It seems there are some laws that even Uber, handmaiden to Silicon Valley’s “cult of disruption,” isn’t willing to break — at least until others have broken them first, anyway. The car service for the bourgeoisie today announced that it would roll out its more-affordable UberX service, which relies on untrained drivers instead of the licensed professionals of the core Uber service, in select cities after competitors SideCar and Lyft had operated in the area for 30 days.
“The way we really look at the [ride-sharing] landscape is that ride-sharing apps were taking extreme regulatory risk in rolling out, and, believe it or not, that was at a level that we were really not comfortable with,” said Uber CEO Travis Kalanick in a call with the press. Now that Lyft and SideCar have been operating in multiple cities without being slammed by regulators, however, Uber wants to capitalize on the trend. “We look at [a lack of regulatory action] as tacit approval embracing ride-sharing as an innovative way to get around a city,” Kalanick said.
Today’s announcement was a lesson in contradictions. Kalanick repeated several times that he doesn’t view this as a defensive measure against SideCar and Lyft during the call, yet he writes in a blog post that Uber “watched two competitors roll out in a few cities in which we already operate, without nearly the same level of constraints or costs, offering a far cheaper product.” SideCar and Lyft are called “clones” and “quite different” from Uber within the same paragraph and seem to be considered competitors or gnats, depending on which interpretation best serves Uber.
Kalanick writes in the announcement that UberX’s “criteria for which a driver will be disqualified will be stricter than what any existing local regulatory body already has in place for commercial transportation providers.” (Emphasis his.) This is notable in a few ways, not least among which is the delicious irony in Uber, the anti-regulatory wunderkind — most of the time — saying that it will impose stricter regulations than the commissions it seeks to disrupt.
This claim stands in direct contrast to Uber’s presence at SXSW 2013, where the company, while offering free rides to Austinites, allowed anyone with a pulse and a gas pedal to accept rides. Some of these drivers were… less than stellar, as the New Yorker’s Matt Buchanan reports:
Over eight or so rides, I learned that the training for Austin UberX drivers, who were recruited through a Craigslist ad, consisted of a forty-five-minute orientation following a background check, though “twenty minutes of it was just filling out forms,” one driver told me. Another driver admitted, as she nearly ran into a group of people in a crosswalk, that she had only attended “like five minutes” of the training. Most of the orientation was about how to use the Uber system and “what not to do,” according to one driver—the biggest thing not to do was accept gratuity, since it would jeopardize the legality of the enterprise.
Maybe the sign-up process for UberX will change in markets where Uber is allowed to collect fees for its service — I used the word “capitalize” earlier for a reason, after all — instead of operating as a glorified marketing campaign. We’ll know soon enough.
SideCar and Lyft are competitors, except when they’re not; they’re clones, except when they’re not; they’re a threat to Uber, except when they’re not; and they’re scouts that will, in many ways, define UberX and give Uber “tacit permission” to operate within certain cities — except Uber is going to do it better and impose stricter rules than the cities themselves.
Perhaps the most notable aspect of today’s announcement is Uber’s changing approach to entering new markets and working within regulatory laws, and that this shift is predicated by other services expanding to those markets first. It used to be that Uber was the one launching and then seeing what regulators would do (and, depending on the outcome, mobilizing its fanbase to create controversy). That seems to have changed, with Kalanick writing:
Innovation and consumer safety are at the core of Uber’s culture. Until this policy shift, Uber hesitated to engage in a market perceiving extreme regulatory risk. Finding the principles for engagement with such risk in this market was crucial. We wanted to set the rules in a place where everyone would agree that safety and welfare of consumers was taken care of while regulators catch up to the innovation they are letting flourish. We look forward to ridesharing spreading across the country but look to do so only after first getting a read from regulators on this new relaxed approach to transportation licensing and enforcement.
He expanded on this “extreme regulatory risk” during the press call, saying:
It’s about this spectrum of regulatory risk, and rolling out ride-sharing is far further down that spectrum to the extreme than anything we’ve done before, because everything we do today… everything we’ve done up to today has been with transportation providers that are licensed, regulated, have commercial insurance, the whole mile.
This is merely the latest example of Uber’s ability to redefine, and re-market, itself in order to best capitalize (there’s that word again) on trends, laws, and its own advances. While this isn’t uncommon amongst technology companies — or any company looking to avoid slipping into the red — to adapt and evolve over time, Uber has turned the practice into an art form.
The company showed this last year when it introduced the UberTaxi service, which was banned in New York due to the city’s existing contracts with the Taxi & Limousine Commission. Because yellow cabs and livery cars are regulated separately by New York, Uber had to deal with a legal clusterfuck that it tried to tap-dance around as it evolved.
“Uber went after the black cars in New York first, securing a livery license from the city after arguing that the service constituted an advance reservation,” writes Adrianne Jefferies for The Verge. “But once Uber started going after taxis, it argued the opposite: that an Uber booking is the equivalent of a ‘virtual hail.’”
Now it seems that Uber is trying to pirouette between its anti-regulatory status and operating without drawing the ire of regulators. The company is at-once staunchly anti-regulation and enthusiastically pro-regulators, depending on the day and whichever message better serves its revenues. While that’s likely to prove a sound strategy for building a company, it’s a poor way to define a movement, as Uber has fancied itself before.
Tap, tap, spin, and stomp.