Toronto is demanding that Uber get out of town. But don’t expect the tech start-up behind the ride-sharing app that’s cutting in on local cab businesses to leave any time soon.
Cease-and-desist orders are old hat for the online service that connects paying passengers with drivers via their smartphones. Uber has faced regulatory opposition in many of the more than 230 cities where it operates. From San Francisco, where it was launched four years ago, to Berlin, Seoul, Barcelona and Sao Paulo, local governments, often backed by entrenched taxi interests, have taken similar legal action charging Uber with contravening local taxi regulations.
And this isn’t the first time Toronto has taken legal action against the company. In August 2012, five months after Uber launched its initial UberBlack app, which connects potential passengers with commercially licensed limo drivers, the city charged the company with operating an unlicensed limousine business.
In a dazzling display of defiance, Uber introduced a second service, UberTaxi, just a few days later. That app connects would-be passengers with licensed taxi drivers.
Not to be outdone, the city once again charged Uber, this time in December 2012, with operating an unlicensed taxi business. These charges – totalling 36 alleged offences in all – have been slowly wending their way through the courts. On December 3, Uber and city prosecutors will meet in court to set a trial date
No surprise, then, that the city is once again seeking an injunction against all Uber operations after the company introduced yet another app, uberX, to connect potential passengers with ordinary people driving their own personal vehicles to take them where they want to go for a fee. Uber calls it “ride-sharing” and says it’s their fastest-growing option.
Andrew Macdonald, Uber’s regional general manager for the central U.S. and Canada, ran Uber’s Toronto office at its inception. He’s dismissive of the city’s legal challenges. “It’s a ‘we don’t like what you’re doing’ type of notice,” he says. “It varies city by city, but in many cases the cease-and-desists we receive haven’t a basis in law.”
Macdonald argues that Uber is a technology company, not a transportation company. It doesn’t own a single car, nor does it have the middleman infrastructure of dispatchers and staff relaying phoned-in taxi orders. He adds, “It’s very hard to look at a set of rules that was designed in the 1980s or the 1990s before smartphones even existed and say that an app-enabled company that’s providing a totally new technology to allow people to provide a totally new service is breaking a set of rules which really don’t apply to their business.”
Uber’s tactic of ignoring regulatory opposition and barrelling ahead isn’t limited to Toronto it’s standard practice for them worldwide.
In Belgium, where Uber is banned, drivers can be fined $14,000 for every ride they accept, but such penalties seem to represent a drop in the Uber bucket. The company is currently valued at $18 billion (U.S.), with a projected rise to $25 billion if a current round of fundraising is successful. Not content with expanding markets in North America and Europe, its eye is clearly fixed on global market domination the company is making inroads in Asia, Africa, the Middle East, Latin America and eastern Europe.
While Toronto’s previous legal action against Uber barely registered on the public’s radar, this time was very different. Last week’s court injunction triggered a barrage of media coverage in which Uber was frequently described as wildly successful and brilliantly innovative while city bureaucrats were accused of blocking progress. One columnist described the taxi industry as hidebound and its “tortuous regulatory regime obsolete.” Even mayor-elect John Tory said the city can’t “pretend something like Uber is just going to go away, because it’s not.”
This, of course, plays right into the company’s hands, as do protests by anti-Uber taxi drivers. Thousands of them took to the streets in several major European cities on June 10 in a united show of strength. Traffic ground to a halt, disrupting the lives of millions of people, but Uber came out smelling like roses. Its sign-ups in Britain that day shot up by 850 per cent, a statistic the company smugly trumpeted.
Tracey Cook, Toronto’s executive director of Municipal Licensing and Standards, says, “Uber is jeopardizing public safety.”
Macdonald disagrees, arguing that Uber has “industry-leading safety.”
Uber’s Lauren Altmin adds that uberX ride-sharing drivers – those ordinary folk in their own cars – undergo background checks that are among “the most rigorous in the industry.” She says they include criminal screenings at both the RCMP and local police levels and a full review of the driver’s motor vehicle record. She adds that uberX drivers must have a registered vehicle – 2005 or later – and carry valid auto insurance. UberX itself carries $5 million of auto liability insurance.
As for UberTaxi, Macdonald points out that every single cab driver in Toronto is an independent contractor. “Taxi drivers driving around in Beck-branded taxis pay Beck for dispatch, and they have the right to that service because they pay for it. But they’re also free to use Uber or other apps to source their business. It means they’re getting more rides as a result of more choice and more competition in the market.”
One UberTaxi driver I spoke to who didn’t want his name used was seated behind the wheel of a Co-op cab. He owns the vehicle. A smartphone given to him by Uber was lying on the seat beside him. He bristles when I ask if he’s notified Co-op that he’s also driving for Uber.
“Why should I?” he demands. “I pay them company dues of $520 a month. Even if I go on vacation, I still have to pay the same amount each month. If the dispatcher gives me five fares a day or 100 a day, I still have to give them $520 a month.”
But with Uber, he says, he only pays a 10 per cent commission on the actual number of fares he accepts through the app. There are no restrictions, no quotas. “We’re poor” he says.
UBER INDEX
Founded 2009.
More than 200 Number of cities where the service is available.
$18 billion (U.S.) Company’s net worth. Investors include Goldman Sachs.
10 per cent Commission the company charges cab drivers who use the app to find fares. Uber also has an app that connects would-be passengers looking for a ride with ordinary folks driving their own personal vehicles.
$520 a month What cabbies typically pay cab companies in dispatching fees every month.
36 Charges against Uber by the city in December 2012 for operating an unlicensed taxi business.
Anne Wright-Howard’s documentary on The Sharing Economy will be broadcast on Ideas, CBC Radio One, on December 4.
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