxi in under an hour in SF anyways ;)

Seriously, this just validates their model and I hope they can figure this out.

corin_8• 16 years ago

Maybe I'm just misinformed but... basically they're running a taxi service without a license to do that, then acting surprised when the city calls them on it?

There's a taxi company I use whenever I'm in London called Addison Lee, and they've done the same as UberCab - using nice technology to know where you are, where the nearest available cars are, how long it will take for a car to get to you... In actual fact, at least based on http://www.ubercab.com/learn, AdLee is better: it has all the benefits of UberCab, plus they tell you the price of the journey before you book the car (it won't become more expensive if you get stuck in traffic, or if the driver takes a longer route), which always works out cheaper than a black cab, in my experience. Oh, and in adition to letting you pay with the credit card on your account, you can chose to pay by cash if you so wish.

Anyway, my point? Seems that Addison Lee have been (albeit in a different city/country) doing what UberCab is doing, slightly better, and for quite a bit longer: and they actually bothered to pay to be a licensed taxi provider, meaning that the London officials don't have a problem with them.

josefresco• 16 years ago

Maybe taxi license requirements are vastly different between the two countries making it prohibitively expensive or unrealistic to do the same in the US?

corin_8• 16 years ago

I couldn't comment on the costs involved in either country, but that really isn't relevant. If you can't balance a company's finances without saying "we won't follow the law because it's too expensive" then you're doing something wrong.

That argument sounds semi-reasonable when coming from a teenager downloading films illegaly, not from a serious company avoiding paying for a license it needs.

sutro• 16 years ago

I believe the loophole they operate under is that the ability to pick people up randomly on the street in SF requires a license, but picking people up who call ahead is simply a car service and not subject to taxi licensure. The fact that UberCab has made doing the latter effectively as easy and convenient as doing the former is indeed a challenge to the old guard, whom you can bet is working behind the scenes to close the aformentioned loophole as quickly as possible.

Taxi service in SF is truly horrible and is ripe for disruption. I hope these guys win. Go UberCab!

2arrs2ells• 16 years ago

As horrible as it is in San Francisco, it's worse in other cities (Boston, for one).

tkalanick• 16 years ago

Ubercab is not a taxi service and does not own or operate limo vehicles. We simply connect consumers with existing Limo Drivers. We do make sure that all limo drivers that connect are properly licensed and have the appropriate insurance.

corin_8• 16 years ago

"Its cars don’t have insurance equivalent to taxis’ insurance" is taken directly from the TC article.

As to the logic of "we are not a taxi service, we just make money putting customers into taxis", I really can't comment on how the law views this.

If the SF Metro Transit Authority withdraws the cease and desist order then please accept my apologies for making bad assumptions, but given the law enforcers say what you are doing is not allowed, I can only assume that it is, indeed, not allowed, regardless of how you word what exactly you do.

Either way, I hope you get it resolved (whether that means them backing down, or you agreeing to whatever they're wanting of you), other than this current situation your service looks pretty great, and I'm sure I'll use you some day when I'm on your side of the pond.

anigbrowl3• 16 years ago

I live in SF and am totally on your side - I think you're being punished for the existing firms' failure to think of this first. SFMTA is drastically overdue for reform.

ramanujan3• 16 years ago

You need to get your users to flex their political muscles. Whether that is text messaging the politicians or what have you, put the fear of god into them and make them realize they'll have a political fight on their hands with thousands of angry citizens on your side.

zaidf• 16 years ago

You have an incredible PR battle to deal with! It is hard to call yourself Ubercab and then claim "Ubercab is not a taxi service."

While you may technically be right, it may not matter in your PR battle.

lolname2• 16 years ago

Ubercab is not a taxi service

It's hard to read that and think of you as anything other than a liar (or perhaps an obnoxious pedant).

That's truly meant as constructive feedback.

edit: seriously. I figured it'd be better somebody tell him that on HN before he says it to a media personality without thinking of how it will be perceived by some.

ig1• 16 years ago

AdLee is different, in that they actually own all their cars (and lease them to their drivers) and they make guarantees on the quality of the cars, etc.

And while they're cheaper than black cabs, they're more expensive than minicabs (for non-londoners: Black Cabs can be hailed off the street, minicabs you have to call) which is a closer comparison.

What UberCab seem to be doing (I may be wrong as I've never used their service) is aggregating drivers from multiple limo services into an on-demand system. It seems that in SF that limo services have to be pre-booked an hour in advanced, which suggests that UberCab would firstly have to get a taxi service licence and secondly get all of their limo drivers licensed and insured as taxi drivers (as opposed to limo drivers). I imagine the later is the bigger problem than the first.

gojomo• 16 years ago

It seems that in SF that limo services have to be pre-booked an hour in advanced

Actually, did you notice the finesse in the (unattributed but blockquoted) objections TC provides from the 'incumbent taxi industry'? They say, "Limos in U.S. cities usually have to prebook an hour in advance". They don't say "SF requires limos to prebook an hour in advance". Maybe SF hasn't quite locked-out competition as strictly as elsewhere -- perhaps even by mistake. (Industries protected by political favors can get lazy and sloppy, though they're nasty when awoken.)

ramanujan3• 16 years ago

Ubercab is a great example of disruption of an inefficient, expensive system. The measure of whether something works has never been whether it makes some London official happy. Of course they won't like something that's taking tax revenue out of their pockets.

sriramk• 16 years ago

I think there is a pattern across both UberCan and AirBnb where both are facing opposition from existing, regulated industries (taxi services and hotels respectively).

Among all the posturing essentially meant to protect their existing businesses, I do think they have one valid point - that they both skirt around laws and regs in place. Though a lot of these laws and regulations are outdated/driven by special interests, some of them are in place for a reason. For example, not having hotels in residential areas so that neighbors aren't disturbed. Or having safety training for drivers of cabs.

I do worry about the risk that UberCab/AirBnb could cause to its users (or others indirectly impacted).

In both cases, the existing industries aren't doing themselves any favors. The argument around existing dispatchers maybe not making a living anymore - if someone else provides a better service than I do, it isn't their fault if I can't make money anymore. Reading the comments on the cab drivers' blog [1] is a bit sad. One of the commenters recognizes how good Ubercab is but uses that as an argument on why they should be shut down, instead of going "Hey, what if we started doing some of the things they do and improve?"

http://phantomcabdriverphites.blogspot.com/2010/09/tac-iii-p...

pavel_lishin3• 16 years ago

The best argument I've heard against AirBNB is that some people are buying up property and basically setting up hovels that they're renting out. Unsafe, unclean, miserable places to live.

But hell, I've stayed in shitty motels where the only thing keeping the carpets glued to the floor was the roach shit.

callmeed2• 16 years ago

I think review systems will weed out the crappy, unclean places.

The best argument I've heard is the liability issue. Americans are sue-happy. One slip in the shower or bad car accident and then what?

Are AirBnB and UberCab totally immune from litigation?

_delirium3• 16 years ago

That's the main reason I don't even bother to look at AirBnB for the handful of cities where it's particularly bad (NYC and London mainly). If they made a better attempt to distinguish people genuinely renting out their own house/apartment from black-market businessmen running unlicensed hotels, I'd have much more confidence. For that matter, I'd like to be able to easily exclude licensed hotels too, some of which try to list themselves as if they were apartments for rent.

ramanujan3• 16 years ago

Any new product is never better in all aspects, and usually can't yet fund the fleet of lobbyists that existing players have. Regulations are primarily a tool of established businesses which they wield like a sword when all else fails, kind of like lawsuits. And a disruptive newcomer which reduces municipal tax revenue is sure to be in the gunsights, because almost every new business can become "illegal" at a politician's whim. It's incumbents of both types (political and business) against the newcomer, except they aren't actually offering a better service but rather pointing a gun at the interloper.

Where is the statistical evidence that Ubercab and AirBnB are actually less safe than the alternative? Moreover, we let people choose to use motorbikes OR cars; why should the "less safe" alternative always be illegal? Sometimes other attributes (convenience, speed, price) mean that you'll settle for three rather than four nines in safety.

loewenskind• 16 years ago

>Where is the statistical evidence that Ubercab and AirBnB are actually less safe than the alternative?

I think it's a bit premature to ask for this kind of statistical evidence no? Are these companies old enough to have any useful, relevant statistics?

cubix• 16 years ago

Or having safety training for drivers of cabs.

If only that were true. Taxi drivers are among the most reckless drivers in my city, and pretty well every other major city in North America that I've visited. If there is any training, it is not taken too seriously.

pierrefar2• 16 years ago

every other major city in North America Why stop at North America? It's worldwide.

BUT: The only good thing about taxis in London is that they need to pass a test called The Knowledge (refs below) which means they are able to figure out the best route to anywhere in London on the fly. And if you think this is easy, it's not: the structure of the brains of taxi drivers is actually bigger in the part responsible for spacial memory, the discovery of which led the researchers winning the Ig Nobel prize.

Refs:

http://www.tfl.gov.uk/businessandpartners/taxisandprivatehir...

http://en.wikipedia.org/wiki/Taxicabs_of_the_United_Kingdom#...

http://news.bbc.co.uk/1/hi/677048.stm

http://news.bbc.co.uk/1/hi/sci/tech/7613621.stm

http://improbable.com/ig/winners/#ig2003

stretchwithme• 16 years ago

I wonder if part of the reason for all the unsafe driving is that passengers have reduced incentive to complain about it. Clearly, it endangers passengers, but passengers WANT drivers to go faster so they can avoid paying too much.

I'm not sure if per minute/mile pricing is necessary or just a creature of regulation. I certainly don't encounter it any other time I travel with someone else driving. It certainly ruins the cab experience for me. Can't they properly estimate time and distance now with the mapping and traffic apps we have today?

jbooth• 16 years ago

And even if some of the regulations they have to face are outdated, stupid, in need of reform.. well, they still can't just break the law. Existing hotels/cabs follow the laws, including the stupid ones. We should fix the laws.

jrockway3• 16 years ago

This seems like the perfect business to run from outside of the US. To run a traditional taxi company, you need to have a presence in the area where the taxicabs are. To run a website that connects two people together, you can be anywhere. And you are outside of the legal reach of the City of San Francisco.

Sure, the users will be violating some city regulation, but that, like file sharing, is unprofitable to follow up on. (AirBnB is in a similar situation. No need to give the irritated local governments a legal target.)

corin_8• 16 years ago

Unless they relocate all drivers to live outside the US they're going to have a slight problem, I think...

jrockway3• 16 years ago

The drivers are already licensed. They can drive wherever they want to, and pick up whomever they want to.

The specific legal problem that the article mentions is that operating the dispatching company is illegal.

zachware• 16 years ago

The conflict was inevitable but as we often see in business, old players use regulation, unions and back room deals to protect their markets. Look at the RIAA, TV and movie industries. The technology is available to bring content to any device, anytime but they use regulation to stop it.

It's bullshit. SF taxis are inefficient and difficult to use. Ubercab solves a problem and calls out just how ridiculous the SF Taxi system is. Instead of fighting to make their business more relevant, the taxi unions fight with regulation.

I use Ubercab a lot. Why? * Because a car comes to me in a few minutes. * I don't have to stand in the rain and wonder if the illuminated taxi light means the taxi will stop or not. * I don't have to wonder if the cab takes cards or if the driver will simply refuse to take them even if his company does. * Most importantly, I don't have to hold on for dear life wondering if I'm going to die before i get where I'm going.

Let's all stand up and say screw you unions. Ubercab is an innovator. SF taxis, be more efficient and you'll win. Otherwise, get out of the way.

tlrobinson• 16 years ago

This sounds familiar:

    "Ubercab threatens dispatchers’ way of earning a living"

Oh, yeah:

    "[TECHNOLOGY] threatens [PROFESSION]s' way of earning a living"

Not a valid argument.

eli2• 16 years ago

Yeah, but neither is ignoring the law because you disagree with it.

AngryParsley2• 16 years ago

I think "ignoring the law because you disagree with it" is called civil disobedience. Although the term usually means individuals breaking laws for moral reasons, not companies doing it for efficiency and profit.

Edit: I just wanted to point out that it is sometimes valid to ignore a law because you disagree with it. I'm not saying Ubercab is in the right.

anigbrowl3• 16 years ago

Not a lawyer, but after a quick look at the regulations as they currently stand, I don't think they are breaking the law. They are offering an alternative to taxi service, and the service they provide doesn't appear to require the kind of permits or satisfy the conditions the SFMTA sets. Of course, I'm guessing since I haven't seen a copy of the order, and there's no record of the administrative proceedings on the public website, apart from a question at a meeting of the Taxi commission in September about whether or not the service is legal.

In any case, you shouldn't assume they've 'ignored' regulations simply because an agency has declared them not to be in compliance. Regulations are often poorly drafted or subject to conflicting interpretations; the applicability of a given regulation can also change over time because of court decisions or changes in other legislation which. Administrative orders are subject to an appeals process and judicial review, and initial determinations about what is or is not legal often turn out to have been made in error; generally, orders that mandate or forbid a given activity are placed on hold during the appeals process. It's unfair to respond as if they had simply thumbed their noses at the law just because proceedings have been initiated.

ataggart• 16 years ago

"One has not only a legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws. I would agree with St. Augustine that 'an unjust law is no law at all'."

Using threats of violence against otherwise peaceful adults for engaging in consensual acts -- acts which do not violate the rights of others -- is unjust.

forensic3• 16 years ago

ubercab could relocate their business to russia.

SF customers and drivers could still pay for the app.

let's see them regulate that

I want to make a taxi dispatcher that is outsourced to an Indian call centre. These dispatchers don't realize how deeply obsolete they are.

ceejayoz• 16 years ago

> let's see them regulate that

Regulating the dispatchers would be difficult, but they could easily go after the owner/operators of the cars involved in actually transporting folks.

forensic3• 16 years ago

What if they decentralize it even more?

I'm imagining regular drivers (like me) being txt'd when there is a nearby person who wants a ride.

Like hitchhiking but using GPS and money.

The hitchhiker would specify his destination and how much he is willing to pay. The software would know my location as well as destination (optional) and notify me when I'm near him.

Make everyone into a taxi driver.

For added value you could also give individuals special badges and such that certify their driving credentials, and let the buyers decide how much their driving credentials are worth.

Credentials could be on a graded scale: - Confirmed driver's license - Confirmed professional driving certification

Naturally you'd have a reputation system where passengers can rate the quality of the drivers, and drivers could respond to the criticisms.

Decentralized taxi service. The biggest hurdle is reaching critical mass of users, which UberCab has achieved. I want to see them destroy the conventional taxi industry (disruptive technology makes me tingle)

callmeed2• 16 years ago

So is ubercab connecting people with "car services" that aren't licensed taxi companies?

Are these the drivers you see often in NYC when arriving at the airport? My understanding is that there are risks to using such services (like if you leave something in the vehicle you're unlikely to recover it whereas a taxi co. can usually track it down). True?

jon_dahl• 16 years ago

I think it's four or five steps up from the rogue drivers at NYC airports. The drivers are licensed limo drivers, and everything is official/on-the-books.

johnglasgow• 16 years ago

Three points:

1. Sounds like UberCab should look into licensing out their platform to existing cab companies. It would mean lower margins, but they can quickly scale throughout the US and beyond much faster.

2. UberCab's blog post is arrogant. Did they really think they can avoid paying expensive licensing fees because they are using black cars instead of yellow cabs? Taxi licenses are very expensive and a lucrative revenue source for every major city. A taxi seat can cost as much as 1 million to purchase in NYC, and I know other cities such as SF and LV are not much cheaper due to the fixed number of licenses. I can only imagine the outrage of other cab drivers losing work to cheaper services (i.e. UberCab) because they are not paying licensing fees.

3. UberCab can easily recover albeit at lower margins. They need aggressive biz dev to quickly secure licenses. I hope they can continue to disrupt city transportation.

enki2• 16 years ago

i've given up on trying to get a cab in sf.

there's only 1381 highly regulated taxi medallions and a constant shortage. most potential customers have, just like me, given up on ever getting a cab when they need one, so there's not only artificially decreased supply, but also artificially decreased demand.

there's been extensive comparative research into taxi regulation for decades. the reason SF is so much worse even than other cities that restrict the amount of cabs, is that SF doesn't only regulate street pick-up but also dispatch.

google scholar is full of papers on taxi regulation research, and there's http://www.schallerconsult.com/taxi/ and other pages.

unsurprisingly deregulation is in the interest of the drivers because a competitive market increases customer demand. would you sometimes pay double the fare if you could get a cab _right now_, instead of waiting 25 minutes and praying? hell yeah, if only they let you!

let's hope uber can make on-demand transportation in SF usable again.

seldo• 16 years ago

This is funny, because having lived in London it's SO much easier to catch cabs here, I assumed SF was pretty good about taxi regulation.

You have not experienced unavailable taxis until you have lived in London, where outside of the city center they literally do not operate.

enki2• 16 years ago

in vienna, which usually is the worst regulation hell, i could get a cab anywhere in the city within 4 minutes, any hour of any day. and that's a city with 1.75 times the population of SF (not including all the people who commute to SF to work there.

this has been extensively studied. taxi service quality is essentially dependent only on regulation quality (with some delay as customers get used to the fact that they can actually get a cab)

rubinelli• 16 years ago

Am I the only one who finds it naive to name a startup UberCAB and then act as if it had nothing to do with taxi dispatching services? It's as if the PayPal founders decided to call it "UberBank."

_ouxp• 16 years ago

It might not be seen this way in general, which goes to the PR problem another poster mentioned, but my perception is that when someone markets something as über-, they mean it transcends or supersedes what they're prefixing. So not "cabs" but "better than cabs".

makmanalp• 16 years ago

>> Ubercab operates much like a cab company but does not have a taxi license.

^ Why is the taxi license process so difficult to go through? Why does it take 10 years or so?

>> Limos in U.S. cities usually have to prebook an hour in advance, by law, while only licensed taxis can pick someone up right away but Ubercab picks people up right away (again without a taxi license).

^What is this but protecting special interests? Viva creative destruction.

risotto• 16 years ago

Who actually uses UberCab?

Taxi Magic is a fantastic app that's totally legit. Open the app, use your location to book a cab and within 5 minutes it's there. It's Luxor Cabs who are fully licensed and use computerized dispatch.

I tried UberCab once and it was a nicer car but the experience was no better than Taxi Magic, and significantly more expensive to get around town.

I hate non-metered cabs. Taxis are one place where regulation is good. We all know what it's like to deal with a shady taxi driver. The tendency is to gouge vulnerable travelers, not to set lower prices. The consistency that regulation offers is the most important.

I also can't believe the complaints about the taxis in SF. The cab companies are downright excellent when you actually call, and plentiful on the streets.

daveman692• 16 years ago

I used to be a huge fan of Taxi Magic but the past few months have found it less and less reliable. Basically if the cab is over .2 miles away it will pick up a fare on the street instead. When UberCab tells me that a car is coming, I can trust that it will actually come.

rdl• 16 years ago

I think UberCab will end up needing to change their name (UberCar?) to distance themselves from the "cab" or "taxi" connotation, and position themselves as an alternative to cabs, vs. a kind of cab, more forcefully.

Other than that, I think they now have the moral justification to trash the taxi industry and cartel in their marketing. This can probably end up being a net win for them.

UberCab Ordered to Cease And Desist

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