There are many things that can enable disruption, but let’s talk about two in particular: technological advantage and playing by different rules. It’s easy to get the two confused – as many people are doing in the case of Uber and the traditional taxi strikes it is inspiring across Europe.
The drivers that will gridlock London on Wednesday (others are also striking in Berlin, Paris, Madrid, Milan and Lisbon) are Luddites and idiots, according to some commentators. They’re just trying to hold back the tide of technologically-enabled competition. But is that a fair assessment?
Unfair fight
The very well-funded Uber and rivals such as Lyft and Hailo certainly do pose a threat to traditional cabs: their apps provide a more convenient way for punters to find a car and their real-time marketplace model (they don’t actually maintain fleets as such) is more efficient than just driving around looking for a raised hand. However, their biggest advantage is regulatory, certainly in places like London, where traditional “black cab” drivers have to stick to well-defined rules.
Here’s the problem: if you’re a London taxi driver, you need a license from Transport for London (TfL) to operate. There are two kinds of licensed cab driver there, black cab and private hire/minicab. Minicab drivers can only take pre-arranged bookings with a pre-arranged fee, and black cabs are the ones that drive around looking for business, are easily identifiable, and carry a meter.
The minicab conditions exist largely because of passenger safety – it’s relatively tricky to tell which drivers are genuine and which are potential threats, and there has historically been a problem with drivers aggressively touting for business. What Uber is doing is to take on licensed minicab drivers (at least in theory; the company’s London recruitment page has a dead link for getting TfL licensing) and send them out to compete with the black cabs in the metered-travel business.
The black cab drivers say, correctly, that this is illegal. TfL, however, has decided that the smartphone app-based meter used to calculate Uber fares is not a taximeter, and has asked the High Court to back it up.
This was a very silly decision on TfL’s part. The law clearly states that a taximeter “means a device for calculating the fare to be charged in respect of any journey by reference to the distance travelled or time elapsed since the start of the journey (or a combination of both)” — you could get tangled up in whether Uber’s app is a “device” or whether the GPS-equipped smartphone would have to be the device, but it’s pretty clear that it does what a taximeter does.
Regulatory failure
The black cab drivers are in a terrible position. Their regulator is effectively saying that they have to play by certain rules (such as going through rigorous testing for having memorized London’s streets) while others who are doing much the same thing don’t have to be equally compliant. Under this set of rules, black cab drivers don’t merely have to fend off their crowdsourced, app-enabled rivals – they have to do so with one arm tied behind their back.
It’s worth noting that many traditional black cab drivers happily signed up to Hailo, a service that was originally designed to bring them into the app-enabled age, before turning against the company when it moved into the competing minicab space as well. It’s not like they’re entirely resistant to change.
The fault, therefore, lies with the regulator, not the cabbies. And those who are so keen to deride the cabbies for their supposed neo-Luddism and idiocy should really be asking whether they want to see the regulations changed in London, Paris, San Francisco, San Antonio and beyond. Should all taxis be de-regulated? Should Uber be more heavily regulated? I don’t know – that’s a public policy decision. But it’s a far more complex argument than the one painting traditional taxi drivers as fools and protectionist villains and Uber as the swift, smart underdog.
Regulation is really tough these days, with the pace of technological innovation being as speedy as it is. Rules that suited one age suddenly don’t fit the next, and it takes a while for them to catch up. In the interim, some traditional players sometimes find themselves at a severe and unfair disadvantage that’s not of their own making. Don’t blame them for that – and don’t assume that their disadvantage is wholly caused by their rivals’ inherent technological superiority.
PS – I’m going to an event this evening, where the organizers warned attendees that there’s a taxi strike in Berlin, but Uber has helpfully stepped in with the offer of free and discounted rides. Uber is currently banned from operating in Berlin, so that’s illegal, but who cares, right? Disruption!
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