With the allure of a Tesla and the overbearing presence of an Escalade, Uber is trying to transport the new sharing economy to New York.
With its e-hail app connecting freelance drivers with passengers, the privately owned Silicon Valley company is aggressively upending business models worldwide for how to engage a taxi. So far, roadblocks have been the universal response -- an approach that takes the public for a ride.
Consumers are losing out on better service and lower costs competition usually generates.
The upstart's strategy of using swift and relentless pressure to force itself into closed markets has prompted dramatic defensive measures. These take two paths: mass protests, such as ones that tangled traffic in Mexico City, or government intervention to stave off disruption of the monopolistic order.
East Hampton, like France and China, has turned to criminal prosecution. In May, the town charged 23 Uber drivers with misdemeanors after they allegedly failed to comply with its new code; most have pleaded guilty to a lesser charge and paid a $400 fine. The drivers had violated new town rules that require drivers to have a brick-and-mortar business office in town with the same address as the car's registration, essentially preserving the old fleet model.
That type of protectionism shouldn't be a surprise after Uber followed its young clientele to the East End -- stunning local cabbies. It provided 26,500 rides the past two summers and paid $47,000 in fees to the town. After the driver arrests on Memorial Day weekend, Uber shut its East Hampton service while it decides its next move.
The French arrested two top Uber executives last week on charges of operating "illegal taxis." And Chinese authorities recently created sting operations to arrest cabdrivers who used apps to do business.
Meanwhile, in response to the explosive growth of all e-hail cars -- Uber alone has attracted $6 billion of venture capital investment -- New York City is trying to limit further expansion. Uber has 26,000 drivers in the city as partners; they provide about 100,000 rides a day and decide when and how many hours they want to work. However, the city proposes to allow Uber to add only 201 drivers in the next 12 months. Uber had planned to add another 10,000 by the end of the year. Mayor Bill de Blasio and the City Council want to cap new licenses under the pretense of studying traffic congestion, pollution and noise.
Now Nassau County is forming a Taxi & Limousine Board to write rules to combat unlicensed for-hire vehicles, including those such as Uber and Lyft that use the Internet to seamlessly connect drivers and passengers. Seven of nine seats on the board have been given to taxi and limousine fleet owners or those with close ties to them. Yet Nassau's initial meeting two weeks ago with Uber officials was universally described as positive.
The differing regional responses to Uber, however, leave little doubt that New York State must step in soon to provide oversight and enable competition, which almost two dozen states have done. New York has an important role in ensuring passenger safety and security, access for disabled riders and adequate vehicle insurance. But burdensome rules about fares, how taxis are hailed and how many can be on the road are wrongheaded.
New technologies inevitably force changes in the law, regulations and ways of doing business. The established taxi fleets in East Hampton are now considering the use of their own e-hail apps. Yet Uber and other outsiders remain shut out of the town.
Long Island's response to the threatening or unconventional should not be to dissuade new businesses, but to adapt to new market realities.