Judge rules on taxi industry lawsuit: Compete with Uber or die | Hacker News Reader

Judge rules on taxi industry lawsuit: Compete with Uber or die

crainsnewyork.com

62 pointsandrewl70 comments

In SF I always use Uber over taxis for the better experience of hailing and paying for a ride. But within the last year I notice every day how bad Uber drivers are severely affecting the city for the worse.

So many uber drivers don't know how to safely park to pick up or drop off passengers without blocking traffic. Drivers don't know the fastest or safest routes to get around with other drivers, busses, cyclists, pedestrians and construction.

I don't want to see Uber regulated to hell, but I would like to see features of taxis required for drivers like signs on top of the cars indicating cars for hire, and most importantly lots more training about road safety.

There is potential for uber infrastructure to self-regulate - continuously giving bad ratings to bad drivers will see them reprimanded in some fashion (I imagine). I've had (mostly) good experiences here in Boston/Cambridge; any bad experiences I've had have been documented with 1 to 2 stars and a quick explanation as to why.

I admit that I have no idea how the reprimanding of drivers of the handling of bad customer reviews is performed by Uber. Hopefully it's done in an honest way.

This is just hearsay, but I was told there is basically a minimum rating and if they drop below it for any meaningful amount of time they are fired.

How can I report an Uber driver who is not my driver?

That's the problem with trying to value an asset that's granted by the government. Just because they have acted a certain way in the past doesn't guarantee that they will continue to act a certain way in the future. Spectrum auctions could be considered similarly. One day the government could decide to auction off tons more spectrum, devaluing the existing licenses. It'd suck that they did that, and that in hindsight you paid too much for what you got, but that's just the way it works.

It would suck for existing spectrum holders, but not for the spectrum consumers.

The same thing happens with any commodities, anyway. If I just bought a diamond mine and they discover a massive vein of new diamonds in an easily accessible place, that sucks just the same.

Ironically the diamond industry is controlled by a few large companies inflating the price by artificially restricting availability.

Or, in the case of Copyrights, a government granted asset can be an entire business model, and when efficient at making money, the industry becomes a force that can strong arm the government to further its interests at home (Copyright term extensions) and abroad (SOPA/TPP).

> That's the problem with trying to value an asset that's granted by the government. Just because they have acted a certain way in the past doesn't guarantee that they will continue to act a certain way in the future.

I see that problem with any asset; 'past performance is no guarantee ...'. And one reason any asset can be unpredictable is the behavior of actors on which it depends; for example, if Apple changes the rules or features for the next version of iOS, your app might not be viable anymore. I don't see government as a special case.

Oh I totally agree. Trying to value an asset that someone else controls in a meaningful way is very difficult. Like you pointed out with Apple or whatever.

Valuing an asset based solely on income in a true market is the best way to not get screwed. True markets are few and far between, though. The degree to which your market is regulated determines your external risk.

> Valuing an asset based solely on income in a true market is the best way to not get screwed. True markets are few and far between, though. The degree to which your market is regulated determines your external risk.

I think you make good points, but I'd add that certain regulation is necessary for a "true" market: 1) The regulation that prevents the fraud and cheating that distorts markets, and 2) regulation that prevents the market from ignoring the externalities that are not factored into price, such as health, safety, labor rights, and environmental impact.

Taking a libertarian perspective here, the problem isn't Uber. The problem is that the government tried to artificially limit the supply of cabs with medallions, leading to entrenchment, lack of competition and no urgency to innovate within the industry.

So innovation came from outside and it's blowing the whole thing up.

It will be interesting to see if this pushes any traditional cab companies to become their own "mini Uber".

i.e. sell all their medallions, get rid of all their regulations and expense overhead, and just operate all their drivers like Uber operate theirs. At which point competing should be easy enough.

I think we're at a very interesting point in the Developed world - in the 80s, 90s and 00s everything about our society became more and more regulated and safety conscious (hotels, taxis, health care, education) meaning costs skyrocketed, and the cost of entry to compete in those markets became astronomical.

Now we're using technology to go back to way things used to be - less regulation, less rules, (arguably) less safety. Spend some time in the Developing world and you'll see their society still works like this - people will let you stay in their house for a few bucks a night (airbnb), people buy minivans then drive around picking people up for a fee (uber), etc. etc.

It's interesting we had to use technology to go back to the way things used to be in these areas.

I'm looking forward to seeing the uber/airbnb equivalent for education, healthcare, energy, etc.

> I'm looking forward to seeing the uber/airbnb equivalent for education, healthcare, energy, etc.

The total disregard for laws and regulations? Exciting. Fingers crossed Uber burns up it VC money sooner than later.

It's pretty terrible when people on HN pine for the days of less developed countries (no worker protections, no labor/safety regulations).

> It's pretty terrible when people on HN pine for the days of less developed countries (no worker protections, no labor/safety regulations).

The Developed World can not continue with it's standard of living, it's simply not sustainable. Something has to give.

The way I see it, services like Uber and airbnb can slowly chip it down to something sustainable, or we can hold onto it until the bitter end when it all comes crashing down.

Also, just because a job is offered with no worker protections, no labor/safety regulations etc, it doesn't mean a person has to take it. People vote through their actions.

And people are really bad at making decisions with long term repercussions. Take smoking, drinking, texting while driving, driving without a seatbelt, eating too much, sitting too much, spending all day staring at a computer screen, not sleeping enough, etc. Humans are short-term thinkers. So if you ask a poor person "would you rather protect your industry and reduce the risk to your health, or keep getting paid"... well look at all the people working in coal mines. They sacrifice their health, their neighbors health, their economy, and their planet just to have a paycheck.

People vote with their actions. But people are short sighted, selfish, and greedy. That's why labor regulations and unions were invented. It's just been so long since the days before unions and regulations were created that everyone thinks they're useless. It's been so long since it rained that you start wondering why you have a roof over your house. You'll remember soon enough.

> The Developed World can not continue with it's standard of living, it's simply not sustainable. Something has to give.

That's not true _at all_. How productive are self-driving cars going to be with no drivers? And electric powertrains? Very! Why would a government allow Uber to have a monopoly on that? They're government owned roads!

You can entirely continue to provide a high quality of life to citizens of a developed country using automation and software.

Shall we continue to socialize the losses and privatize the gains in society? Pardon me for being crass, but fuck that noise.

But still , that calls for something like UBER with democratic vote over it's decisions. And since most people will be consumers ,not employees of that service , the incentive towards how to manage it's drivers would be the same.

> But still , that calls for something like UBER with democratic vote over it's decisions. And since most people will be consumers ,not employees of that service , the incentive towards how to manage it's drivers would be the same.

You mean like mass transit provided by a government org? You own the roads, you make the rules.

> That's not true _at all_.

Go and spend some time in the developing world, then you'll reevaluate that statement.

What you don't see/realize is that we've simply outsourced slavery. The reason your iPhone, etc. are so damn cheap is becuase there are slaves building it, who have a standard of living way, way, way lower than yours.

I'm saying it has to equalize globally, which means our has to come down.

I cried when I visited the silver mines in Bolivia - http://theroadchoseme.com/potosi

That has more to do with poor governance than rich countries consuming too much. Bolivia has all the natural resources necessary to provide its people with a high quality of life, but education and corruption act against that.

I live in the country that makes your iPhone. Same here also.

> What you don't see/realize is that we've simply outsourced slavery. The reason your iPhone, etc. are so damn cheap is becuase there are slaves building it, who have a standard of living way, way, way lower than yours.

Foxconn is replacing most of its workers with robots. Most work can be replaced with software and/or robotics in the next 5-20 years.

> I'm saying it has to equalize globally, which means our has to come down.

Completely disagree. Perhaps on meat consumption, and petroleum use (both which need to decline across the entire world).

> I cried when I visited the silver mines in Bolivia

There are responsible ways for mining for the resources you need.

I'm not following your logic of how airbnb and uber are standard of living equalizers.

First, most people employed by the industries being disrupted by these companies (hotels and taxicab companies) are taxicab drivers, maids, bellhops, front desk. All relatively low-paying jobs already.

Paying people at the bottom less keeps prices low. Therefore, people with disposable income can the spend the same amount of money and get more goods and services. It raises the standard of living for the middle-upper class while pushing people in these low paying jobs closer to poverty.

This is not a diatribe against these companies or the free market. I just don't agree with you. These companies are actually raising our standard of living. Giving us more money and time to consume things and spend more money.

> I'm not following your logic of how airbnb and uber are standard of living equalizers.

Globally, I mean, to bring our standard of living closer to those people who are for example building our iPhones for pennies.

The standard of living in the developed world has to come down closer to theirs, and one of the ways we'll do that is through things like uber and airbnb because they are a lot less heavily regulated, and result in less employee income/safety/security etc. I.e. the people who "work" for uber are closer to those in the developing world, than those working for the current taxi scheme in a developed country

Okay, but did you not see my response? People who work for uber are already at the bottom of the proverbial food chain in America. Your use of the word "our" in "our standard of living" is puzzling since you are most likely middle class. Paying them less will marginally raise your standard of living since you could presumably afford more taxi rides.

>it doesn't mean a person has to take it

That's fine as long as the job market is good. Have you considered that those that control enough levers in government might want to keep the job market poor in order to force low wages and less protections? This is how union-busting happens.

The Federal Reserve specifically targets a "healthy" amount of unemployment to prevent inflation.

>> no worker protections

Worker protection should apply equally to everyone, not give preferential treatment to one group(taxi drivers) at the expense of most other groups who just have minimum wage laws and osha.

I'm referring to how Uber illegally classifies their workers as contractors. And I agree that worker protection should apply to everyone equally.

They are losing that battle in a hurry...

June: "In California, Uber driver is employee, not contractor: agency" http://www.reuters.com/article/2015/06/18/us-uber-california...

Just yesterday: "Another Uber Driver in California Ruled an Employee, Not Contractor"

http://blogs.wsj.com/digits/2015/09/10/another-uber-driver-i...

They are contractors, though. They own their vehicle and set their own hours. They can choose if they want to work that day or not. Uber is just a lead source to the driver. My neighbor drives a black car, legally licensed as a limo, and drives for Uber. Not all of his fairs come from Uber. He owns his own business, Uber is not his employer.

Governing bodies across the US continue to find Uber "contractors" to fit the parameters as employees.

As far as I am aware, no driver outside California (which is, contrary to popular belief, not the entire US) has been ruled an employee.

And even the cases in CA are not going to be settled for a couple years.

Florida: http://www.theverge.com/2015/5/22/8647163/former-uber-driver...

Also, the IRS is nationwide. Uber has a high hill to climb with them regarding contractor status.

Maybe the answer is to extend protections to more workers, not take them away from some.

Work force disruption is an unfortunate side effect of technological disruption. If your solution is NOT to embrace change because you don't want to see disruption take place then that's not a long-term solution.

Edit: I'd like to expand on this with a (not so) hypothetical. Autonomous cars are already here. How long until we have automated taxis? Let's just say 10 years. Would you make them illegal to keep the taxi workforce in place?

There is disruption in virtually every workforce because of the Information Era. Our work force will have to adapt.

I don't think you understand my point.

I'm not against technological disruption. When the shipping container revolutionized shipping 60 years ago, the shipping industry split the productivity gains with the longshoreman union to buy out those made redundant by said productivity gains. I'm inferring that the same will need to be done again.

If technology obsoletes people, and they're unable to retrain, they'll be supported by social safety nets, funded by taxes on said technology.

(arguably) less safety.

I don't even think this is arguable - there is literally nothing that owning a taxi medallion does to improve safety.

That's a ridiculous statement. The power to shut down a business gives a regulator a lot of power to do things like improve safety. In NYC, the Taxi and Limousine Commisson is a strong regulator the does a bunch of things to improve safety.

Just because your city sucks and doesn't do it's job doesn't mean that the solution is to hope that Uber's army of independent contractors maintains their cars.

The GP's point (under the most charitable interpretation) is that safety regulation is orthogonal to medallion limits. You can revoke someone's permission to drive for hire without also placing a limit on the total number of people who can drive for hire. Indeed, this is the typical model in Germany (IIRC): anyone who meets the standards and doesn't mess up can be a cab driver.

* The power to shut down a business gives a regulator a lot of power to do things like improve safety. *

That can easily be done without the government provided monopoly of taxi medallions. Medallions (or any other form of monopoly granting) aren't required for regulation, enforcement, or any other aspect of keeping the public safe.

So, you don't think having 10x more cabs in midtown manhattan would cause potential safety problems?

Taxis are a shitty business, no doubt, but replacing a government medallion with a corporate medallion isn't a solution. Uber has the valuation they have because after they kill off the competition, they'll limit the supply of rides and jack up the cost.

>It will be interesting to see if this pushes any traditional cab companies to become their own "mini Uber".

>i.e. sell all their medallions, get rid of all their regulations and expense overhead, and just operate all their drivers like Uber operate theirs. At which point competing should be easy enough.

There was a story on HN about a year ago, regarding an cab company owner doing exactly this, although the owner didn't have medallions to sell, he simply stopped renting them and paying associated fees.

HN discussion: https://news.ycombinator.com/item?id=8134323

My summary: https://news.ycombinator.com/item?id=8134695

> in the 80s, 90s and 00s everything about our society became more and more regulated and safety conscious (hotels, taxis, health care, education) meaning costs skyrocketed, and the cost of entry to compete in those markets became astronomical.

Speaking generally, I think it's safe to say that this is the opposite of what happened. The hallmarks of Reagan's [1] and Thatcher's economic policies in the 1980s was massive deregulation (and privatisation). By the end of the decade it became the global norm for economic policy, a consensus generally accepted by even their left-wing successors, Clinton and Blair, by many others around the world, and became a key part of the "Washington Consensus",[2] which was a set of economic policies forced on poor countries who needed aid by Western governments and agencies (and accused often of coldly sacrificing the welfare of hundreds of millions of very poor people). As a more recent example, excessive deregulation of the financial industry, such as the repeal of Glass-Steagall act [3], is widely blamed as a signicant cause of the financial crisis of 2008.

I'll add an interesting point: The period of perhaps greatest economic growth in the West, the 1950s and 60s, was the period of greatest government regulation and direct involvement in economies. Deregulation began in the 1980s and while economies have grown since then, wages for most Americans have been flat for 30 years. That proves nothing, but it suggests the evidence for the libertarian theory isn't so clear cut. (Personally I think regulation is not an ideology but a tool, good for some things and not for others.)

[1] It actually began under Jimmy Carter, a little known fact.

[2] http://www.cid.harvard.edu/cidtrade/issues/washington.html

[3] http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/wei...

Petrodollar starts in the 70s causing exponential inflation in the 80s.

> The period of perhaps greatest economic growth in the West, the 1950s and 60s, was the period of greatest government regulation and direct involvement in economies.

What calculation leads you to conclude there was more regulation in the 1950s and 1960s than today? My impression is that "deregulation" in practice largely amounted to at best a decline in the rate of increase in federal regulations, not an overall decrease in total regulation. Today there are vastly more federal rules and regulations and also substantially more government employees as a percentage of total employment than there was in the 1970s.

Um, here's a plot of one proxy for new regulations - the size of the federal register in pages:

http://politicalcalculations.blogspot.com/2012/07/the-regula...

There were several high-profile cases of actual deregulation (eg, regulations related to trucking and airline fares), but it amounted to pushing back the tide - the nature of government programs is to grow and most have continued to do so, occasional changes in fashionable rhetoric notwithstanding.

Hm, I'm both impressed and a little cockeyed at the ruling by regulators that e-hails are "pre-arranged travel" for the purpose of defining the service and noting its exemption from needing a medallion.

Oh I get it - that's clearly a distinction to hammer home for the benefit of Uber. As the article points out, one of the competitive advantages Uber has is the rapid pace of pickups in Manhattan - within two minutes. Quite a remarkable achievement in getting the efficiency of "pre-arranged travel" down to less than 120 seconds.

I wonder what the conversations around Melrose Credit Union were like when they decided to, metaphorically speaking, put all their eggs in one basket.

It's not about amount of time, it's order of operations.

Taxi: already on the street, driving around, I try to get flag one down by essentially luck. Pre-arranged: I contact you, tell you where I am, you specifically set out to pick me up.

Pre-arranged is exactly how traditional car services have always worked. The fact that improved technology means pre-arranged also can be fast is a good thing.

Where was this judge for the Aereo case.

In Romania most taxi companies have their own app. This change started about 3 years ago.

How's Uber doing in Romania?

This is fascinating -- as revenues for municipally-backed/traditional taxi companies fall, we are starting to see municipalities raise fees on the taxi unions to make up the shortfall. Oftentimes these taxi unions wield striking as leverage in negotiations, a tactic which is rapidly losing effectiveness and is generally counter-productive.

So the judiciary doesn't care for legal challenges against Uber, municipalities are actively working against taxi unions, and consumers are flocking to Uber in droves -- what is a unionized taxi driver to do in this kind of political and economic climate?

> what is a unionized taxi driver to do in this kind of political and economic climate?

Do the moral thing and step-down from their monopolies, and embrace competition.

Why do you care about immoral people? Those who benefit from monopolies are not above robbers who benefit from a temporary monopoly on violence to bilk their victims.

EDIT: response to ishw (since my posts are being delayed):

The drivers that took credit in order to benefit from an immoral monopoly subsidized by tax-payers had it coming. Public libraries are available and anyone can learn where this road leads by picking up Economics in One Lesson which is eminently readable and widely available.

This is like saying "this gang of robbers paid the government X dollars backed by credit for the right to rob, and we can't put those robbers in a position of defaulting on their now-worthless license to rob". Uhm, yes we can, because the "medallion" they bought is precisely the instrument that makes it illegal for everyone else to compete with them. In other words, a criminal is not exempt from their crime just because they purchased the instrument, that enabled them to commit the crime, with credit.

When you say "Taking the moral highroad is not an option here", therefore, that's just a misinformed reaction to a situation that, as you correctly noted, allows for no way out that isn't harmful to one or both parties. Which is why this sort of engagement (monopolistic or monopsonistic) is to be discouraged and why only voluntary contracts should be enforced by Law.

EDIT: response to mbreese:

Wow... your response is a complete non-sequitur to what I said.

The article mentions most medallions are backed by credit -- that would mean the drivers would be put in a position of defaulting on their now-worthless medallions. Such investments would destroy their financial prospects for the near future if not in the long term due to the exorbitant cost associated with holding medallions.

Taking the moral highroad is not an option here. It's easy to advocate the free market from afar, but not everybody is prepared to even begin participating in the free market due to being financially shackled.

I was going to suggest that Uber operate a program of financial assistance to taxi drivers looking to flee the credit-subsidized catastrophe bearing down on them in exchange for multi-year employment contracts, but the collective value of these medallions is estimated at $10 Billion. Yes, ten billion USD.

How would such a program work? Could it work?

> The article mentions most medallions are backed by credit -- that would mean the drivers would be put in a position of defaulting on their now-worthless medallions.

A medallion buy-back is the only fair solution (for individuals, not for taxi companies). So there should be some kind of compensation so we can all get out of that system, system the local legislator created. But it shouldn't be up to Uber to pay, no matter how I dislike Uber, they didn't create the problem. The whole "free but paid because of scarcity" medallion fiasco is the real cost of corruption, and tax payers always foot the bill sooner or later in these case.

The drivers don't generally personally own the medallions. The medallions are owned by companies who mortgage them to banks. The medallion collapse means these companies almost certainly have negative value, and if the owner isn't making enough money from it they'll just walk away. The bank will then have to legally recognize what is already obvious (that the loan on the medallion will not be paid as agreed, and the collateral is worthless). The bank may have to call in insurance and some bank customers may take some losses. $10 billion isn't going to break the bank insurance industry.

What about the drivers? They've already been fired, that's why the cabs are sitting idle. There's no need to help the financial speculators.

NYC-specific comment:

Taxi drivers don't typically own their medallions. Medallions are typically owned by medallion holding companies, which lease out their cars to drivers.

Very low interest rates fueled medallion companies to push the price of medallions higher and higher. Everyone was bidding for what they saw as a good with fixed-supply. Then Uber came along. Turns out they were wrong.

So who suffers? Banks that made bad loans and a small number of stagnant companies whose business models are now obsolete. Business as usual. The world keeps turning. Drivers will just shift to Uber or one of their myriad competitors.

Having Uber or the city bail out these banks/holding co's would be a little ridiculous. Let the businesses that made bad decisions deal with the consequences.

Wow...

Competition is good, but it's not like taxis are an unregulated monopoly taking advantage of the populace. They are heavily regulated, mainly in terms of the prices that they can charge (in most areas). It's not like Uber is that much cheaper than a taxi, particularly when there is surge pricing.

I do find Uber more convenient than a taxi, but they aren't exactly competing on a level playing field.

The very fact that medallions were being sold for hundreds of thousands of dollars demonstrates that taxi were, in fact, a monopoly taking advantage of the populous. Regulated monopolies are often even worse than unregulated ones, because the dominant entities were placed in that position through preferential treatment by the government, not as the result of prevailing over all their competitors in the marketplace.

The medallions became investment vehicles for hedge funds because they conferred the right to provide a service for which there was a very high demand and a supply that the government was capping at an absurdly low level, in a classic example of regulatory capture. When you had to wait forever for a taxi, it was because there weren't enough of them being operated. And there weren't enough of them being operated because only people with medallions were allowed to operate taxis.

Ridesharing apps have unmasked this glaring inefficiency and given people a look at how much more efficiently the world can be run when government regulators are circumvented by private enterprise. The state still has the power to ban this new mode of providing transportation, but that will likely be politically untenable, given the public popularity of Uber and Lyft. (There is still a risk of indirect state action, like unfavorable rulings about the employment status of Uber drivers)

The experience of the taxi companies will be a wake-up call to other heavily regulated legacy industries that if there are any signs that an app is going to disrupt their business model, they need to immediately try to block the app from the marketplace (e.g., by suing the makers to scare off VCs) Once customers get a taste of the techno-libertarian future, they aren't enthusiastic about returning to the drudgery of state control.

> They are heavily regulated

Regulations generally favor the incumbents. Don't believe me? Start a food truck in Manhattan.

I suppose you could argue that taxis are getting a raw deal now, even with the existing regulatory capture. I'd be receptive to arguments that certain taxi regulations are punitive or out of date.

"what is a unionized taxi driver to do in this kind of political and economic climate?"

Start driving for Uber? And try and organize a union there?

oh but you are a contractor then.

Sad thing is, it really shouldn't be that hard for them to compete with Uber. It's a customer service issue.

* Don't make me wait huge amounts of time, especially without telling me. * Any driver who whines about taking a damn credit card should be fired immediately. Ugh. * Start treating customers well. Uber is hit or miss with this.

Far too often I call for a cab and stand around waiting for 40 minutes, then get someone who drives like a maniac and is incredibly rude, and then when I say I need to pay be credit card they whine and cry and outright lie to try to get cash instead.

As a New Yorker, I am very pleased with the decision. The reason why the taxis are not being used is not because of Uber but rather because the taxi prices are set too high. The way to fix the problem is for the NY City Taxi Commission to lower the taxi fares. With lower fares, more people will take taxis, especially now that there is the new "Arro" app that allows for e-hail of taxis.

Lower the prices, and more taxis will be in use. Simple economics!

Could a maddalion holder accept Uber rides as well?

So how much does it pay to be an Ueber driver anyway? Just curious.

PS: Über without the umlaut is spelled Ueber. [1]

[1] https://en.wikipedia.org/wiki/%C3%9C

Company name, unfortunately, is "Uber". Not "Über".

Yeah, that's always been a real head-scratcher for me. I see the umlaut in maybe every third reference to the company, and yet they never used it in any official capacity!

Worst case of hypercorrection I've ever seen.

Does Uber pay fees to the Taxi Limo Commission?

Yes. In NYC Uber is a licensed car service like Carmel and Dial7.

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