Uber’s heavily criticised taxi app UberPOP has been the subject of heated debate for quite a while now, but where do we stand after a long year of criticism, allegations, protests, and finally lawsuits?
They had probably not expected a warm welcome when they first set foot in Europe with the release of their taxi app in Paris in December of 2011, but the sheer outrage it caused might have caught even them by surprise. Uber — originally founded as UberCab in 2009 — had already been active for a good two years by then, but nothing much had ever been written about the company. It was only when they expanded to mainland Europe when friction started to occur between them and established taxi companies. Parisian taxi drivers were only the first of many European cabbies that would eventually suffer the consequences of the new service — and protest against it not long after. It all makes perfect sense from a taxi driver’s point of view, but does that also make Uber illegal?
Playing taxi driver
Uber is an American company with a long list of services that all start with the ‘Uber’-prefix, of which UberPOP is by far the most controversial. The reason for this is that this app allows unlicensed drivers to play taxi driver (and no, not the video game — if only!) without really being one. This enables them to be approximately twice as cheap as regular taxi services. Perhaps not so surprising, then, that a decrease in revenue has led professional taxi drivers to stand up for their rights and fight for every penny in the market, even if that means dragging Uber into court. As it turns out, that’s exactly what they’ve done — several times, in several countries across Europe. Based on the fact that UberPOP is still making headlines today, you would think that Uber actually won these court cases, but nothing could be further from the truth; they lost them in almost all European countries. So how come we’re still reading headlines about this service, I hear you ask? Perseverance. Sheer perseverance.
The way that Uber has gone about their business for the last year and a half has definitely taken a lot of resilience to say the least. The company immediately faced heavy resistance from established taxi companies in most European cities, something it had never really experienced before in most of the 300 cities that it operates in today. Everything was running rather smoothly up until then, having had the most promising of starts a company could ever wish for. At the start of 2011, it raised 49 million dollars in venture funds (a financial capital typically provided to high-potential start-up companies), and that wasn’t the end of it; in fact, it was only the beginning. It continuously raised additional funding, including a whopping 258 million dollar investment in 2013 by Google Ventures (Google’s corporate venture capital investment arm), reaching a net worth of 41 billion dollars by the start of 2015, and an estimated 50 billion halfway through the year. That tells you just how fast Uber is growing right now. Its capital has allowed Uber to become what it is today: a global player in the transport industry. And you have to give them credit for the way that they did that.
Having said that, we shouldn’t forget that Uber would never have made the headlines if they had actually played by the rules in the first place. The simple truth is that they haven’t, which has made it quite a bit easier for them to secure such a dominant market position. Through the UberPOP app, users are linked to drivers without professional chauffeur or taxi licenses, which enables drivers to operate at approximately half the price of a regular taxi. Their cars also don’t have taximeters; instead, all payments are made through the app, which is against the law — at least for the moment. Furthermore, Uber’s pricing system has been heavily criticised. By making use of unlicensed drivers, they’ve been able to keep their prices low — or whenever they wanted them to be, anyway. The company uses an automated algorithm to surge price levels, responding rapidly to changes of supply and demand in the market. This attracts more drivers during times of increased demand, while reducing demand at the same time. Customers receive notice whenever prices have increased, so that demand drops. In practice, this keeps prices nice and low for most of the time, but it also means that they can skyrocket during holidays, or simply whenever the weather happens to be bad. During New Year’s Eve of 2011, prices were as high as seven times that of normal rates, causing outrage among customers. That makes sense, especially considering the fact that Uber’s premise has always been to be the cheapest. Uber even applied for a US patent in surge pricing in 2013, which I personally find quite peculiar given that premise. To this day, they’re still trying to get the patent…
Things got rather grim between Uber and taxi companies over the course of 2014, when angry cab drivers finally gathered in Paris and later set up roadblocks in other major European cities too, gradually expanding their protest against what they perceive as a threat to their livelihood. It didn’t take long before Uber was experiencing numerous legal and regulatory challenges to its operations, with most of them based on unfair competition claims. The main argument is simple: Uber has an unfair advantage because it’s not subject to the same kind of fees and regulations placed on taxis. You would think that all of this might make you ponder over your actions, but once again, nothing could be further from the truth; Uber has carelessly continued doing what it was already doing, expanding even further and paying any fine sent their way, no matter how high. To illustrate: we’re talking penalty charges of up to a million euros — ‘just’ a million euros — to be paid by a company with a net worth that runs into the billions. No wonder they’re still going strong! Andrew Leonard, an American journalist from San Fransisco, California (where Uber is based), put it as follows: “Uber is the closest thing we’ve got today to the living, breathing essence of unrestrained capitalism. This is like watching Andrew Carnegie or John D. Rockefeller in action. This is how robber barons play. From top to bottom, the company flaunts a street-fighter ethos.”
Uber clearly sees things differently. To begin with, they don’t even consider UberPOP to be a taxi service, but rather a form of “organised hitchhiking”. They’ve tried to talk their way out of the situation by claiming that the current taxi regulation doesn’t apply to them. Niek van Leeuwen, General Manager of the Benelux branch of Uber’s, had the following to say about it: “It’s not just twice as cheap as a normal taxi ride. There are eight million cars in the Netherlands, many of which stand still for 23 hours a day. During the one hour that they are in use, there’s often only one person in them. That has an enormous impact on energy usage, parking, traffic jams, and so on. Fortunately, we have good ties with the Dutch government.” However, the Dutch government had already taken a stand by then, stating that it considers Uber’s drivers to be ‘crawlers’, i.e. illegal taxi drivers. Uber responded to this by stating that they were going to go on nevertheless. Meanwhile, Uber’s drivers were getting their first official warnings from the government, while Germany banned the service altogether. Uber appealed against this decision, stating that it would pay all fines if needed, including those sent out to drivers. It didn’t take long before those fines started coming in — not just there, but in other European countries as well, including a 100,000 euro fine in France for “fraudulent operations”. It didn’t bother them, or at least it didn’t stop them, because they kept expanding to other European cities, holding on to their earlier statement of “organised hitchhiking”.
…or innovative carpooling?
But how can this be the case? Until not so long ago, Uber recruited drivers with the catchphrase ‘earn 100 euros a day’ — a clear sign of Uber’s commercial intentions. There’s nothing wrong with that per se, but it does contradict Uber’s stance on the matter. After all, how could anyone be interested in sharing their car with a complete stranger if there’s no money to be made from it? This shows that it must be more than merely a form or organised hitchhiking, which all of a sudden sounds like intentional distortion of the facts to me. Uber introduced a new service in Paris at the end of 2014, called UberPool — merely a month after the French court had deemed UberPOP to be illegal, but let’s try to ignore that for the moment — and this service sounds a lot more like a genuine (and less contradicting) attempt at improving transportations across the globe. I say this because there seems to be a much bigger (and better) idea behind it. UberPool is Uber’s grand attempt at — you guessed it — carpooling, but in a much more ambitious way than I believe the world has ever seen before. This also actually addresses many of the points raised by Van Leeuwen earlier on, which for the most part are absolutely true. The goal is for it to become a climate-friendly alternative to possessing a car of your own, simply because it could be cheaper. According to the Dutchman, we can already see this effect taking place in San Fransisco, California, where young people are getting rid of their cars because they’re starting to see an alternative. This effect could take place just about anywhere; for the Netherlands, it could mean a reduction of hundreds of thousands of cars in the long run, if not a million, says Van Leeuwen. The only question is whether people will embrace the idea of carpooling at all. It’s clearly a great ambition of his, but UberPOP doesn’t achieve this. As such, I would like Uber to shift their attention towards UberPool instead.
Put the money where the mouth is
For the moment, Uber is still holding on. Although 2015 has seen an increase in resistance and even violence against UberPOP drivers in several countries (forcing Uber to retreat in some of them), they’ve stuck to their guns nevertheless. Remarkably, this hasn’t had an adverse effect on them; in fact, some countries have even tried to change their legislation over the course of this year to allow UberPOP. This includes Belgium, and the service was never illegal in the United kingdom to begin with. Given this, I really don’t understand why Uber chooses to adopt such a seemingly arrogant attitude towards all other parties involved, when in fact, many governments are starting to see the potential benefits. By creating such a fierce opposition towards the Uber brand, they are ultimately just shooting themselves in the foot, making life harder for themselves rather than easier. Uber should be acting the gentleman, opting out of the market while negotiations are still going on, but instead, they’ve stuck to their philosophy by any means necessary, accepting increasingly higher fines in the process, virtually setting the rules for themselves — thereby endangering the lives of their drivers. While it’s true that cars could be used a lot more efficiently, this takes nothing away from the fact that UberPOP’s core activities are that of a taxi service. They should therefore be subject to the same rules as all the other companies in the market, at least for as long as regulation remains unchanged. The last thing we should want is a company that can set the rules for itself, effortlessly paying any fines it might face in the process, no matter how high. It’s high time that we put an end to this taxi service, so let’s put the money where the mouth is. Let’s put a stop to UberPOP.