Lyft, SideCar, and Uber all slapped with $20K fines from CA regulator

http://arstechnica.com/tech-policy/2012/11/lyft-sidecar-and-uber-all-slapped-with-20k-fines-from-ca-regulator/

by co_pl_te • 14 years ago

82 97 14 years ago

usaar3333• 14 years ago

Interesting how Uber is lumped in with Lyft and SideCar. Uber drivers at least have (towncar) licenses. I haven't figured out yet how Lyft/SideCar are anything more than illegal taxi services that rename "fare" "donation".

cj• 14 years ago

Uber also runs Uberx, a cheaper non-towncar version of Uber similar to Lyft. Does anyone know if uberx drivers also have towncar licenses?

brianr• 14 years ago

UberX cars still have towncar licenses though, judging by the TCP stickers on their bumpers.

j-v• 14 years ago

In Chicago I've seen taxi drivers using Uber X, but that may be a city-specific pilot. This TC interview with Uber indicates that Uber X drivers have TCP licenses, but may not necessarily drive limos or town cars:

http://techcrunch.com/2012/07/01/uber-opens-up-platform-to-n...

sbacheld• 14 years ago

Uber also has extended their service to include some real taxi drivers in San Francisco (which would have a normal taxi license)

eli7• 14 years ago

I'm a customer not a lawyer, but Uber certainly feels like a "provider" to me. It's not like they are just a referral service. They dispatch a driver of their choice, they process the payment, and they pay the driver.

And while I think Uber is an awesome service, it's not totally unreasonable for the state to insist that if you are acting as a taxi, you need to have proof of insurance beyond what's required for a normal driver.

dinedal2• 14 years ago

The problem is that the cars Uber has are already insured as limos. Just by the parent company that they are getting them from, not by Uber itself.

eli7• 14 years ago

If the drivers already have the required paperwork and insurance then why doesn't Uber just register as a taxi provider and submit it as CPUC requested? Is that really so onerous (honest question)?

eridius2• 14 years ago

The lawsuit against Uber seems to me like nothing more than taxi drivers upset that their monopoly is being threatened. As the article said, all the Uber drivers are already licensed, and there's no explanation as to why Uber is "unfair".

eli7• 14 years ago

Uber claims their drivers already meet the requirements, but if Uber doesn't register with CPUC how can they know if it's true? Are they supposed to take Uber's word for it?

eridius2• 14 years ago

I don't know anything about CPUC so I can't really answer that question, but the lawsuit isn't about the licensing. The lawsuit is about Uber being "unfair", with no explanation for what that means. The only hint is that taxi drivers are seeing lower incomes, and the implication is that the lower incomes must somehow mean that Uber is being "unfair" rather than simply being a consequence of competition.

Zak13• 14 years ago

If you don't take Uber's word for it, don't use Uber. Given that there are alternatives available, I don't see the need for regulation here.

traughber• 14 years ago

Technically it'd be an oligopoly.

tvladeck3• 14 years ago

I really like Lyft. I use it when I need a taxi and it works very well.

Although I do agree that a world where these types of "collaborative consumption" services (like AirBNB) are essentially unregulated (or at least more open to competition) is much better, it is true that a number of industries are regulated, and incumbents that have been "playing by the rules" were promised a protected business environment. And it's not like they didn't have to give anything up in that trade - a taxi medallion in NYC is worth a lot of money - they have been exchanged for over a million dollars.

So the question is: how do we transition to the better world without being unfair to the "stranded capital"?

smsm426• 14 years ago

We managed to transition from horsepower to cars without economy breaking down and I'm sure some people investing in horses lost some money on that. If some people investing in taxi business being shielded from competition will lose some money - sucks for them, but definite benefit for everybody else. And also would teach people not to invest in schemes that rely on government coercion and anti-competitiveness. It'd be no more "unfair" to them than their rent-extraction based on excluding competition is unfair to consumers.

tvladeck3• 14 years ago

I'm not sure I was clear. In the cases I'm discussing, society has made an explicit deal with a group of providers within an industry. Essentially that deal is: purchase a license, run your business this way, charge these prices, etc., and we'll protect your market.

NB this does not apply in equal degrees across all industries, and your horses -> cars example doesn't qualify.

In addition, note that I was agreeing with you that the transition, on the whole, is definitely desirable. I'm only arguing that there may be moral consequences in not upholding society's end of the trade I describe above.

bcoates• 14 years ago

Give up on the idea of an apolitical, independent bureaucracy and move to the patronage ("spoils") system. The government becomes incapable of credibly promising rents beyond the horizon of the next election and the value of monopoly rights gets priced more appropriately as a wasting asset.

You could give existing civil servants tenure both to be fair to them and ensure a gradual transition.

brc3• 14 years ago

>were promised a protected business environment

Protecting a business environment always comes at a cost to the consumers, whether it is through tariffs, regulations, licences, restrictions or whatever.

I don't feel sorry for the existing businesses, because they constructed a legal framework to protect themselves instead of trying to keep up with the competition. At any point the natural will of people to come up with something better will route around the regulatory framework they hid themselves behind.

Incumbents have been playing by the rules all right - rules that they have successfully lobbied for, that protect them at a cost to everyone else.

The stranded capital has to remain stranded, and sucks to be them. Otherwise you open a can of worms, and extreme economic stagnation will follow, because doing business becomes a case of who can construct the best regulatory fences, not who can deliver the best products and services.

It's not called risk capital for nothing. You risk losing it.

TLDR; cry me a river, taxi companies, and next time innovate instead of regulate.

smsm426• 14 years ago

It just reeks of special interests protecting their turf. Of course when you are operating in highly regulated environment and have a well-oiled connections with local politicians it is annoying when somebody new comes around and tries to take part of your customer share. However for me as a consumer it is annoying that government yet again tries to take away my choice under the guise of protecting me from imaginary threats - and instead ends up protecting me from better service and lower prices. I don't need this kind of protection.

polemic2• 14 years ago

Oh please. Regulation doesn't exist in a vacuum, and acting as if you're exempt from the law in the noble pursuit of lower prices is bollocks.

PKop2• 14 years ago

So please specify how, in this case, what is beneficial about the regulation of the taxi industry for consumers who want choices and lower prices?

prentis• 14 years ago

Acting as though arguments for the common benefits of a competitive market should be dismissed unless the proponents are selflessly altruistic is an even bigger load of bollocks.

smsm426• 14 years ago

Nobody said anything about being noble or exempt from the law. The fact is the local laws are written by politicians that are in the pocket of the unions. And one doesn't have to be a noble knight to be opposed to this injustice and to realize it's just a legal extortion scheme.

jasonhancock2• 14 years ago

In practice these behave exactly like a taxi service. I don't think it matters much who owns the cars. No one would argue that a cab company from, say, LA, should be able to just bring a portion of its fleet to SF and start picking up passengers without complying with the laws that govern taxis here. If these start-ups affect the market in essentially the same way, we and they all know they are trying to enter a market with rules in a way that does not abide by them

penrod2• 14 years ago

I'll take the bait: Yes an external cab company should be able to come into SF and compete with the local firms. The SF regulations have expressly been rigged to support a local cartel and are morally illegitimate.

jasonhancock2• 14 years ago

You may think that an external cab company (or Lyft) should be able to come into SF and complete with local firms but you also apparently agree it is illegal. I personally consider it equally morally illegitimate for individual actors in a society governed by the rule of law to decide which laws and regulations "work" for them and which ones don't, then to disregard those they don't like. And in practical terms I think it is irresponsible for a group of people with one goal -to make money- to set up a company which they know is breaking the law, and to convince a lot of people to join them in breaking the law (their drivers) and creating ridiculous contortions that allow them to pretend not to be governed by the rules ("the donation thing" e.g.) when everyone knows they are a taxi service, plain and simple.

dreamdu5t• 14 years ago

Another example of government regulation keeping us safe from evil taxi drivers.

Thank God regulations like this exist to make sure that everybody pays their protection money.

Anyone who disagrees clearly hates poor people and taxi drivers... or something.

crazy1van• 14 years ago

This is outrageous that the taxi companies are just lobbying for laws that protect their business at the expense of other businesses!

Ok, now please pass a law saying internet providers can't limit how much data I can send each month nor prioritize one type of traffic over another. After all, that is hurting internet businesses!

1123581321• 14 years ago

Traffic prioritization is an important issue that does hurt businesses and users to the benefit of telecoms and ISPs. It is better known as the "net neutrality" issue. https://www.eff.org/issues/net-neutrality

To your larger point, the disgusting part is the behavior of the regulators, who should not succumb to the lobbyists and campaign donations of the livery industry. However, it's also absolutely wrong to attempt to influence government for personal gain. We all have a moral duty to do what's good for everyone including ourselves. Taxi unions need to recognize that protecting incompetent systems to enrich their members at the expense of everyone else, by using government as a weapon, harms every user of public transportation and several businesses and in the long run sets the drivers up for an unnecessary catastrophic collapse of the taxi system when it becomes completely unbearable by the public.

ajays3• 14 years ago

The deck is stacked against Uber, Lyft and Sidecar. You have to realize that the taxi industry is a government-cab collaboration, with the customer getting fleeced. It is not as simple as "government grants license to cab operator, cab operator runs his cab and makes money". No. The government takes a cut from the daily action too. Use a credit card in the cab? The government takes a cut. Want to rent your medallion to someone else? The government takes a cut.

Right now, the financial impact of these outfits is minimal. But when they seriously start impacting government revenues, expect the lawmakers to come out swinging. They'll tag-team with the taxi union(s) and make life hell for the Sidecars, Ubers and Lyfts of the world.

callmeed• 14 years ago

I've always thought AirBnB has as big a deck stacked against it (or bigger). There are a lot of cities whose main industry is tourism and collect 10%+ bed taxes. I can't imagine they'll give those up easily.

yardie2• 14 years ago

I don't think so. The VRBO market has existed for years (decades even) AirBnB just made it marketable and easy to enter. The controversy with them is some of the property owners are really taking the piss and treating their residential property as hotels and not paying the hotel taxes (BTW, Florida is 20%).

All the reports I've read have been spot on (though the AirBnB founders disagree). The hotels are paying this tax. Some of your members properties look awfully like a hotel. You collect the money, you collect the tax.

Unlike the taxi companies who actually have a monopoly, the hoteliers just want the same deal to apply to everyone.

jeandenis• 14 years ago

Couldn't those cities move to tax the vacation rental industry, though? In developed markets like Paris, a majority vacation rentals are done through agencies (who manage cleanings, checkins checkouts, quality control, etc.). It would be fairly straightforward for the cities to pass laws to force agencies to get licenses and pay a tourism tax, much like hotels do.

Most vacation rental agencies I've dealt with wish they were taxed as opposed to being de jure illegal but de facto tolerated. That uncertainty has made acquiring new properties and investing capital in the business quite risky.

That's not to say that the deck isn't somewhat stacked against vacation rentals. There is a hotel lobbie that's dead-set to kill the industry. Unlike the agencies, the hotel people are quite organized (although that's changing in my experience).

And there's an even greater threat from the fact that most vacation-rental properties are owned by foreigners who are seen as driving the price up of longer-term rentals because of the new emphasis on the short-term market. I do think that rising rental prices in many urban centers is the biggest short-term danger -- PR and real.

At the same time, vacation rentals are becoming more and more necessary to tourism in big cities. E.g., Paris has more than 75+k apartments rented by the week, with occupation rates above 50%. If you made it illegal, there wouldn't be nearly enough hotels to cover those millions of travelers. And enforcing a ban on a per-property basis would be extremely expensive in terms of man-power.

My prognosis is that the market matures, the cities find a way to benefit through taxation, vacation rentals become a bit less price-competitive versus hotels because of that taxation, and it grows from an $80b a year market to a $200b a year market [see http://software.homeaway.com/Media/Files/pdf/RezFest2012-Bre...].

I know next to nothing about Uber and that business, and I am sure the taxi lobby will do its best to kill it, but in the end one should never underestimate gov't ability to be clever when it comes to finding new revenue through taxation, especially during these times.

[I have invested in a couple of companies in Europe in the vacation rental market]

stevewilhelm• 14 years ago

So cities, counties, and states are supposed to build and maintain roads, keep them safe, and allow businesses like Uber that use these roads and services to do so without paying for them? How is that sustainable?

Zak13• 14 years ago

Uber's drivers pay tax on the fuel they use and there's sales tax on the transaction itself. They are, in fact paying for the use of the roads. Why should there be a special additional tax on that particular type of business?

ajays3• 14 years ago

Do UPS, FedEx, etc. pay separately for the privilege to use these roads? No. The money to pay for these facilities comes from gas taxes (mostly), sales taxes, income taxes, etc., all of which are paid by the Uber/Lyft/Sidecar people too. Their cars don't run on air, you know. In fact, Uber's limos use much more gas than the Priuses that the cabs drive, so in fact at least Uber people are paying more for the use of these roads.

smsm426• 14 years ago

Businesses like Uber pay a lot for them. Corporate taxes, payroll taxes, sales taxes, gasoline taxes, business licenses, registration fees, etc. etc. Trying to justify every runaway regulation and fee with "oh, but we have to build the roads!" is only going to convince somebody who is too lazy to think about how many taxes business like Uber has to pay in any case.

And if by the "services" you mean blocking competition and being the enforcement arm of the unions - then I could do without these "services", thank you very much.

Robelius3• 14 years ago

I was following this story for about a week now. SF was extremely conflicted because they want to be tech friendly, but at the same time taxis are a huge moneymaker. There are also unanswered questions about safety and liability in case of car accidents. If the city did want more taxi cabs though, they would allow more. There are many cab companies waiting for the chance to expand. Also, the article doesn't say it (I only skimmed it though so I may of missed it), but the tech companies were issues warnings to cease their actions. I can't find a source to back it up though. Only heard it on NPR while driving.

firefoxman1• 14 years ago

I wonder if Uber, Lyft and Sidecar aren't competing against each other right now, seeing as they have a common enemy. It would be wise to have all the people on your side as possible even if they won't be in the future.

Robelius3• 14 years ago

As far as I know they are not competitive with each other. They are small enough that they don't effect one another.

penrod2• 14 years ago

The problem with this argument is that anti-competitive regulations that restrict the size of the taxi market probably do not maximize government revenues. The government would probably receive greater revenues if it deregulated the market since more people would take cabs, albeit at somewhat lower fares.

The more significant dynamic behind regulatory capture is the simple fact that the groups who are most interested in taxi regulations and the membership of CPUC, and who are most incentivized to lobby for advantageous laws and to try and get friendly people on the Commission, are the very taxi firms being regulated.

colevscode• 14 years ago

The few uber drivers I've talked to love the service. One driver told me that, with uber, he can often find a nearby fare in minutes. He said that the combination of flags, the dispatcher, and über means the meter is always running.

It's pretty clear to me that the folks that are suffering from über are the taxi dispatch companies. These companies lease out the cars for a daily fee, like 150 bucks per day. The driver can do whatever he wants as long as he pays that daily fee. The cab company pays insurance because they own the cabs. Cab drivers are essentially independent contractors. They start making money after they've covered the cab cost for the day.

So why should the cab companies care if a driver is using über? From what I've heard, when a dispatcher has a good order, like for a trip across town on a slow day, they'll ask for a cut. In other words the cab companies are supplementing their taxi rental service with a cut of the fares they dispatch. And as a cab driver, if you want to get good orders you have to stay on the dispatchers good side.

Über changes the balance of power. As more people use über, the drivers have to rely on the dispatchers less, and the tit-for-tat system is deflated. I think this class action suit is an attempt to retain the status quo by cab companies. Über shouldn't be responsible for insurance until they start owning their own cabs. If the cab companies have their way, both the drivers and passengers will suffer.

pfortuny2• 14 years ago

This was clearly going to happen. News at eleven. Not that I agree with the fine, but it was really deemed to happen.

ALee• 14 years ago

If I were them, they should just get users to use real names and addresses to send e-mail, faxes, and paper mail to the offices of the public utilities commission and to other officials who will pressure them.

Fundamentally, these guys just need to increase social capital with regulators and invest in legal infrastructure. The government is just like another giant company with dependencies and old architecture. Trust me, it's just like investing in weird ERP integration to get access to all of those clients. It's not something that is necessary to the evolution of your product, but it's something you just have to do because the market is just shaped that way.

Also, any press is good press, and once these three get large enough, it'll be widely unpopular to not support them.

dean783• 14 years ago

Lets help them out Tell the PUC to support ride sharing services Sign the Petition:

https://www.change.org/petitions/tell-the-puc-to-support-rid...

Lyft, SideCar, and Uber all slapped with $20K fines from CA regulator

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