Is Uber's Strategy of Flaunting Laws and Picking Fights With Cities Sustainable?

As Microsoft, Google, Amazon and other new economy behemoths have learned the hard way, government workers may not be as brilliant, entrepreneurial, innovative and well paid as those in tech, but they are persistent. And they have an impressive record of winning in the long run. JL

Catherine Rampell comments in the Washington Post:

In an ideal world, regulators navigating the taxi wars would craft a new set of laws that better balances public welfare and safety concerns while providing flexibility to accommodate new business models. No company has the right to unilaterally exempt itself from public laws, even if it considers those laws to be kind of stupid. That’s not civil disobedience; that’s racketeering.

Like many consumers (and politicians), I have a lot of ambivalence about so-called “ride-sharing” services such as Uber, the company that has suddenly become a political crucible for U.S. presidential candidates.

Uber engages in behavior that has long struck me as at best sleazy and at worst illegal. But in many cities, traditional taxi services can be pretty awful, too. For example, in France — where the industry is highly regulated, and drivers must abide by strict licensure requirements — rides are pricey and not super reliable. Drivers sometimes start the meter as soon as you call them to retrieve you, rather than when they actually pick you up. That means you can be charged for the privilege of waiting an hour in the rain.

Enter Uber, which introduced a cheap, desirable taxi alternative that also happens to be against the law in Paris (among other cities): UberPOP, which enables any old schmo to effectively use his or her personal vehicle as a taxi — insurance and licensure requirements be damned.

Uber has challenged regulations that effectively ban UberPOP, on both procedural grounds and more substantive ones, and lost. When I was reporting from France this spring, UberPOP drivers clearly knew they were working outside the law. To evade police, drivers sometimes asked paying passengers to sit in the front seat and pretend they were friends (you know, as if they were actually “sharing” a ride). Despite such charades, drivers still sometimes got caught — but Uber happily paid their fines and sent them back on the road.

French taxi drivers were furious about this encroachment. In massive protests — or rather, riots — in June, taxis blocked roadways, kidnapped Uber drivers, set cars on fire, and harassed and physically beat passengers patronizing the ride-sharing service. (Musician Courtney Love live-tweeted some of the horrors.) But rather than punishing the taxi drivers, French authorities detained two top executives at Uber, which subsequently suspended UberPOP.

There are two ways to look at these developments, which have been echoed in cities around the world, albeit usually with fewer pyrotechnics.

On the one hand, Uber offered a service that consumers wanted, especially after the taxi tantrums. Uber app downloads reportedly surged during the protests.

On the other hand, France is a sovereign country that can decide for itself what laws it wants on its books. No company has the right to unilaterally exempt itself from public laws, even if it considers those laws to be kind of stupid. That’s not civil disobedience; that’s racketeering.

Simply repealing all livery laws, which Uber seems to want, has a poor track record. When U.S. cities deregulated taxi services several decades ago, chaos, congestion and price hikes followed — and cities ultimately opted to re-regulate. As I’ve said before, the solution to bad regulation is not zero regulation. It’s good, thoughtful regulation.

In an ideal world, regulators navigating the latest round of taxi wars would craft a new set of laws that better balances public welfare and safety concerns — through minimum insurance, licensure and reporting requirements, for example — while providing enough flexibility to accommodate new business models.

You know, like Uber’s home state of California recently tried to do. At Uber’s behest.

In 2013, California effectively became the first state in the country to formally legalize and regulate the ride-sharing industry. This came after a protracted battle with the upstart companies themselves, which had been flouting existing insurance and licensure laws. Taxi industry incumbents argued that the upstarts should be shut down. But Uber, Lyft and others successfully lobbied for a new law that allowed them to continue operating, so long as they complied with basic safety, insurance and reporting requirements. The ride-sharing companies hailed this as an unalloyed victory.

Fast forward two years.

On Wednesday, a California administrative judge ordered that Uber be suspended and fined $7.3 million because, she found, it had broken even that law by refusing to report required information about disabled passengers and accessibility. (Separately, Uber has also argued that it’s not required to abide by the Americans with Disabilities Act because it’s a tech company and not a transportation service.) Uber, now valued at $50 billion, says it will appeal.

Meanwhile, the company is picking battles with other cities, including New York, that are trying to figure out how to best integrate these new “disruptive” services with the old ones and to address concerns about congestion and public safety. Anyone expressing skepticism about Uber’s motives and promises is, predictably, cast as a Luddite or a lackey of Big Taxi.

But consumers (and elected officials) are right to remain skeptical. Time and again, Uber has acted as if it believes that it alone has the right to decide where and when rule of law applies. Even, it turns out, when the law in question is one the company itself once asked for