Wednesday, July 28

Rideshare companies like Uber face opposition

From Cato Institute, an update on the regulatory and anti-competitive struggles Uber faces. Wichita has regulations that I believe outlaw services like Uber. See Uber, not for Wichita.

The Latest Travails of Rideshare Companies

By Matthew Feeney

Don't try to catch a ride with Uber in Wichita now -- or in the future, unless Wichita changes laws and regulations.
Don’t try to catch a ride with Uber in Wichita now — or in the future, unless Wichita changes laws and regulations.
Last week Uber CEO Travis Kalanick said that the technology company, which connects riders to drivers through its app, could enjoy a “record-breaking” valuation thanks to its latest attempt to raise money.

Yesterday, Bloomberg reported that Fidelity Investments “is competing to lead Uber Technologies Inc.’s new financing in a round that could value the ride-sharing service at about $17 billion.”

Bloomberg’s reporting went on to note that if valued at $17 billion, Uber would be more valuable than the car rental service Hertz and the technology and appliances retailer Best Buy.

The news of Uber’s possible $17 billion valuation comes in the wake of news highlighting how the company has run afoul of regulators and taxi drivers across the world.

Earlier this year in Illinois, both the state House of Representatives and Senate passed HB 4075 and HB 5331 by veto-proof margins. If signed by Gov. Pat Quinn, the bills would require that the rideshare service drivers pass a background check, have commercial liability insurance of at least $350,000, and be required to obtain a chauffeur’s license if they carry passengers for more than 18 hours a week. These chauffeurs’ licenses are not easy to get in Chicago, the only city in Illinois where rideshare companies operate. They require any driver to complete a chauffeur training course, pass a written test, and demonstrate proficiency in English. The manager of government affairs at Lyft, another company that offers a rideshare service, has claimed that the 18 hour per week regulation would affect the 63 percent of drivers who use Lyft in Chicago. Chicago lawmakers recently passed an ordinance regulating ridesharing, a move welcomed by Uber and Lyft, although the legislation will have to be brought into compliance with HB 4075 if it is signed into law.

Uber and Lyft are facing a legal battle over the Americans with Disabilities Act in Texas. Two Houston women and lead plaintiff Dan J. Ramos of San Antonio are suing both Uber and Lyft claiming that the companies are required to accommodate wheelchair-bound passengers. Elsewhere in Texas, Uber recently followed Lyft’s example and started operating in Austindespite an official ban.

Last week it was reported that Uber is planning to appeal rideshare regulation proposals in Maryland. Uber stated that it would leave Maryland if the Maryland Public Service Commission went ahead with its plan to regulate Uber and other rideshare companies like taxi operators. Taxi operators in Maryland have claimed that rideshare companies have an unfair advantage over traditional taxis.

In Australia, Queensland followed New South Wales in cracking down on Uber, requiring that Uber drivers be at least 24 years old and drive a vehicle made after 2005 with at least four doors. In London, the city’s transportation agency, Transport for London, has asked for a High Court ruling on whether Uber is operating legally by using GPS to calculate fares as opposed to meters attached to vehicles. The Licensed Taxi Drivers Association is planning to cause “severe congestion and traffic chaos” over the issue next week.

Uber’s $17 billion valuation looks all the more remarkable in the face of all this opposition from competitors and regulators. The market is signaling that Uber’s services are highly valued by consumers. What remains to be seen is how frequently politicians will side with consumers — or whether, instead, they will use the power of government to shield entrenched incumbents from innovative competition.

Originally published at The Latest Travails of Rideshare Companies.