Rachael Botsman has posted an interesting article today in The AFR arguing that Australian regulators should ignore the taxi industry’s special pleading and permit ridesharing services, like Uber, to operate:
It’s understandable that the traditional taxi, limousine and cab companies are scared and unhappy about the competition, given they did not see it coming. The incumbents are appealing to state regulators, arguing the likes of Uber are “rogue apps” that create unfair competition because they “operate outside of the regulatory framework” of the taxi industry. Herein lies the problem: “on-demand ride sharing” was not considered when the laws governing the taxi industry were enacted.
It’s a common approach for the disruptor to focus on what their product isn’t (“We are not a taxi company”) and for the incumbent to focus on what it is (“Yes, you are providing taxi services”)…
[But] whose interest is the law really protecting? The current cease and desist letters, fines and regulatory battles about Uber should not be just about Uber, per se.
In the bigger picture, what’s at stake is the risk of getting wedged into a myopic viewpoint that damages the progress of the entire industry. Ultimately, regulation should enable innovation that disrupts a market for the benefit of the majority.
In the case of Uber, the net result should be safer, more reliable, more diverse and affordable transport options as well as good wages, proper insurance cover and quality assurance for the drivers. If traditional taxi companies remain middlemen that don’t add value in any way to the service for drivers or customers, they will become redundant…
Botsman is, of course, spot on. As argued repeatedly, ride-sharing is a no-brainer for the economy, providing greater choice to consumers and lowering costs, while also improving productivity by facilitating a more efficient use of the existing transport fleet. It would also offer drivers even greater options to derive an income, without paying exorbitant licence fees or rents to taxi plate owners. Ridesharing should be embraced by regulators subject to meeting minimum performance standards.
Ultimately, technology will win the day – just as the invention of the personal motor car won the battle against the horse-and-cart and railway industries, which lobbied governments to erect all kinds of barriers aimed at preventing their operation. As noted by Botsman:
If we look back over the history of innovation, a repeated mistake is the assumption that a successful lawsuit can magically erase a new idea from the minds of the public. Win or lose on the legal front, it doesn’t matter; you can’t untell the story.
If the idea is a good one, it won’t quietly disappear into a black hole. Ask an Uber passenger what they think of the service, and common responses are “simple”, “beautiful” and “I will never take a ‘normal’ taxi again”. As soon as the genie is out of the bottle that a new way exists and the public decides that new way is as good as, if not better, than the current option, then change happens quickly.
It’s a view shared by Wired’s Marcus Wohlsen, who believes that Uber is now too big to ban anyway, given the firm is valued at some $US17 billion, and operates in 140 cities across 40 countries, with a reported 20,000 new drivers joining Uber per month:
…powerful political leverage comes in the form of popularity. “The more they sort of popularize themselves, the stronger their argument becomes” against crackdowns, New York University Stern School of Business professor Arun Sundararajan told Businessweek.
That strength, however, doesn’t have as much to do with the quality of the argument as it does with the quantity of people who support it. The more riders Uber can get in its cars and accustomed to having its push-button convenience as an option, the less incentive politicians have to stay on Uber’s case… It’s cultivating constituents — the people who will complain when someone in power tries to take away their Uber.
The underlying message in all this is: “Move aside taxi industry. Uber has arrived and it ain’t going away”.
