Uber and the Taxi Revolution

Uber and the Taxi RevolutionUber has now revolutionised getting hold of a cab in over 60 cities across the world.  The brain-child of Travis Kalanick, like all the best ideas it is deceptively simple. Forget all that standing on the kerb, yelling and gesticulating for the ride that never appears or shoots past. Forget those rainy nights when the only option was to trudge home getting soaked, with sore feet and a heavy heart as not s single taxi light was to be seen on the empty streets.  With the Uber app on your smartphone, a driver will come for you, wherever you are, whenever you want, and offer a smart and professional service back to your door.  Almost as good as having your own chauffeur on call.

That’s the theory behind Uber, and it has been an outstanding success, its current value is $4 billion. But a few cracks are beginning to show in the model.  The problem with Uber is that is has all the hallmarks of a brilliant cyber-technology company, but it can’t stay invisible. It has to exist out in the real and the physical world and this is where issues are beginning to emerge.  When technology start-up meets taxi service, what is it? Can it be both? The two most important components of the concept, the drivers and the customers, both have some gripes.

With Uber, the tip is incorporated into the fare, but this is proving unpopular with the drivers who say they are not getting them.  The drivers have gone ahead and filed suit and it has been put forward by a judge in San Francisco, so Uber are not going to be able to carry on ducking on this.

The most common complaint from those in the passenger seats is the policy of surge pricing.  This is when the fares suddenly soar up to 3 or 4 times when it’s a public holiday, or its rush hour or it starts to bucket with rain and demand increases.  Kalanick is not apologetic about this feature. It gets more cars out there, he says, when people need them. That’s how it works.

A cabbie who drove for a regular taxi firm before, and now works with Uber, said he had more flexibility and freedom now than he ever did before.  He doesn’t have to ask anyone if he wants to take a vacation, he can plan his own time. He can accept or reject any fare. He can go home when he wants to. What he misses though, is the community with the other drivers and the backing of the union. As ever, he sees the executives and the investors getting rich, while he gets by on decent but not mega-money.

While Uber are constantly, sometimes aggressively, canvassing for more drivers to work for them, there are some outstanding questions growing about responsibilities. Uber say they are a self-regulating entity because they ask their customers for feedback, but they can’t be completely outside of statutory regulations.  They say their drivers are “freelance” but if they use their own cars what insurance cover is suitable?

This wasn’t such a moot point when Uber started as they used existing limousine drivers. It’s the new service, Uber X, where the drivers are in their personal vehicles, that has crossed the line. Drivers are covered by a $1 million insurance on Uber X but only when they have accepted a passenger on the app.

Uber have made a strong case that innovation would be stifled if they were subject to the normal rules of a transportation business, but the California Public Utilites Commission, while accepting this as “creative” arguement could not agree. Uber plan to appeal on that decision.

The big problems emerge when something goes badly wrong as when  six year old girl, Sofia Liu, was hit by an Uber driver on New Year’s Eve. He wasn’t carrying an Uber passenger when the accident happened.  The child lost her life and her brother and mother were also injured. The family hold Uber accountable. A lawyer for the Liu family said that Uber drivers were by their very nature not concentrating, as they were looking at their phones for the next fare.

Uber has revolutionized the taxi business, but not without a few serious problems.  The wrongful-death lawsuit in the case of Sofa Liu has been filed on Monday in San Francisco, and the company are going to be hard pushed to stick to their claim that it has nothing to do with them. They de-activated the account of the driver, Syed Muzaffar, and tightened up background checks, but they still have to face up to the full implications of the tragedy.

If Muzaffar was on the Uber app at the time of the fatal collision, as the family allege, than Uber could face big liability. Uber, and its imitators, are in their infancy still, and the law has to quickly play catch-up.  The fate of Uber, right now, is hanging in the balance.

It will all come down to whether Uber can define itself, as it wants to, as a technology-driven marketplace, or as a transport company. It just facilitates, it says, just like eBay, or Amazon. Will that analogy hold up in court?   Like all revolutions, this one just got messy.

By Kate Henderson


New York Times


One Response to "Uber and the Taxi Revolution"

  1. Matt J   January 31, 2014 at 8:30 am

    If you want to try out uber, for a limited time you can get $20 off your first ride if you sign up now: https://uber.com/invite/4r11h

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