California Continues To Be Anti-Innovation: Tells Ridesharing Services That Carpooling Is Illegal

from the oh-come-on dept

Mon, Sep 15th 2014 3:44am — Mike Masnick

There has been plenty of discussion about ridesharing services lately, and whether they should be subject to the same sorts of regulations as taxis. As we've discussed, while taxi regulations have some historical basis in protecting riders from scammers, most of that was for a time when there was significant information asymmetry between drivers and riders, making it much easier for drivers to scam, rip off or endanger passengers. The wonderful thing that services like Uber, Lyft and Sidecar do is get rid of much of that information asymmetry and risk. The drivers are rated and monitored. The services handle the payment terms. The regulations that once served a purpose are less and less important. And, of course, then the reality starts to become clear. Where those regulations may have once had some benefit for the public, these days, they're much more about limiting competition, keeping prices artificially high and limiting new forms of innovation.

That's become especially clear in the last few days, where the California Public Utilities Commission (CPUC) has alerted Uber, Lyft and Sidecar that their new carpooling offerings are illegal. All three companies recently introduced a rather useful innovation that actually makes it much more accurate to call these services "ridesharing." By enabling "carpooling," the services find multiple people heading in the same general direction, and put them in the same car, allowing all of them to get a cheaper fare. It's the kind of useful innovation that seems like it's better for everyone. But, not the CPUC. In the world of the CPUC, you can't innovate if you haven't first groveled for permission:

Basically, the CPUC says that under California law it's illegal for these ride-sharing services to charge passengers an individual fare when carrying multiple people in one vehicle. If the companies would like to add a carpool feature, they first have to request an adjustment to their existing permits with the CPUC or petition the state legislature to modify the law.

Some people like to mock the idea that these companies like to innovate first and deal with the regulatory issues later -- and there may be something to that. But anyone who's ever worked in a setting where innovation is happening knows that having to ask for permission is a recipe for no innovation. California has a long history of enabling innovation. It would be quite a sad state of affairs for it to go the other way.

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Filed Under: california, carpool, carpooling, cpuc, innovation, permission, ride sharing
Companies: lyft, sidecar, uber

55 Comments

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That Anonymous Coward (profile), 15 Sep 2014 @ 4:11am

So the problems with the roads being packed, pollution, and all of the other ills...but damn it, you gotta come before us so we can get you to do more for us.

Perhaps it would have made more sense to adjust the permits and make a public statement that you did it in the best interests of the public would have been a better PR move. Because while you claim it is illegal, you suggest there is a way for them to be in compliance with the law currently. Perhaps instead of making the people trying to make things better try and get the legislature do something (without screwing it all up) you take the initiative and try to get the law changed to promote these sorts of services.

No one is forced to use these services, no one getting a ride from the companies is being blindsided, and it benefits he public by putting fewer cars on the road moving more people...

Perhaps one should be questioning if the CPUC is actually interested in making things better for the public, or keeping themselves power tripping.
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Anonymous Coward, 15 Sep 2014 @ 4:15am

'California has a long history of enabling innovation'

but did that include lining the pockets of certain individuals? if so, i understand why this is failing.
the strange thing is in other countries this would be applauded as it reduces road congestion and pollution. strange how in the USA, it is illegal to do these things and legal to do the opposite.
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lfroen (profile), 15 Sep 2014 @ 4:18am

What does it have to do with innovation?
While I'm not a California resident, I don't how does it have anything to do with innovation.
If I've got it right, they say "you can't charge like a taxi unless you're acting like a taxi". Which is OK in my book.
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Anonymous Coward, 15 Sep 2014 @ 4:30am

Typical administration pitfall:
Administration: We only have 2 categories, which one are you? "Taxi" or "not Taxi"?

Innovator: we offer some services that look a bit like Taxi, but we offer other options as well, such as "carpool".

Administration: we'll just treat you like a Taxi then. And by the way, as a Taxi you cannot offer carpooling.

Thinking outside the box is impossible for these organizations.
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fred, 15 Sep 2014 @ 4:32am

Response to: custom adayemi paul on Sep 15th, 2014 @ 4:06am
that gets through and honest posters get censored.
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That One Guy (profile), 15 Sep 2014 @ 4:33am

Re: What does it have to do with innovation?
The service being offered here seems to be less 'taxi' and more 'professional carpool service'. If people who work together are allowed to carpool, and pay the one who drives for the gas and convenience, I don't really see the difference here.
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That One Guy (profile), 15 Sep 2014 @ 4:34am

Re:
Bureaucrats don't tend to be the most 'nimble' bunch when it comes to anything new, no.
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fred, 15 Sep 2014 @ 4:36am

Response to: Anonymous Coward on Sep 15th, 2014 @ 4:30am
the funny part is that these are the rules set up in part wirh Uber and Lyft. They knew it already and still broke the rules they helped to write .
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Anonymous Coward, 15 Sep 2014 @ 4:39am

The printing press, destroyed the entrenched power of church and aristocracy by making knowledge available to the citizen. However time delays and the requirement to gather and publish information meant that government bureaucracies were needed to sort and act on that information. The Internet with its real time dissemination of information is in its turn making those bureaucracies redundant, along with the role of politicians in setting the rules. I hope that the associated violence can be avoided, but entrenched powers rarely give up their power unless forced to.
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That One Guy (profile), 15 Sep 2014 @ 4:45am

Re: Response to: Anonymous Coward on Sep 15th, 2014 @ 4:30am
Yeah, Uber and Lyft having anything to do with writing the laws impacting them, I think I'm going to have to go with [CITATION NEEDED].
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That Anonymous Coward (profile), 15 Sep 2014 @ 4:46am

Re: What does it have to do with innovation?
Except it looks like they got the permits to act like a taxi, and then decided hey lets group several customers, who are willing, at point A-ish who want to get to point B-ish to share the ride and break the fare up over the group saving money.

All 3 ride services decided this was an offering customers wanted, because it saves them money and no one else is offering it (innovation in getting people from A to B).

It seems like there is much public benefit, except the group who is supposed to benefit the public decided they needed to make them stop now (or before they even began) until they all appeased the CPUC.
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Chris ODonnell (profile), 15 Sep 2014 @ 4:51am

Every morning I drive to a nearby commuter parking lot and stand in line for a few minutes as strangers going to the Pentagon swing by and offer us rides so that they can use the carpool lanes on I-95. Then I repeat the process headed home, catching a ride at the Pentagon to my car, which is parked about 37 miles south. It allows me to commute about 100 miles roundtrip each day for $4.50 in subway fares.

No cash change hands for the rideshare, but we are still "paying." The driver allows two strangers into his or her car, and I get into cars with strangers, something out parents told us never, ever to do! It's a wonder that this is legal.
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That One Guy (profile), 15 Sep 2014 @ 4:58am

Re:
Obviously those fiends need to be shut down, forcing more people to be on the road driving, causing more pollution, and burning through more gas. You know, for the good of you and your fellow passengers. /s
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That One Guy (profile), 15 Sep 2014 @ 4:59am

Re: Response to: custom adayemi paul on Sep 15th, 2014 @ 4:06am
If people don't like being sent to time-out, then they need to stop acting like unruly children, it's as simple as that.
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Anonymous Coward, 15 Sep 2014 @ 5:08am

Re: Re:
Just think of all that tax revenue from fuel duties that is not being collected, ride sharing is cheating the government out of money that it is due. The petrol companies also have grounds for complaint, they are not getting the sales they are due either, and the government is losing more tax due to lost profits.
/s
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Anonymous Coward, 15 Sep 2014 @ 5:26am

Penis?
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Anonymous Coward, 15 Sep 2014 @ 5:28am

Re: Response to: custom adayemi paul on Sep 15th, 2014 @ 4:06am
"that gets through and honest posters get censored."

If "honest" means inaccurate information, yes.
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Anonymous Coward, 15 Sep 2014 @ 5:43am

For or against innovation?
Two quotes from same article:

"California Continues To Be Anti-Innovation"
"California has a long history of enabling innovation"

That seems like a contradiction. Are you saying they are for or against innovation?
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Anonymous Coward, 15 Sep 2014 @ 5:58am

Re:
This is what happens when we let government 'decide' what is good for us.
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nasch (profile), 15 Sep 2014 @ 6:04am

Re: Re: Re:
Just think of all that tax revenue from fuel duties that is not being collected, ride sharing is cheating the government out of money that it is due.

It wouldn't surprise me, since there are proposals to tax hybrids extra because they use less fuel and thus incur fewer gas taxes:

http://www.thenewamerican.com/economy/economics/item/15673-states-propose-fees-on-hybrids-to-c over-gas-tax-losses

Or raise the gas tax just because cars are generally getting more efficient:

http://cnsnews.com/news/article/eric-scheiner/democrat-raise-gas-tax-make-lost-revenue-fue l-efficient-vehicles
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Anonymous Coward, 15 Sep 2014 @ 6:10am

Re: For or against innovation?
English lesson.

California has a long history of enabling innovation.
This sentence means that over a historically significant period of time, the state has been innovative.
California continues to be anti-innovation.
This sentence refers to the last few years of bad law creation and or enforcement that has been contrary to the greater history of innovation.

English is an amazing language that allows tons of differing opinions and thought processes. Please stop imposing your own lack of thought processing into articles you read.
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That Anonymous Coward (profile), 15 Sep 2014 @ 6:13am

Re:
You really need to say it 3 more times while looking in a mirror to actually summon me...
this has been a recording.
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Anonymous Coward, 15 Sep 2014 @ 6:59am

Re:
Email bomb locked on...
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Owen Thomas, 15 Sep 2014 @ 7:09am

It is not ridesharing, it is transport for hire
The thing all you hipsters don't seem to grasp is that these livery car services passing themselves off as ride sharing (they are NOT), is that this is transportation for hire. It is a commercial business. The cars/drivers do not carry commercial insurance (illegal). If you are in an accident using your private vehicle insurance while using your vehicle for commercial business, YOU ARE DRIVING UNINSURED. The drivers are not drug tested nor properly background checked/fingerprinted. The cars are not checked for safety. Professional drivers have to do all these things. Calling a livery car service "ride sharing" just because you use an app to dispatch cars is dishonest. And these are not "little start ups", they are massively funded corporate attempts to drive the little guys that follow the rules out of business. Sorry, I will continue to use Curb. Oh, and one of my friends ordered a ride using uber, the driver took some other guy, and my friend ended up with a $28 charge on his card that was a massive headache for him to get reversed. Please stop the dishonest reporting, TYVM.
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Anonymous Coward, 15 Sep 2014 @ 7:20am

Tour Bus.
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nasch (profile), 15 Sep 2014 @ 7:38am

Re: It is not ridesharing, it is transport for hire
The cars/drivers do not carry commercial insurance (illegal).

https://support.uber.com/hc/en-us/articles/202347808-In-the-US-what-insurance-is-available -if-there-s-an-accident-

From a brief look it does seem Uber has some issues with background checking and safety inspections. I didn't look at any other services. On the other hand, one source I found indicated that less than 2% of car accidents are caused by vehicle defects, so while inadequate safety inspections sound scary, they're probably not really that important. Keeping people from driving around while under the influence would be great and is not something that should be entrusted to user ratings.
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jupiterkansas (profile), 15 Sep 2014 @ 7:39am

Re:
That's because building the box is the purpose of these organizations.
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Anonymous Coward, 15 Sep 2014 @ 7:44am

"California has a long history of enabling innovation."

Certainly not in the business models of their content producers.
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Chris Rhodes (profile), 15 Sep 2014 @ 7:44am

Re: It is not ridesharing, it is transport for hire
When the term "FUD" was created, they had this comment in mind.
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Anonymous Coward, 15 Sep 2014 @ 8:06am

Re: passenger security
I think this potential risk can be resolved by setting up TSA checkpoint at each pickup area.
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Anonymous Coward, 15 Sep 2014 @ 8:28am

Re: Re: It is not ridesharing, it is transport for hire
I was going to say, that should be the role of the police, stop anyone whose driving is below par; but given the state of the US police at the moment, that might be hard on passengers, being in a vehicle stopped by highwaymen looking for money to confiscate etc.
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Anonymous Coward, 15 Sep 2014 @ 8:59am

Re: Re: For or against innovation?
Ah, the usual I-don't-think-Mike-can-defend-himself reply, with unnecessary rudeness included. What would this site be without it, eh?
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Ed (profile), 15 Sep 2014 @ 9:24am

Re: It is not ridesharing, it is transport for hire
Do you lie for a living (elected official, perhaps?) or is this just a hobby for you?
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Just Another Anonymous Troll, 15 Sep 2014 @ 9:31am

Re: It is not ridesharing, it is transport for hire
"And these are not "little start ups", they are massively funded corporate attempts to drive the little guys that follow the rules out of business. "
Whatever you're on, can I have some? The "rule followers" ARE the big guys, genius.
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Mike Masnick (profile), 15 Sep 2014 @ 9:54am

Re: It is not ridesharing, it is transport for hire
The cars/drivers do not carry commercial insurance (illegal).

Hmm:
https://support.uber.com/hc/en-us/articles/202347808-In-the-US-what-insurance-is-avail able-if-there-s-an-accident-

"there’s a commercial insurance policy for ridesharing with $1 million of coverage per incident. This policy covers drivers’ liability from the time a driver accepts your trip request through the app until the completion of your trip."

https://www.lyft.com/drivers

"Lyft provides additional insurance policies, at no cost to the driver. We worked with leading insurance carriers get our drivers: commercial auto liability insurance up to $1M per occurrence, contingent collision insurance for drivers who carry collision coverage on their personal auto policy, and coverage for bodily injury caused by uninsured/underinsured motorists."

The drivers are not drug tested nor properly background checked/fingerprinted.

Hmm:
http://blog.uber.com/driverscreening
"All Uber ridesharing and livery partners must go through a rigorous background check that leads the industry. The three-step screening we’ve developed across the United States, which includes county, federal and multi-state checks, has set a new standard. These checks go back 7 years, the maximum allowable by California law. We apply this comprehensive and new industry standard consistently across all Uber products, including uberX."

https://www.lyft.com/safety
"Every driver is screened for criminal offenses and driving incidents. The criminal background check includes national and county-level databases, as well as national sex offender registries."

Got any other lies you'd like to spread?
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Anonymous Coward, 15 Sep 2014 @ 10:27am

Re: Re: It is not ridesharing, it is transport for hire
What Uber and Lyft claim on their web sites isn't necessarily the truth. Just ask the family of a 6 year old girl killed in San Francisco by an Uber driver.
Also, most cab and livery drivers are independent contractors or owner/operators. They are most definitely the little guys.
Further, you can tell the intent of companies like Uber and Lyft by the fact that they offer services without bothering to become legal first. They are currently illegal in Arizona (they must carry $300,000 in commercial vehicle insurance full time, not just when they are on a call). They refuse to do this). Also, I lived 3 doors down from a convicted felon who passed Uber's alleged background check.
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John Fenderson (profile), 15 Sep 2014 @ 10:44am

Re: Re: Re: It is not ridesharing, it is transport for hire
"Just ask the family of a 6 year old girl killed in San Francisco by an Uber driver."

You know who else sometimes hits and kills people? Regulated taxi drivers. A single incident means nothing -- what are the incident rates?

"Also, I lived 3 doors down from a convicted felon who passed Uber's alleged background check."

This also happens with regular taxi drivers -- many of them are convicted felons as well.
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Gwiz (profile), 15 Sep 2014 @ 10:47am

Re: Re: Re: It is not ridesharing, it is transport for hire
What Uber and Lyft claim on their web sites isn't necessarily the truth. Just ask the family of a 6 year old girl killed in San Francisco by an Uber driver.

What exactly are you claiming is untrue?

And why bring up a single incident involving Uber? If you are really worried about pedestrian safety then your focus should really include traditional taxicabs too.
In Manhattan, about 16 percent of pedestrian crashes that led to death or serious injury involved a taxi or livery cab. Taxis account for only 2 percent of vehicles registered in the city, but at some times of day, they can make up nearly half of Manhattan’s traffic, according to some estimates... Source

Also, I lived 3 doors down from a convicted felon who passed Uber's alleged background check.

Anecdotal references are meaningless. Got [citation]?
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nasch (profile), 15 Sep 2014 @ 10:57am

Re: Re: Re: It is not ridesharing, it is transport for hire
Also, I lived 3 doors down from a convicted felon who passed Uber's alleged background check.

What was he convicted of? It may not even be relevant.
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Anonymous Coward, 15 Sep 2014 @ 11:08am

Re: Re: Re:
And at some point, popcorn sales will suffer I'm sure... /s
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Anonymous Coward, 15 Sep 2014 @ 11:24am

Re: Re: Response to: custom adayemi paul on Sep 15th, 2014 @ 4:06am
Posting facts= getting a "time out" on Techdirt.

As usual, Masnick tries to inflame first, and then cover his butt at the end with the little note about "regulatory" issues. That issue would happen to be liability car insurance, and it's a big one. But don't expect to learn why on this blog.

This post will now be censored by Techdirt for being 100% truthful. How innovative.
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Anonymous Coward, 15 Sep 2014 @ 12:04pm

Re:
This is the same California that has CalTrans (DOT) signs blaring about a "Severe Drought" and the Governor threatens state-wide water rationing, while municipalities threaten to fine people for not watering their lawns enough.
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Fred the fourth, 15 Sep 2014 @ 12:16pm

Regulation
This is why I quit being a product development manager and program manager. I was OK with spending 10% of my time dealing with regulations, but when it got to be 80% I decided I could make better use of my skills.
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jupiterkansas (profile), 15 Sep 2014 @ 12:19pm

Re: Re: Re: Re: It is not ridesharing, it is transport for hire
Apparently convicted felons should never be given a job where they interact with another human being.
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John Fenderson (profile), 15 Sep 2014 @ 12:34pm

Re: Re: Re: Re: Re: It is not ridesharing, it is transport for hire
I wasn't going to go there because it's tangential to the point, but you're 100% correct. It's truly shocking how many people believe that convicted felons should never be allowed to participate in the workforce (or most other parts of society) again.
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nasch (profile), 15 Sep 2014 @ 1:14pm

Re: Re: Re: Re: Re: Re: It is not ridesharing, it is transport for hire
It's truly shocking how many people believe that convicted felons should never be allowed to participate in the workforce (or most other parts of society) again.

And then they wonder why recidivism is so high.
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Case, 15 Sep 2014 @ 3:43pm

So, UberHeadline is the new product?
Techdirt logic: Company calls their product $GENERIC_TERM, agency bans said product, ergo make a hysterical headline "ZOMFG, they banned $GENERIC_TERM".

In other words, the same tactic as a certain "inventor" who called his product "EMAIL" and lead the public on a merry dance...if his service was shut down for violating regulations, I take it Mike would also cry foul over "banning email"? Or does that tactic just apply for companies marketing themselves as the hip alternative to evil "Big X"?
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Case, 15 Sep 2014 @ 3:51pm

Re: Re: Re: Re: Re: Re: Re: It is not ridesharing, it is transport for hire
...unless they are investors in a private prison contractor, where high recidivism is part of the pitch to shareholders.
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Anonymous Coward, 15 Sep 2014 @ 4:19pm

Having a law on the books is one thing, enforcing it is another. I usually don't pick up hitchhikers, but have on occasion. Is that illegal also, and if it is what is the penalty? I don't believe they have the death penalty in Cali anymore, but I won't be taking any chances.
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Editor-In-Chief, 15 Sep 2014 @ 9:57pm

Re:
In some places it is illegal to pick up hitch-hikers. In those same places, it is also illegal to hitch-hike.

David Oliver Graeme Samuel Offenbach
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Anonymous Coward, 15 Sep 2014 @ 11:21pm

Re: What does it have to do with innovation?
They promote more efficient logistics for one and allow for a marketplace for their drivers and customers with reviews which hasn't been done with taxis before. How is that not innovation?
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Chris Dodd, 16 Sep 2014 @ 12:35am

Who said you could stop sucking me off, cockslave?
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Niall (profile), 16 Sep 2014 @ 2:32am

Re: Re: Re: Re: Re: Re: It is not ridesharing, it is transport for hire
And then whine because people are needing to live on 'gubmint handouts'...
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Niall (profile), 16 Sep 2014 @ 2:35am

Re: Re:
I would love to see their legal definition of hitch-hiking...
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Anonymous Coward, 16 Sep 2014 @ 7:52am

Re: Re: Re: Re: It is not ridesharing, it is transport for hire
Probably copyright infringment on the "Taxi business plan"...
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