California PUC Cracks Down On Innovative Ride Sharing Operations As Another Batch Of Taxi Drivers Sue Uber

from the innovation-not-allowed dept

Mon, Nov 19th 2012 3:35am — Mike Masnick

We've covered the various regulatory and legal fights that Uber has been dealing with lately. The company, which basically has set up a super convenient way for people to book a ride (and, in some cases, taxis), keeps running up against a combination of local regulatory agencies who tend to feel that they get to lord over anyone who attempts to do anything involving driving people around for money, as well as existing limo and taxi providers who fear a more efficient system (especially when they profit off of inefficiencies). Of course, some politicians and taxi/limo drivers recognize that greater efficiency is actually good for everyone, allowing a more convenient and useful system, and filling in gaps when regulated supply strains the system.

However, too many are just focused on the status quo. And this isn't to say that there isn't a place for regulatory bodies to ensure that cabs and limos are safe and that they don't take advantage of passengers. But the line between protecting passengers and protecting legacy players from competition sure does become a blurry line very, very quickly. And this week a bunch of these companies have run into legal problems on their home turf. Uber, specifically, has has been sued in San Francisco by some cabbies demanding that the company be shut down. They claim that Uber's car hailing service is really an unregulated taxi service, and thus, unfairly competing with them.

Perhaps the bigger issue, however, is that the California Public Utilities Commission (PUC) has fined Uber and two other companies, Lyft and SideCar (who offer ridesharing). As that Wired link notes, this seems to be a clash between two core concepts that seem to thrive in San Francisco: on the one hand, freedom to innovate and disrupt and, on the other hand, support in government intervention for the public good. I'd argue that the two concepts aren't in quite as much conflict as the article suggests, if the intervention actually is for the public good. The problem is that's not really clear here, and it's not hard to see how it's really for the sake of limiting competition.

SideCar points out that this is a case of regulators not knowing how to classify an innovation:

asserting that we are operating a transportation carrier... is like saying Airbnb is a hotel chain, that Travelocity is an airline, or that eBay is a store

Lyft, similarly, suggests that there's a problem in regulators taking a square peg and trying to shove it into a round hole, because they've never seen a square before:

Transportation has historically been a highly regulated industry, and the existing regulations weren’t designed to imagine a world where two neighbors who have never met are able to connect within a matter of minutes to share a ride across town.

Uber's CEO, Travis Kalanick, told Wired that the PUC fine is particularly ridiculous in its case, since it only works with drivers who are already regulated by the PUC. It's just offering them another channel for finding customers. But under the PUC's ruling, it appears that they want those people to be doubly regulated, which seems completely wasteful:

Our contention is that if you read the regulations, such a notion doesn’t make sense. Are we supposed to give drivers a second drug and alcohol test? Are we supposed to have cars inspected by the DMV a second time after they’ve already inspected (our) partners’ vehicles?

In the end, you have to wonder if the role that regulators have still makes sense for these kinds of innovators. Yes, there are issues about safety and avoiding scams, but the various companies have built in systems to deal with that -- such as driver ratings and public reviews. Those types of things weren't really possible in the past, which is why you needed a PUC to make sure taxidrivers weren't ripping people off. But now the "PUC" can be the public itself. But... that only works if you believe the regulations are supposed to help the public, rather than the legacy players.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: innovation, puc, regulation, ride sharing
Companies: lyft, sidecar, uber

26 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Lizzardborn, 19 Nov 2012 @ 3:45am

Actually I think that Uber, Lyft etc by design are safer than the normal cabs. There are just too many electronic trails left. you know who picked up who, left it where and have the whole course. So I think it may be harder for the drivers to endanger their passengers.
[ link to this | view in chronology ]
Anonymous Coward, 19 Nov 2012 @ 4:00am

i wonder how much longer it's going to be before it's realised that the only thing US companies and politicians are any good at is restricting what someone else wants to do so as to protect legacy industries in existence at the time and prevent anything new from coming on to the market place that could actually inspire progress and efficiency. when are these morons going to understand that they are only in the positions they are in because of the innovations that occurred previously that allows them to do what ever it is they are doing now? the whole aim of innovation and new ideas is to progress, not to restrict, inhibit or protect what is available atm! jeez!
[ link to this | view in chronology ]
Anonymous Coward, 19 Nov 2012 @ 4:04am

Regulatory Agencies
Do the regulatory agencies see these new Internet based business models as threatening their existence as well as that of the legacy players?
[ link to this | view in chronology ]
This comment has been flagged by the community. Click here to show it

out_of_the_blue, 19 Nov 2012 @ 4:19am

'But now the "PUC" can be the public itself.'
Gawd, you're a jewel. What enforcement ability does "the public" have? Yet again, your libertarian notions just don't take bad actors into account. The taxi biz is so regulated because it's an easy rip-off racket, can't be let loose.

By the way: the name "Uber" is probably part of the problem. Bad association with "ubermensch", and seems a particularly bad choice for densely populated areas having a lot of Jewish folk, don't it?

Help Mike "Streisand Effect" Masnick! Click at least once daily to make it the most viewed page:
http://en.wikipedia.org/wiki/Streisand_effect
[ link to this | view in chronology ]
- Michael, 19 Nov 2012 @ 5:12am
  
  Re: 'But now the "PUC" can be the public itself.'
  "What enforcement ability does "the public" have?"
  
  Seriously? The EXACT same enforcement is available. The PUC can take away a license to operate as a taxi. The public can STOP USING THE TAXI SERVICE. This is the same result - the driver is out of business for acting badly - and the taxpayers don't have to find an agency to make it happen.
  
  "Bad association with "ubermensch", and seems a particularly bad choice for densely populated areas having a lot of Jewish folk, don't it?"
  
  Did you eat paint chips as a child?
  [ link to this | view in chronology ]
- Anonymous Coward, 19 Nov 2012 @ 5:12am
  
  Re: 'But now the "PUC" can be the public itself.'
  God, you're a tool.
  
  "What enforcement ability does "the public" have?"
  
  While the public doesn't have any enforcement ability, they do have something much more important. The ability to directly be critical of Uber in a manner that allows other members of the public to be aware of any shortcomings. As well as allow Uber to know of any problematic drivers and/or incidents.
  
  Both of which are very important. A vocal public and informed customers can quickly regulate a company providing such a public service. More quickly and more efficiently than any state or federal regulatory body.
  
  As for the "ubermensch" bit, did you really just go there? Wow. Just when I think you can't sink any lower/get any crazier.
  
  And quit posting the wiki link for "Streisand effect", it got old real quick and it's annoying. We get it. You don't like Mike. You even more hate that he started something that has become a common phrase. Jealousy over your own shortcomings is no reason to be even more annoying/stupid.
  [ link to this | view in chronology ]
- Logan2057 (profile), 19 Nov 2012 @ 6:17am
  
  Re: 'But now the "PUC" can be the public itself.'
  Bub, you ain't got a clue about anything do ya? All you do is get on here to spit vitriol and your own warped brand of logic. It's obvious you either don't read or can't read without someone helping you to figure out the big words. So go back and sit on Momma Troll's lap and whine for some more swamp water and mud hole cookies, with slimy snail bits baked in.
  [ link to this | view in chronology ]
- Anonymous Coward, 19 Nov 2012 @ 7:43am
  
  Re: 'But now the "PUC" can be the public itself.'
  Saying "the name "Uber" is probably part of the problem. Bad association with "ubermensch"" Is like saying you can't call something "Third" because of the 'association' with "The Third Reich" i.e. a monumental display of abject ignorance.
  [ link to this | view in chronology ]
- Anonymous Coward, 19 Nov 2012 @ 11:18am
  
  Re: 'But now the "PUC" can be the public itself.'
  godwin-ing in your first post, you're slipping
  [ link to this | view in chronology ]
Anonymous Coward, 19 Nov 2012 @ 4:45am

Here is the future. http://i.imgur.com/ic6op.jpg Yeah we're fucked.
[ link to this | view in chronology ]
Lizzardborn, 19 Nov 2012 @ 4:49am

Interesting will be the outcry when google decides to enter the taxi business with the self driving cars. Much cheaper, total passenger safety. No humans needed.
[ link to this | view in chronology ]
- Michael, 19 Nov 2012 @ 5:14am
  
  Re:
  It will be awhile.
  
  I'm sure there will be a law passed by the auto-maker lobby that forces you to walk in front of self-driving cars waiving flags as a safety measure.
  [ link to this | view in chronology ]
Anonymous Coward, 19 Nov 2012 @ 5:14am

If you can't compete ... litigate
[ link to this | view in chronology ]
The Real Michael, 19 Nov 2012 @ 6:13am

I guess that regulatory agencies' sole purpose is to prevent would-be competitors and innovators from operating within the free market, or at least cripple them so as to render them useless.

We need to regulate the regulatory agencies.
[ link to this | view in chronology ]
- Anonymous Coward, 19 Nov 2012 @ 7:25am
  
  Re:
  A regulatory agencies main purpose is to maintain its own existence, and preferably grow its own powers.
  [ link to this | view in chronology ]
  - The Real Michael, 19 Nov 2012 @ 8:08am
    
    Re: Re:
    Yes, and how do they do that? By serving the interests of the entrenched businesses. From their view, it's much easier for them to manage a small handful of operations rather than deal with a wide open ballpark.
    
    Allow me to diverge.
    
    Before the internet, independent musicians, artists, filmmakers, writers, etc. had to put up with a similar situation. Since the conglomerates controlled all forms of major media, from TV and theater to radio and print, they were in a position to call the shots and dictate who was seen and heard. If they didn't give you a break, you didn't get heard -- it was that simple.
    
    Now put two and two together and it's easy to figure out why groups like they're so hellbent on lobbying Washington to regulate the internet. Because they want to control it.
    [ link to this | view in chronology ]
Pixelation, 19 Nov 2012 @ 7:09am

Maybe if they summoned a horse and buggy instead it would be okay with PUC.
[ link to this | view in chronology ]
Anonymous Coward, 19 Nov 2012 @ 7:40am

I'd argue that the two concepts aren't in quite as much conflict as the article suggests, if the intervention actually is for the public good.

Aren't you completely ignoring the chilling effects here? It doesn't matter a hoot if the intervention is always for the public good unless you actually thing people set out do make the public worse off. What will happen is innovators will pull punches for the same reasons they always do when there's a risk of ex post facto intervention. It works exactly the same way here as it does for, say, fair use and copyright.
[ link to this | view in chronology ]
ALANTONE (profile), 19 Nov 2012 @ 7:55am

It's all about the tax money
Most public agencies only care about the money they collect and not necessarily protecting the legacy service. Therefore, once Uber starts paying them off they will be embraced with open arms by the local government.
[ link to this | view in chronology ]
brandon (profile), 19 Nov 2012 @ 8:17am

"protect the public"
it's interesting how often this phrase is used as a disguise for the real intent of government intervention which is; control the public.

our juggernaut government's main purpose is to control public interest and focus so that the government may continue to grow and thrive. the people are the fuel source, the government is the feeding organism. -_-
[ link to this | view in chronology ]
iambinarymind (profile), 19 Nov 2012 @ 8:43am

The "Regulation" Euphemism...
"Regulation" for the so called "public good".

"Regulation" is just a euphemism for government force/coercion. It is used to create artificially high walls to entry into various markets using State force/coercion in order to keep out competition.

Also, the power to regulate is the power to grant favors. So it also increases the power of State bureaucrats.

What truly helps the "public good" is the ability for individuals to exchange on a voluntary basis (no force/coercion involved).

Less government force/coercion aka "regulation" (i.e. the tech industry) = more competition, more innovation, more choice & affordability for all consumers.

More government force/coercion/"regulation" (i.e. government "schooling"): 100 years ago - classroom, desks, teacher in front of class, writing on a blackboard.
Government "schooling" today? - classroom, desks, teacher in front of class, writing on a whiteboard.

Behold, the magnificent innovation resulting from government "regulation"...from a blackboard to a whiteboard in 100 years.

I prefer consensual relationships.

Try Voluntaryism instead.
[ link to this | view in chronology ]
- dennis deems (profile), 19 Nov 2012 @ 12:26pm
  
  Re: The "Regulation" Euphemism...
  Regulation is what enables us to trust that the food we buy isn't diseased. Regulation is what enables us to trust that the water we drink and the air we breathe aren't full of poison. Regulation is what keeps children in school instead of laboring in factories. Regulation is what enables us to trust that the vehicles we use to get from place to place are safe. There isn't a single evil that corporations would not gladly inflict on the populace without regulations to prevent them.
  [ link to this | view in chronology ]
  - Anonymous Coward, 19 Nov 2012 @ 12:41pm
    
    Re: Re: The "Regulation" Euphemism...
    Actually law is more significant than regulation, along with reputation. Killing or injuring people, whether by accident, negligence or deliberate action is bad for business.
    [ link to this | view in chronology ]
Peter Mullen, 19 Nov 2012 @ 9:08am

PUC and Uber
This kills me. Why any business person in California would vote Democrat is simply staggeringly idiotic. That is unless they participate in the money cabal that keeps corrupt bureaucrats in power.
[ link to this | view in chronology ]
- Anonymous Coward, 19 Nov 2012 @ 11:48am
  
  Re: PUC and Uber
  Because the other choice is republican? Well, according to a lot of people, anyways.
  [ link to this | view in chronology ]
Scott Beyer, 8 Jan 2013 @ 3:02pm

Regulations on Uber
The fines on these start-ups only begin to describe how taxi regulations, which are usually supported by unions and enforced by municipal authorities, have hurt consumers in cities across the U.S. For a breakdown about this, and the general regulations in San Francisco, read my blog article: http://bigcitysparkplug.com/2013/01/07/taxi-laws-that-are-needless-costly-and-uber-political/
[ link to this | view in chronology ]