Tags: Uber | Regulation | taxi | safety

Uber's Shortcomings Invite Regulation

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Wednesday, 17 Dec 2014 11:35 AM Current | Bio | Archive

The market hype surrounding ride-sharing company Uber in many ways reminds me of the great tulip investment bubble of the 17th century, but I don’t think the tulips insulted journalists or attacked growers — although there may have been a sneeze or two.
 
Currently Uber is valued at almost $40 billion, which should be an early warning sign for sane investors. This is an incredible valuation for a company where the assets consist of a list of driver’s names and proprietary computer software that matches these volunteer drivers with passengers and calculates the fare.
 
Uber doesn’t own the cars, control the drivers, or assign routes. It collects 20 percent of the fare and charges riders few additional fees that it keeps. And that’s the company. The remarkable management arrogance is a bonus.
 
Uber is the world’s foremost practitioner of do first and possibly ask permission later. It typically enters a market and competes directly with taxi companies, without bothering to submit to any type of regulation.
 
It calls this being a disruptive competitor, but in many instances Uber is simply exploitative.
 
As you know I’m no fan of government red tape and regulation. All too often it stifles competition and only serves to protect the regulated. This is particularly true in the taxi industry. So Uber’s competition was a welcome alternative for passengers tired of surly cab drivers, dirty cabs, and that vague feeling you’re being cheated.
 
But Uber failed the first test of the ethical competitor: insuring the safety of its product. Until government intervened, Uber did not insure drivers. It made sure Uber drivers had an auto insurance policy, but the policy was for a passenger car. If an Uber driver was in an accident and the insurance company found out he was driving for hire, the company could refuse to honor the claim leaving the driver and passenger high and dry.
 
Now government has forced Uber to cover drivers from the minute they accept a passenger to the time the rider reaches the destination — something Uber should have done on its own from the beginning.
 
The other area where government and Uber are fighting is background checks. Taxi companies are putting pressure on regulators and alarming passengers by intimating that getting in an Uber car is tantamount to hitchhiking when it comes to danger for female passengers.
 
California is suing Uber is an effort to require it to fingerprint drivers, and speaking of prints the state also wants to get its hands on the fare-charging app to make sure it’s charging a fair fare. It’s just a few short steps to limiting the number of drivers, setting fares, and assigning territory. Then Uber becomes Yellow Uber just like any other cab company, completely defeating the purpose for competition.
 
The Uber response to a government crackdown is to alert riders to inundate politicians and government officials with email, text, and phone messages telling them to leave Uber alone. This has been working so far, but the constant stream of controversy stories in the media can’t be helping the company reputation.
 
But Uber management had a response for that, too: Hire private investigators to dig up dirt on reporters and threaten to leak it. And maybe search the database for all the reporter’s Uber trips and see if there is something fishy.
 
Naturally when that idea leaked the coverage was even worse.
 
Uber obviously understands software and marketing and it is offering riders much-needed market choices, but it needs a great deal of help in the realm of public affairs and crisis control. Maybe someone in the company is working on an app.
 
Michael Reagan is the son of President Ronald Reagan. He is president of The Reagan Legacy Foundation and chairman of the League of American Voters. Mike is an in-demand speaker with Premiere. Read more reports from Michael Reagan — Go Here Now.
 
 

© Mike Reagan

 
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Uber is the world’s foremost practitioner of do first and possibly ask permission later. It typically enters a market and competes directly with taxi companies, without bothering to submit to any type of regulation.
Uber, Regulation, taxi, safety
645
2014-35-17
Wednesday, 17 Dec 2014 11:35 AM
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