Uber’s No-Holds-Barred Expansion Strategy Fizzles in Germany
nytimes.com
nytimes.com
While the cap on the number of taxis in the city at 1700 does seem ridiculous and I'm not sure about the need for much in the way of qualifications in the age of ubiquitous GPS devices, regulated insurance and health requirements are not unreasonable.
But personally I just don't see the need for Uber - why do I need a global taxi-megacorp running the show in my town and taking 20%?
We already have several cab services that have apps (complete with map-based tracking) and allow credit-card payment. Plus they all comply with the various city rules and regs about carrying passengers, fare transparency etc.
Why? There are already too many taxis on German roads. It might be that in peak times you have to wait a couple of minutes, but 20-22 hours of the days the taxis sit idle.
Not that I'm the sort that believes that the market always results in optimal outcomes or anything, but it does seem weird.
Keep in mind that, like busses and trams, taxis are considered part of the public transport infrastructure in Germany. One particular consequence is that taxi drivers are not allowed to refuse fares, and that fare prices are fixed.
Come to think of it, I have no idea if we have a cap here!
Yeah, it does initially to me as well, but I suppose it's just another public policy lever for transportation, and acts a bit like congestion charging. For instance, in a lot of very busy streets in London, due to congestion, pollution, and desire to improve public space, there are debates about pedestrianization, or allowing through only buses, or allowing only buses and taxis, or allowing that plus local access.
For instance, Oxford Street (which has half a million pedestrians each day) shifted some years back to only allow through buses and taxis, to improve throughput and reduce pollution, and the new mayoral candidates are now thinking about pedestrianization. Ultimately, one person siting in a cab occupies the same space as 10-15 pedestrians (at Oxford Street densities), or perhaps 5 bus passengers.
Further east, Tottenham Court Road is getting a new Crossrail station (a new tube line), and is going to widen the pavements, and ban private cars, in order to deal with the massive expected increase in passengers. Taxis are more efficient than private cars, but much less so than other options, so it just depends on the context for the city centre, or the city as a whole, or for particular streets, as to how appropriate they are.
One niche that major taxi app services could fit into, in these contexts, is by enabling a system for pooling / shared-use. A London taxi with 4/5 people is probably no less efficient than a bus, and to do something like that takes scale and serious optimization work.
It is far less efficient. A bus can hold 60 passengers and more, with one driver and one engine. The same amount of passengers would require ten cabs, ten drivers and ten engines.
In a world where Taxi.eu and good working public transit exist, Uber has issues to justify breaking laws – as the existing methods provide the same service, for the same costs, and follow the laws.
And Uber’s "end time strategy" of using self-driving cars won’t change anything in Germany – where Mercedes Benz has a majority share in MyTaxi, another ridesharing app – either.
Additionally, Uber competitors have existed since 2007 in Germany, making it a market where the legal fights have long been fought and solved.
I, personally, even like that Uber can’t get a foothold. Because now the profits from the fares end up in the local economy. If Uber would be the majority ridesharing app, a large amount of the profits of the local ridesharing and taxi economy would be siphoned off to Wall Street.
Just publish an API for your service, and write an app that can connect to every service that provides the same API.
Let's just hook into every country where Uber has taxis to create a mega app that will allow you to travel to any country and have access to the following:
- Ordering of taxis via the app
- Takes credit card information (atleast securely)
- Ratings of drivers to weed out the bad ones
- GPS to show how far the driver is, how far you are from your destination
- Your destination syncs to the drivers device, so they know where the fuck they are going for a change
- Tax invoices on completion of drive
- Allow to change from business / personal accounts on the fly.
- Semi good customer service
- Fare estimate (including surge pricing, surcharges) to destination
- Split fare easy
- App that is on both iOS AND Android
- App that doesn't suck and crash.
Hooking it into multiple systems would be the technical challenge, the rest seems a solved problem.
Oh, and some folks (probably mostly Europeans) don't really like the driver-ratings thing. It's an end-run around little things like employment rights. A ratings scheme for the individual taxi companies providing the services perhaps is useful, but not individual driver ratings.
There's a massive non-technical challenge as well: getting the companies to cooperate when both sides (the taxi companies and the unified service) would rather cut out the other intermediary, and when both the drivers and the passengers would benefit from fewer intermediaries (lower costs and higher consistency for the passengers, higher percentage of the fare going to the drivers).
> Oh, and some folks (probably mostly Europeans) don't really like the driver-ratings thing. It's an end-run around little things like employment rights. A ratings scheme for the individual taxi companies providing the services perhaps is useful, but not individual driver ratings.
How are driver ratings an employment rights issue? What's wrong, precisely, with recognizing when someone repeatedly does an unacceptably bad job? They're absolutely necessary, and a big part of maintaining consistency and quality. I've almost always had good experiences, but the few times I haven't (e.g. a driver going on a racist tirade), I've been glad to be able to provide a rating, and for that matter receive an actual response from a human. That would do a lot less good if that rating only applied to a taxi company, rather than to a specific driver. Why not give the taxi company enough information to recognize their good and bad drivers?
Yet it happens in some places, there are now apps in many major cities that do just this across multiple firms.
>> How are driver ratings an employment rights issue?
Your ratings have dropped, you are no longer eligible to contract for Uber, goodbye.
>> Why not give the taxi company enough information to recognize their good and bad drivers?
I suppose I don't object to that, it's fine. It's the Uber strategy of kicking people off the books that's objectionable.
Drivers handle a large volume of customers; unless the rating system is badly broken, a single customer could not single-handedly swing ratings enough to get someone fired. I would also hope that the service contracting the drivers would not accept a single unsubstantiated account as unassailable evidence, and would look for a corroborated pattern instead.
Given that drivers can see their own rating, and the rating thresholds for drivers are well-known, getting close to that point would serve as fairly clear warning of needing improvement (if there isn't an explicit warning to that effect). So there's an opportunity to improve.
Apart from that, I'm not going to comment further on the already extensive volume that has been written about the merits of "contractor" versus "employee"; the arguments there are already quite well known and don't need further rehashing.
Maybe. Or maybe management fires people who they don't like, or who point out illegal practices, or who are more expensive to them for some reason. The European requirements to document the process and for the employee to have access to representation are not excessively onerous, and they're there for a reason.
> Drivers handle a large volume of customers; unless the rating system is badly broken, a single customer could not single-handedly swing ratings enough to get someone fired. I would also hope that the service contracting the drivers would not accept a single unsubstantiated account as unassailable evidence, and would look for a corroborated pattern instead.
I'd hope that too, but plenty of companies do dumb things from time to time (if they do enough dumb things they'll eventually go out of business, but in the meantime it can still be catastrophic for individual employees). And if there is systematic racism/sexism/etc. then averaging a number of ratings wouldn't prevent it.
If you want to put it that way, yes.
Employment rights were hard won and a lot of people, myself included, do not enjoy the likes of Uber undermining them in the name of (slightly) lower prices and (maybe) better service.
As I said elsewhere - in a regular job there would be dialogue with management, chances to improve, formal warnings etc.
So should you be forced to use a plumber with poor reviews? Or eat at a restaurant with terrible food?
Or do you have one set of rules for individuals and another for "evil" corporations?
Exactly where the boundaries are for this is a grey area, as is much of law and ethics.
What about the coordinating those? What about review system for drivers?
Uber's practice of (effectively) firing drivers that don't get top ratings seems to go against a lot of the principles behind European employment practices and laws.
Just as an example, when coming back by train late at night I along with 4 other passengers waited at the taxi stand from the train station for 40 minutes to get a taxi (and that is despite having called the central before to confirm that there would be taxies). And when the first taxi finally arrived, he refused to allow us to share a taxi to go to different destinations, which meant more waiting. It's just anecdote, but it's something that's happened quite often to me and my friends and it's why we're happy that Uber comes to finally bring some competition.
Of course, if Uber got the monopole on taxi service, I'm under no illusion that they would be benevolent, any monopolistic situation is detrimental to service and prices. I believe though that the barrier of entry to compete against Uber in the future would be much lower than competing against the current taxi lobbies so I don't think Uber would ever get enough shares of the market to be a monopole (based on the money they are losing by subsidizing fares in China and India, I think that owning a big share of the market and being in a monopolistic position is there plan, I believe it's doomed to fail though).
Check out taxi.eu – an app from the Taxi companies, offering the same service as uber. Or MyTaxi.
The German market already went through that phase, competition is there – it’s just not uber.
My city (Southampton, UK) has competition already, without Uber.
I guess the situation is different in different places, but to me there is no value proposition in Uber. In fact the prospect of a large multinational taxi-corp moving in could make things worse if it damages the ecosystem we have in place here already (and have had for many years).
In which way, I would be interested. Your points seem unconclusive to me. Berlin had "no competition". Taxis are available, have an app, arrive in a time frame of 5min after calling, prices seem reasonable (20 EUR from one end of city to the other, Berlin isn't that big though). Minor downpoint not all of them take CC, but usually not a problem when you order one with CC. Only been cheated once in 15yrs although I pose as a tourist quite often when arriving at the airport.
In Lisbon, in Portugal, I've taken taxis and Uber often enough to compare. Very often taxis refuse to use the GPS (even if they have one) and take much longer routes than they should (and pretend not to understand my Portuguese when I correct the route they're taking).
I agree that in certain countries, Taxis usually provide good service (Japan for example and China to a lesser extent) but for now Uber does introduce much needed competition in some countries that really need them.
Also, unless I'm mistaken, Berlin has competition, Uber is available there. In Paris, the taxis only started having an App after Uber came. So, at least, in Paris, it definitely contributed to improvements (I'm not sure in Berlin if the app came before or after).
Yes might be, but the situation I've described is the way since I've been in Berlin (which is 15 years) - except the app of course.
I'd welcome competition if it was fair, but predatory pricing by subsidizing fares to unsustainable rates (using their unicorn valuation money) and shitty treatment of drivers - no thanks. Add to that the usual tax evasion schemes of multinational corporations that Uber surely employs.
I have an excellent taxi service in my home town, albeit a bit expensive. I'll stick to using it. Same goes for many places I've visited (e.g. Berlin, Stockholm).
Uber itself isn't illegal here, but the drivers are required to have a taxi license. Non-compliant drivers have been fined by the police.
There are places where taxi regulation is more of a racket than actual regulation (I think Paris, France would fit the bill) and that probably should be challenged by some means.
From my experience talking to Uber drivers in Paris and Lisbon, they're often employed by a separate company that hires them and provide them with a car (That's uberX, not uberPop though since uberPop is illegal in both of those countries). The few drivers I met who were independent were quite happy with the opportunity they had.
In the end, the problem is that in quite a few countries, Taxis are a regulated business with rules that have been created not for the benefits of the customers but instead to guarantee the benefits and monopoly of the existing taxi owners. And Uber (and other companies that are sure to follow in it's wake if the barrier of entry are lowered) helps counter that.
That is why the discussion is so polarized and your opinions are opposite to mine.
I'm not sure what the situation is where you're from, but here Uber can't provide any advantages over the local taxi service apart from price (at the drivers' expense) and supply at some peak hours.
1) Never being open late at night 2) Not having apps/hard to get a hold of 3) Not speaking English: not a problem in itself, but having to fight with them because they missed your exit, or they're taking an insane way to get there, is made harder if you cannot communicate.
Uber is super simple, relatively cheap, and almost always available.
Uber would have had surge pricing in your scenario, most likely. NYE it was like 3X.
I am beginning to wonder if Southampton is uniquely well served by cabs. We're only a small city but we do seem to do pretty well.
And why should they be called on this crap? Perhaps a limit on private-hire cars is part of the city's public transport and clean-air initiatives in some cases?
I've thought about it a bit more now, and those are valid reasons, IMHO. Obviously if the cap is there for arbitrary reasons or simply to protect incumbents then that's different.
If the city decides they do, they can simply keep Uber away just like Frankfurt and others did.
But for example: if the restriction is based on clean-air initiatives, why does it apply to EVs? Why do we have fixed spots for taxis to wait for fares, when we know can cheaply and easily call them up from anywhere?
Taxis are part of the local public transit network here (and regulated by county officials).
§13(4) is about when to grant new taxi licenses, incl. a pretty detailed set of things for officials to look out for.
§13(5) is concerned with who is granted new licenses (established and new applicants, but folks need to be serious about running a taxi business; the latter precludes the 'on-and-off' Uber model), with an eye on avoiding concentration of power.
These things (along with all the other rules for public transit in general and taxis in particular in that law) make sense when considering taxis to be part of public infrastructure that just has to work, and not some investors' toy.
I can understand that investors and their minions running shops like Uber aren't happy about that, but luckily that was no concern when people wrote legislation on providing reliable infrastructure.
Uber was particularly tone-deaf here when pushing their all-American pitch about how they're taking on some evil monopoly (when in a city of 200'000 people, there's not a single taxi company commanding 25 cars. Most have 5 or less).
The benefit that Uber gives me here in Berlin, for me, is really big :
1) Global usage ( I travel a lot around Europe and I can use the same app everywhere, no need to look for a local app )
2) Using app that is potentially / economically better. I certainly expect less bugs than the other apps.
3) All english user interface for every country I go to and pay using the same credit card.
4) Rating drivers
So ... IMHO The big potential of Uber is that it tries to solve the taxi problem everywhere. Just like booking.com for the whole world.
Competitor solution for this problem is MyTaxi. It is popular in Berlin and I also used it in Lisbon last week.
I can see the appeal in the global nature of the app, certainly.
Wow that's strong. Can you explain further?
Nobody told me this though so I was rating drivers a 3 by default for a few months. Hopefully I didn't end anyone's career!
A driver traditionally employed by a company would have a variety of employment rights in this situation - the right to a fair warning (or several), the company would generally have to try to help them improve etc etc.
It's a callous circumvention of employment law, effectively.
Something more. One time I happened to have bad ride with uber and by clicking on the low star button I got many options including the one that I was looking for : "Bad route". So you can justify why you left that rating.
On the other hand I've always missed the opportunity that I have in restaurants to complain about my food quality or even grumpy waiters. This is a nice thing to do, that nowadays I use foursquare for, but it seems very practical for taxi drivers.
I don't want to go deep, but for example if you get a taxi driver from Lisbon airport by hailing you have high chance to pay double the price to the city center ( usually it costs 10 euro, but some guys will bump it to 18 if they see you are a tourist ).
American cities stereotypically have areas where the taxis refuse to go; they have terrible public transport, so there is no competition and no alternative; and they have sprawl, so you can't just walk home. They also have strangely protectionist taxi companies in some places, often linked to permit sale schemes.
Uber goes anywhere, offers much better customer service, and increases supply regardless of permits. You can order online and pay by credit card.
But if your city doesn't have those problems, then Uber is not a good value proposition and it's just a question of convenience. Many local taxi organisations have already adapted to online ordering any paying by credit card.
Typical employment interview consists of "Is there a pulse? Yes? You are hired."
I've used this in Paris and Munich in the last year.
> I've used this in Paris and Munich in the last year.
Did you manage in Munich without cash at all? My expectation would have been that you needed cash regardless to pay for (most) small things (coffee, bakeries etc. etc.). Credit or even debit card use is not very widespread, essentially the only time I use mine is at ATMs and to pay online for services that don’t support direct debit.
If the taxis in your city don't take credit cards, or you can't book online, or there is no competition, then just petition your local authority to fix it before Uber comes along and "fixes" it.
But for me you missed the biggest point - credit cards. Some London black taxis take cards, some pretend their machines are broken, others don't take the cards in the first place which they will proudly tell you with a big user-unfriendly notice in their windows.
The second two ruin it for all the black taxis, as I can't flag any taxi down unless I have actual physical money, which I hardly ever have, because I don't know which of the three it will be.
Issues like price, time to pick up, knowledge of the area, even wanting to support local businesses etc are irrelevant if I can't pay them.
Because of the traffic, whenever possible I use the metro or the tram, busses if I have to.
The few times I need a car, I just grab one from a carsharing service.
At conferences where the organizers provide extremely clear directions for taking public transportation from the airport to the conference venue and back, I've used it. At any other conference, I generally take an Uber, unless the local city does the obnoxious thing and bans them from picking up at the airport.
If some other service existed that worked consistently in every city, I'd try it.
And I managed to figure out their transit system well enough to know how to get from where to where. There are plans, it’s simple.
And especially the price difference – 6$ a day with transit, or 20$ for a dozen kilometers with taxi – is definitely worth it.
Will be interesting to see how this goes. Uber makes heavy use of lobbyists in the US [1]. Would the same work with the EU?
[1] http://uk.businessinsider.com/uber-has-a-huge-group-of-lobby...