How risky is your Uber ride? Much More than you think

An Uber ride is different from hopping into a taxi or a traditional car or limousine service. When you download Uber's app and get into a car summoned with the mobile reservation system, you agree to a host of terms and conditions by default. Uber claims it puts potential drivers through a background check so that they can become an impromptu taxi driver using their own car and Uber's tech platform. The incidents, injuries, assaults and accidents involving Uber drivers and the riding public are too numerous to detail. But the real issue is that the public should understand Uber's responsibility to passengers (or lack thereof).

What exactly do passengers agree to when they use Uber? That depends on whom you ask. Most people don't know what they're getting into when they get into one of these Uber cars and they surely don't know what they're getting into when they download the app. The public is essentially giving Uber a free pass -- up to and including possible death.

Uber's terms and conditions are a way for the company to absolve itself of any liability in cases of injury or accident and to avoid responsibility for a driver's actions. It is a way for Uber to attempt to cover their ass and claim they are not responsible for anything that happens to you. Uber's public statements on safety contradict its terms and conditions. It is akin to an outright deception on people. They surely do not in any way seek to warrant that their product/service is safe.

The fine print of Uber's  terms and conditions clearly says that passengers accept a risk by using the service. "You understand, therefore, that by using the application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable," Uber's terms and conditions read, "and that you use the application and the service at your own risk." Lyft essentially operates the same way as Uber.

In essence, Uber and Lyft are basically trying to show through their terms of use that they are ride-matching services, rather than transportation companies. No one is really buying that they are merely tech platforms, but people continue to use these services without knowing the true potential dangers

While there are some Uber and Lyft drivers that are safe, courteous and competent, several incidents have occurred during the past few years that have called into question the safety of the services. The most severe incident was the death of 6-year-old Sophia Liu, who was  struck and killed by an Uber driver on New Year's Eve in San Francisco. There have also been more than a dozen allegations of sexual assault and groping; kidnapping; and physical assault, according to several media stories.

Uber claims its drivers are independent contractors rather than employees, which if true, it protect Uber from liability. But the company's terms and conditions can be trumped in court if it's shown that Uber exercises a certain amount of direction and control over its drivers and they more are akin to employees. Such factors of control include the ability to hire and fire drivers, decide where their services are performed, or provide them with specialized equipment, along with other considerations -- many of which, some would argue, including myself, Uber has.

Soon enough, the time will come when the issue of whether Uber's drivers are independent contractors or employees will hit the appellate courts and if it goes bad for Uber, then their entire business model may be placed in grave danger...the same type of grave danger that Uber often places its customers.....the danger of death.

Uber investors expect big results, but can Uber produce? Not so far.

Uber’s business strategy has involved trampling government regulations and daring the relevant regulators to do something about it. That strategy has been worked so far, but regulators and the public have begun to show more spine in the face of Uber’s arrogance. Meanwhile, financial analysts have been turning a more critical eye on Uber’s growth and profit potential, and not always liking what they see. Whether the company can sustain its putative $65 billion valuation — derived not from actual financial results, but on the expectations of private investors — is in question.

Uber’s current strategy of dominating local taxi markets depends heavily on the cooperation of regulators (or on intimidating them) and maintaining a positive image with the public. As far as their image, Uber seems to follow the old adage that there is no such thing as bad public relations. To them, all news on Uber is good news. But in public view there are so many horror stories of customers getting assaulted that it astounds me that anyone would ever use them.

On the regulatory front, just two weeks ago Uber agreed to pay $20,000,000.00 ($20 million dollars) that it had systematically deceived drivers about their potential earnings and the terms of a lease deal it offered to help them acquire cars. Uber got away without admitting or denying the charges, but a picture has been painted as a result showing a company that engaged in wholesale deception in order to recruit drivers. In 2014 and 2015, the FTC said, Uber asserted on its website that its UberX drivers earned median incomes of more than $90,000 a year in New York. The truth, according to figures from 2013 to 2014, was that the median driver’s income was only $61,000 in New York. Fewer than 10% of all drivers in New York made as much as Uber had claimed.

Meanwhile, in 17 markets including Los Angeles and Orange County, Uber placed help-wanted ads on Craigslist offering the enticing prospect of making as much as $25 an hour, even driving part-time. In truth, the FTC said, only a fraction of drivers could clear that much. For example, in L.A. and Orange County, where Uber quoted fares of $20 an hour, fewer than 20% of the drivers reached that mark.

Uber’s representations about its auto sales and leasing program were also deceitful, the FTC said. From 2013 through mid-2015, some 7,000 drivers signed up with three subprime auto financing companies with which Uber made deals for a four-year “lease to own” arrangement or installment credit exclusively for its drivers. Uber claimed the drivers would get preferential interest rates, the FTC said; instead, many were saddled with higher rates than other buyers with similar credit scores — in some cases more than double. The bottom line is that Uber has ahabit of doing what it wants regardless of law

Uber is also running up against labor regulators calling foul on its claim that its drivers are independent contractors not entitled to the benefits of employment. The New York State Department of Labor has ruled that two former drivers are entitled to unemployment compensation. The ruling follows a similar one in 2015  by the California labor commissioner for a San Francisco driver. And in Seattle, Uber has just filed suit to invalidate a 2015 city law that gave its drivers, and those for other such services, the right to unionize. 

These battles strike at the heart of Uber’s business model, which depends on flooding markets with platoons of drivers, sticking them with such expenses as gas, insurance and maintenance, and skimming 25% of the fare off the top. Drivers get the benefit of being linked with passengers via Uber’s ride-hailing app, but they’re powerless to control their fares, which Uber sometimes discounts to attract passengers, or the level of competition. Uber’s interest lies in hiring as many drivers as it can for a given market; the drivers, however, end up cannibalizing each others’ opportunities.

This looks like a win for Uber and its investors, but the scanty financial information that has dribbled out about the firm’s revenue and earnings suggests that it’s nothing like a profit-making machine. Bloomberg, reporting from unofficial sources, calculated that Uber lost more than 2.2 billion in the first nine months of 2016, including $800 million in the third quarter alone. Is that really a path to profitability?

Financial analysts are beginning to question whether Uber’s profit potential is all it’s cracked up to be. Transportation industry experts have interpreted Uber’s losses as implicit subsidies to attract riders, meaning that riders were paying only 41% of the cost of their trips. The question is how Uber would keep their business if fares had to more than double to allow the company to break even.

Additionally, Uber’s growth seems entirely explained by its willingness to engage in predatory competition funded by Silicon Valley billionaires pursuing industry dominance. Uber’s business model is focused on the pursuit of monopoly power. But that’s an expensive global quest, and there’s no telling how long Silicon Valley venture investors will bankroll it. Uber already lost the battle in China, potentially a transportation goldmine. Uber gave up the battle in China last year, selling its subsidiary there to domestic company Didi Chuxing — which has hinted that it might wish to expand to new national markets. 

Perhaps in recognition of the limitations of the ride-hailing market, Uber is investing heavily in self-driving cars. But launching its own fleet of vehicles would mean a drastic transformation of its business model. Whether its investors will keep their money in a hardware company rather than a purveyor of software isn’t clear.

Vision Zero- the Mayor has no Vision

New York City’s Mayor Bill de Blasio said in an interview Monday that he would categorize drunk driving “that doesn’t lead to any other negative outcome” a minor offense. This is absolutely absurd. Is Mayor de Blasio serious about this. Drunk driving a minor offense so long as no one gets hurt!!!! I guess all that really matters to Mayor Bill de Blasio is that traffic accident statistics go down. The means to achieve such are irrelevant to him. In other words, driver fatigue rules look good on paper, but in reality all they will do is add window dressing for Vision Zero. To say that drunk driving a minor offense so long as no one gets hurt is kin to dying that armed robbery is a minor offense so long as no one gets hurt. Driving drunk or walking into a bank with a gun, both have potential to cause massive harm and are akin to a scourge on society, but according to this Mayor, no big deal.

How about the big deal of limiting the ability of for-hire vehicle drivers to make a living. Limiting the number of hours they can work without any proof, statistics, studies or data (data and/or studies that apply to New York City) is an absolute outrage. For-hire vehicle drivers are doing the best they can to make a living in this day in age. considering the state of the market right now, that i a hard feat to do. the market is flooded with part-time Uber drivers, thus limiting the amount of jobs a regular full time professional driver can perform. Less money for drivers means they are going to seek a job elsewhere. NYC will be left with nothing but part time in experienced drivers. Would you rather be driven by an experienced driver who knows how to manage their time and fatigue or a part time inexperienced driver who knows how to manage neither.

How many NYC taxi medallions need to be foreclosed upon until the Mayor understands that limiting the number of hours a for-hire vehicle driver can operate is not going to be good for local small businesses in the outer boroughs of NYC, is not going to be good for persons who drive people for a living, is not going to be good for the ability of drivers to continue to service those persons most in need of transportation, is not going to enable the driver to make his/her car payments, etc, etc. In other words, limiting the ability of drivers' ability to operate is not going to be good for the consumer or the the economy.

If the Mayor or the NYC Taxi and Limousine Commission had some empirical data or studies to support their arbitrary time limit, then there may be nothing to complain about, as we are all in agreement that limiting accidents in NYC is a laudable goal. But limiting drivers ability to work and make a living based upon no proof of a problem and no proof that the means sought to be imposed by the NYC Taxi and Limousine Commission are the best means to prevent accidents wholly unreasonable.

It is clear that the Mayor and the NYC Taxi and Limousine Commission are more concerned with what looks good to the public rather than what is good to the public. Accidents in NYC will never reach zero. It is a fact of life, just like crime in NYC. It will always be there. We can try to limit it, but both will be there. Police don't go after criminals and solve crimes without proof, evidence an/or data. They don't operate based upon a hunch. The NYC Taxi and Limousine Commission should not be allowed to make rules based upon a hunch either.

The Mayor's comments about drunk driving not being a big deal so long as no one gets hurt is proof that the Mayor is not really concerned with limiting accidents, but simply with the appearance that he is doing something to limit accidents. That is fine, but before you take away the ability of a for-hire vehicle driver to make a living, perhaps the Mayor should consider having some proof or evidence that the NYC Taxi and Limousine Commission proposed rules on driver fatigue be based upon some proof or evidence. Otherwise, the for-hire vehicle driver is being hurt and punished more than the drunk driver who does not cause any accidents or harm to others. Think about it. It is not just the end result that matters. The means used to achieve those results are often the difference between a well executed plan that leads to good results and a poorly executed decision that causes harm to many without any justifiable basis.

Time to Consider Deregulation of the FHV industry

Deregulation in the for-hire vehicle industry is something that should be seriously considered these days. It is obvious that the New York State government, in its various versions of the TNC (Transportation Network Company) bills it has recently created, proves that while there is virtually no difference in the service provided by a TNC like Uber, from that of the traditional car and limousine service, the various services are being treated differently, all without any real reason or rationale. Can someone really tell me with a straight face that providing transportation via a TNC is not transportation for hire? Is the State Legislature and the Governor going to serious claim that the provision of transportation via a TNC is not a commercial transaction. Ride Sharing is simply a misnomer. While the ride can technically be shared by more than one person, we are no talking about legalized hitchhiking. It is a commercial transaction for which a service is being provided to one person and that person is paying for the service. At least create rules that are the same for all services. Otherwise, the playing field is hardly level and will only lead to destruction of all for-hire transportation providers other than Uber and Lyft.

While new competition from all sides of the car service industry are forcing operators to improve their business, it is impossible to adapting through improved driver retention and customer service when Uber and Lyft are able to operate the same type of business as a traditional car service but can play by rules which are either non-existent or so lenient as to make it unfair competition. If there is going to be regulations, then there should be regulation for all that provide the same service. Otherwise, the government should de-regulate the entire industry.

Transportation deregulation in the airline, railroad and shipping industries have produced enormous benefits for consumers. Airfares are down sharply; trucking rates have fallen; the nation’s railroads are offering new services. A few years ago, passenger and freight transportation were among the most heavily regulated industries in the United States. Now much of the red tape regulation has been totally eliminated.

This wave of deregulation stems from a growing recognition that government controls of transportation have not fostered the public interest. Regulatory agencies tend to protect the interests of the industries they regulate. Studies by experts representing the whole spectrum of political persuasion have confirmed that regulatory agencies reduce competition at the expense of the public. Typically, industry-oriented individuals are appointed to commissions, often from industry itself. Once in office, regulators perceive their duty as protecting the financial health of the companies they regulate. The easiest way to accomplish this is to reduce competition, thereby increasing rates and creating monopolies. This seems to be the exact case in New York City and soon to be throughout New York State. 

Uber and its Destructive Revolution is Bad for the Consumer

Creative destruction is a process through which something new brings about the demise of whatever existed before it.  The process of creative destruction stems from competition and innovation, which drive changes in the market. The success of Netflix is an excellent example of “creative destruction. Netflix has driven the video tape/disc rental business, along with companies like Blockbuster, into extinction. Federal Express created the overnight delivery industry and all but decimated the U.S. Postal Service. Kodak was an iconic American company synonymous with photography. But long entrenched in film manufacture, it did not see the shift to digital photography, one that required no film. But the iconic exemplar of creative destruction was Apple. Its story needs no re telling as it is the stuff of culture and legend. Apple unified the worlds of computers, internet, phone, photography and music by bringing them all together in a single device.  Last, but not last, there probably has not been a better example of creative destruction than the ascendance of Uber.

In New York City, the taxi industry continues to collapse under the forces of Uber’s disruption. Traditional taxi drivers and medallion owners, after being protected from competition by government regulations for many generations, are the obvious losers from the “Uber effect”. Some people believe that consumers are the winners from Uber’s creative destruction in the transportation industry, as we now have more choice, better and faster service, friendlier drivers, cleaner cars, and most importantly — lower prices. Competition is said to breed competition as it forces business to rethink their methods of doing business and to devise methods of doing business in a better and more efficient fashion. At the very least, competition often causes businesses to maximize their responsiveness to consumers. But for competition to be beneficial to the consumer, competition must be fair. In New York City, Uber can hardly be said to have been competing fairly. They burst into the market claiming they were not a transportation company subject to regulation by the New York City Taxi and Limousine Commission (“TLC”), but were a technology company. Their business model was the same as the traditional car services, yet they refused to abide by the rules of the TLC, which all other car services that provide identical services must play by. Compliance with government regulation is very costly, but by the time the TLC got around to regulating Uber, it was too late. The damage had already been done. Uber’s methodology was to break the law, and obtain absolution from the TLC by eventually agreeing to submit to the rules that all other car services in NYC had to play by. Misclassifying its drivers as independent contractors is just another example of how Uber not only continues to take advantage of their drivers, who in my opinion are employees and not independent contractors, but also avoids having to pay the massive costs associated with paying employees (e.g. health insurance, payroll tax, time and a half for overtime, compliance with labor laws). Of course, there are the stories of Uber engaging in a concerted effort of calling other car services for transportation and then eventually cancelling the trip at the last minute, thus upsetting the driver who lost a fare. All this causing the driver to reconsider working with Uber rather than staying with the traditional law abiding traditional car service. And we should not forget about Uber’s massive subsidies of each trip for its drivers and Uber’s obscene subsidization of “sign on bonuses” given to for-hire vehicle drivers to lure them away from the local community car service. With a $65 Billion dollar valuation, Uber can afford to provide subsidies to drivers to lure them away and even to prospective customers to get them to become customers. The list of unfair business practices can go on and on. All of this may seem like legitimate business operations, but in my opinion, it is not only not legitimate but it is destructive to the for-hire vehicle industry in an extremely negative fashion.

Uber did do one good thing in its creative destruction. It caused the for-hire transportation industry to modernize. The yellow taxis had a government backed monopoly for years with no end in sight. As such, there was no incentive for them to modernize or pay more attention to customer service. Car services were forced to modernize by obtaining smartphone applications to allow its customers to book a trip or summons a car, just like one may do with Uber. If a company is forced out of business because it refuses to modernize and adapt to the times, just like Blockbuster and Kodak, then that is the forces of the market that caused their demise. But by engaging in unfair business practices, Uber is forcing the competition out of business for reasons other than market forces. This is patently unfair and should not be condoned.

The City of New York turned its backs on the yellow taxis and is also turning its backs on community car services. Many of these small car services are mom and pop shops, mostly minority owned and operate a legitimate business that have served the transportation needs of the local communities in the outer boroughs of NYC for decades. They provided a service to the City in the 80’s and 90’s in areas of the city that most people did not want to travel to. These small businesses are being forced out of business not just because of Uber’s unfair competition, but also due to the onslaught of new, burdensome and irrational government regulations. The cost to comply with most of the irrational government regulations are so high that small car services cannot afford it. When government regulations serve a genuine purpose, and are rationally related to a legitimate goal, then compliance is required, regardless of the cost. But for the past 6 years, the TLC has been engaging in a pattern of creating new regulations that serve no legitimate goal. Most importantly, government regulation, while sometimes mandatory, is not a market force, but is a governmental requirement.

Most of the governmental leaders of the City of New York have allowed Uber to grow and grow at an unchecked rate. This has caused many unfortunate circumstances. First, it has caused the demise of the yellow taxi industry. Medallions that were worth 1 million dollars a few years ago are worth about half of that now. Even with the plummeting values, medallion owners are still unable to meet their loan obligations because the unchecked rise of Uber has shifted the actions of consumer base from hailing a cab to summonsing a car on demand from Uber. Taxi and car service drivers were once able to make a legitimate and decent living. Now, most can hardly afford to make their car payments. Full time professional drivers are a thing of the past. Uber and the actions and inactions of the TLC have created a market filled with part time unskilled drivers. So what happens to the full time drivers….they become unemployed, unable to pay their bills, unable to feed their families and eventually bankrupt.

I believe in the free market. So if all of this destruction was caused by market forces, then I would have no problem. But when the government turns its back on long standing, law abiding businesses and allows a super-rich and super powerful entity like Uber to operate outside of the law, then the end result will be another government backed monopoly…..all in the form of Uber. So back to the consumer, because that is really what matters here. Right now, the consumer is happy. No more stinky yellow cabs. No need to wait for a car service to pick you up. No need to be concerned about costs because the cost of an Uber trip is the same as a trip with a yellow cab or a traditional car service. But the public usually does not realize the inherent problem until it is too late….and that problem is that non-market forces in the form of unfair completion from Uber along with irrational and needless regulations from the TLC are all combining to cause all other car services to go out of business and make the yellow taxi extinct. So the typical question from the consumer is this….what is wrong with that ultimate scenario since Uber will be left standing the consumer can always use Uber’s app to get transportation? The problem is that the end game of Uber’s creative revolution is a destructive revolution where only one company is left standing….and when Uber is left to be the only company in town, they will be free to jack up their prices because there will be no competition to keep their prices in check. It also reduces their willingness to serve the public interest or provide top customer service. All of this surely make us all worse off. This is why the government is supposed to prevent monopolies from being created or from continuing to operate. Since the late 1800’s monopolies have been largely outlawed. But in the meantime, Uber continues to make massive “donations” to politicians’ campaigns, all to get them the lawmaker to see it the “Uber way”.    

If the history of transportation in NYC has taught us anything it has taught that we need to move away from the ubiquitous crony capitalism that protects well-organized, well-funded, concentrated companies like Uber. In the long run, it will only lead us down the same vicious cycle of high prices and poor service. Think about what I am saying here. Look at the dynamics of the industry. Take a thoughtful view of the future and decide if creating another government created and government backed monopoly is in the best interest of the public. I think you know that my opinion is a resounding “NO”.

Deregulation off the FHV Industry in NYC?????

It has now come to pass that one company is capable of dominating a whole industry. You know the name of the company. But let u go back to the Haas Act of 1937 which instituted the “medallion system” to regulate the number of taxi operators. The yellow taxi system became a government backed monopoly that for decades reaped millions and millions of dollars upon the City of New York and the medallion holders in general. The Taxi industry successfully lobbied to limit the number of medallions for their own benefit.  The taxi companies used their influence to sway politicians in favor of their monopoly. For so many years, an investment in the medallion was a better investment that almost anything in the world.  Ironically, this monopoly left the taxi companies with no incentive to innovate or improve their services, rendering them vulnerable to something they never saw coming……..market forces.  Coddled by this lack of competition, taxi operators have made insufficient effort to be more responsive to customers, who were often frustrated by the difficulty of getting a taxicab, among other issues. So while the taxi medallion owners counted their money and laughed at those on the outside who could not get in, the City of New York became complicit in the demise of the industry. They did nothing to innovate either. No incentive to innovate or think outside the box. This caused an effect that no one could imagine.  A monopoly is essentially concentrated economic power in the hands of a few. Any concentrated power in the hands of a few is antithetical to a free market and democratic society.

The community based car services were born out of the rule mandating that the radios be taken out of the taxis and the general rule that taxis are prohibited from accepting pre-arranged transportation. So for decades, the taxis accepted street hails and the car services (and black car radio groups) provided transportation by pre arrangement. The lines were very clear and all had prospered. Then came the insurgents (the “disruptors”). All of a sudden, the lines between street hail and pre-arrangement became blurred. The Mayor of New York City is quite tech savvy and he was all in favor of the disruptors and their new “toy”. Allowing them to operate outside of the law was a governmental abuse of power and abdication of its responsibility to its citizens. All of a sudden, the disruptors were allowed to accept street hails and prearrangement, which took a significant chunk of business away from both the taxis and the car services. While the taxis and car services played by the rules and were smacked by the regulators when they violated the rules, the disruptors were permitted to operate unlawfully and with impunity.

The City of New York used the taxi monopoly for its own benefit for decades and now has essentially abandoned the transitional for hire vehicle industry. When the “disruptors” came to town, some were not daunted and did not see the need to innovate. Also, they did not see nor could they comprehend that an evil empire had come to town. This was a huge mistake. The black car industry enabled the disruptors and the TLC allowed them to operate outside of the law for so long that by the time everyone woke up, it was too late.

We are now at the point where most in the for hire vehicle industry have begun to lose faith that anyone or anything can help them. By its very nature, monopolies tend to arrest progress. In the beginning, when the taxis reigned supreme, the City of New York standardized the prices and the products, but in the process, in order to retain that standard, the City arrested efficiency and progress…and that itself stagnated the industry and prevented it from growing and innovating.

Very often, a business grows in efficiency as it grows from a small business to a large business; but there is a unit of greatest efficiency in every business that may be too large to be efficient. The profits of a monopoly are not due in the main to efficiency, but are due to the control of the market. The ratio of profit ordinarily is in direct relation to the ratio of control. Where a company has a high degree of control, the profits are great; where they had a small degree of control, the profits are small.

When is the City of New York going to learn the fact that the effect of a monopoly is the arresting of progress and the arresting of advance in industry. It should have learned this with the taxi industry, but now it is doing the same thing with the “disruptors”. The City of New York is perpetuating another monopoly. The City and its regulatory regime is on the wrong path right now and unless they change course, a great for hire transportation infrastructure for the future is unattainable.

A practice is unreasonable if it tends to destroy competition. And we know now what the main practices are which have been pursued by the “disruptors” to secure the monopoly-control of our industry. They are cut-throat competition, espionage, doing business as fake independents, the making of exclusive contracts, as well as many other methods and practices of unfair trade which have been pursued not for the purpose of conducting a business in competition with others, but for the purpose of killing competitors. Again, we have found grave defects in our regulatory machinery.

Personally, I would like to restore competition and do away with the conditions that make for monopoly. But the regulators of the City’s taxi and limousine industry are blinded. The “disruptors” have a lack of respect not only for the law, our City and our institutions, but also our citizens themselves. And yet, with this great demand for on demand transportation staring us in the face, we need to be calling upon everyone we can to do everything we can to bring the “disruptors” back to a respect for law and to convince the regulators to deregulate the industry. This is to prevent another monopoly and for the benefit of all. We are seeing that if we follow the current path, a few rich and powerful people can defy the law; that their power is so great that there will be private monopoly and we cannot prevent it; and that, therefore, if such is the case, we must content ourselves with seeking to mitigate the evil. Respect for the law must be supreme, but the great question involves question more fundamental. For generations immigrants came to this City seeking and obtaining the job of a taxi driver. This used to act as a gateway to the American Dream and the ownership of a medallion was the gateway to riches. Now, it’s the gateway to hell and destruction.

If this opportunity is no longer available and this is no longer the land of opportunity, then what does America stands for. Our whole regulatory system of the industry is for naught. What does democracy involve? Not merely political and religious liberty, but industrial liberty also. Is not business today one of the greatest part of life? What America needs is not the combination of power in the hands of a few, but to keep open the path of opportunity to enable the industry to do for themselves. The current regulatory regime is not merely a capitalistic control of the industry. It is the worst form of capitalistic control. It is absentee capitalistic control. The responsibility and sensibility of regulation is lacking. If there had been responsibility of regulation in the industry, then we would all not be witnessing destruction of the minority based community car services in all 5 boroughs of NYC. 

Permissionless Innovation in the FHV Industry in NYC

While Uber may have come up with a fantastic app, their business model of dispatch (i.e. closest car) is hardly novel. Their superior technology allowed them to hit the industry hard when its back was turned. The problem is that the main players in the industry are now, after having been hit hard, looking for solutions in the traditional mode. The problem is that we are well past the traditional means of solving issues in the industry.

The days of having the leaders of the industry sit down and work things out are over. If Uber showed us anything it surely was that new updated ways of thinking are necessary in this day in age and at this stage of the game.

Immediate, massive Uber adoption allowed them to flout the laws/regulations all while gaining PR at an unprecedented pace….and remember….all PR is good PR. .” In a short period of time, enough people started using the regulation-flouting service which made it both impractical and politically unpopular to crack down upon. Ask NYC Mayor Deblasio who he supported when he was the Public Advocate. When it came time to stand up to Uber, our Mayor backed off.

When confronted with legal obstacles, such as tickets for operating illegally at Newark Airport, Uber utilized its massive checkbook to circumvent any problems by paying the fines incurred by its drivers and fighting their court cases. In the meantime, the company lobbies politicians, and of course, their massive pockets go a long way to obtaining time with leading politicians who are all tool happy to take their money to help in their re-election campaign……and in the meantime, most of the public are oblivious as to what Uber is doing….doing to its drivers, doing to the industry, doing to their own safety….but in the end, then win over unwitting consumer. In every instance thus far the NYC Taxi and Limousine Commission relented and brought Uber’s practices within the four corners of the law.

In nearly every city it’s entered, Uber’s strategy has succeeded with far-reaching consequences. By muscling into urban center after urban center, Uber hasn’t just changed how people work and get around. It’s transformed what it means to be a consumer..

Uber’s strategy is called “permissionless innovation”. It is the idea that we should make just about everything legal and let the individualized choices of consumers dictate the shape of society…..and when people get hurt, lawyers, laws and lawsuits can try to retroactively sort things out. I believe that experimentation and innovation with new technologies should generally be encouraged, but not without any limitation. Before Uber came along, the for-hire vehicle industry in NYC was vibrant. Yes, the yellow taxis needed to become more responsive to the needs of consumers and the car services needed a bit of a kick in the butt to get them to innovate a bit, but at least they played by the rules. Unless a compelling case can be made that a new invention will not bring serious harm to society, innovation should not be allowed to continue unabated and just wait to address the problems when they occur at a later point in time.

Generally, permissionless innovation means a start-up is allowed to break the law so they can give consumers what they want. Regulation sure shackles entrepreneurialism, but regulation is mostly in place for a reason. It is the job of the government to look after the health, safety and welfare of its citizens…and hopefully to regulate in a fair manner. It is not laws that corrupt people, such as politicians. It is money that corrupts people. Money corrupts politicians, eventually corrupts the process and in the end causes more harm than good.

What is Uber today if not the biggest lawbreaker in the world. Uber’s lawbreaking is unprecedented in the transportation industry. Uber’s open defiance of municipal law sets it apart from others Permissionless innovation is just another way of saying “it’s easier to ask forgiveness than permission”…and for every rule that Uber breaks, the NYC TLC seems all too happy to forgive Uber. Permissionless innovation suggests that the correct order for dramatic technological changes should be first harm, then fix. Perhaps the resolution is to totally deregulate and let the consumer make their choice.

Uber pitted regulators in NYC between the existing regulatory system and the desire of thousands of consumers to utilize a new service. Some permissionless innovation proponents equate consumer choice with democracy. Every purchase of the services of a Uber driver is akin to a vote for a product, it service and its business model. Yet, what is good for consumers is not always good for the public on the whole. Tensions between workers’ interests and consumers’ interests often collide. Even more than that, workers and consumers enjoy fundamentally different levels of power under capitalism. Most workers cannot choose between competing employers the way a shopper chooses which TV to buy. Millions of workers cannot even find employment. Uber claims to be a creator of jobs, but its recent entry to the creation of the driverless vehicle proves that Uber is not looking to create jobs, but is looking to use drivers to roll out their product to the consumer and when the driverless vehicle comes into being, to drop those drivers like a bad habit.

Uber benefits from and exacerbates the precarious situation between worker and consumer by drawing many of its drivers from the ranks of the unemployed and/or underemployed— and then completing the circle of death by classifying them as independent contractors. But misclassifying its drivers as independent contractors is not what sets Uber apart from the others. What’s different is Uber’s unconcealed contempt for the rules set out by citizens’ elected representatives. Therein lies the danger. You don’t have to regard monopolistic taxi laws as democracy incarnate to recognize the threat Uber poses to basic norms of popular governance.

Permissionless innovation has produced a world where a paying customer justifies any and all business practices, where certain laws— like the minimum wage and overtime pay — is entirely warranted if the market deems them unnecessary. But citizens are not synonymous with consumers. Consumers act according to different imperatives, and in ways that often undermine the rights of workers. And if you confer on them supreme power — sidestepping the ballot box and other forms of democratic control — you create a reactionary new order.

Personally, I am OK with deregulation of the FHV industry and letting he market decide for itself what it wants, but then don’t come crying to me when someone gets hurt or a workers is paid less than the minimum wage…..or for that matter don’t go running to your local politician for help because they usually do more harm than good. Finally, don’t go running to the courts when you feel you have been wronged. In the civil justice system, justice is like beauty, as it is often in the eye of the beholder.

I am all for getting rid of the regulators and letting the FHV industry fight it out amongst themselves. Let the strong survive or let the meek inherit the earth. Regulators serve only one purpose and that is to create more regulations. This does not help the situation, especially in NYC. We don’t need more regulations. We need the ability to compete on the merits without politicians and regulators telling us what to do. The NYC TLC has shown its contempt for competition on the merits. If they had any respect for the rule of law, Uber would have had its license pulled years ago.

In the end, the consumer wants Uber…of simply Uber-like service. So then let the public have what it wants, but there will be consequences and I believe the politicians and regulators in NYC, a liberal state, will simply not allow this to happen. Politics in NYC has largely been corrupt since the beginning of time. Uber has adeptly taken advantage of the loopholes in the law and the regulators have turned a blind eye.

So where does that leave us after my long rant…….Fair competition is the key to a healthy market. The regulators and politicians either cannot allow it or will not help maintain it……since all else has failed thus far, why not let the market be deregulated for a period, let consumers choose and suffer whatever consequences may come their way from their choice of providers/suppliers…… and let innovation reign supreme…..but in the meantime, get the regulators off our backs or at least put on a show and act like they are truly seeking to maintain a fair and open marketplace. Until, we put the brakes on all of this, the consequences of the Uber disruption will be felt for generations to come. If it is good, then our children and our grandchildren will benefit. If it is bad, then we have ourselves to blame for not taking a minute to put the brakes on innovation and growth of the for FHV transportation marketplace. The stakes are very high for all involved, but for the moment very few people are looking at the big picture. Ask yourself the hard questions, look at each point of view, consider what is best not just for yourself, but for society in general…and then you may begin to wonder, is permissionless innovation a good thing that should continue unabated…or should we take a minute to stop and consider the long term ramifications. 

Uber the Monopolist- What Happens When Uber is the Only Game in Town?

Nearly everyone who uses Uber is impressed by this transportation service. In many cases it makes transportation within urban and suburban areas less pricey. Due to the supply of "Uber Drivers", the service is also much more convenient to obtain on demand transportation than it was in the pre-Uber-era dominated by government-regulated taxicabs. Uber may be a boon to consumers (for the moment) and to the drivers (until the self-driving vehicle displaces all the drivers). But there is a much bigger problem that I do not believe the public sees or even fully understands.

Uber is the prime example of creative destruction. In the case of on demand transportation, destroying not only an older, established way of serving consumers but, more importantly of destroying the government-granted monopoly of the taxi medallion. The taxi industry sat on its fat ass for so long that it had zero incentive to innovate. They relied 100% on what they believe to be a government backed privilege that would never be destroyed....that is until the government didn’t really back it anymore because something better came along. While this is very short sighted on the part of the government that sells these medallions, the fact remains that the government let it happen. Worse of all, the NYC Taxi and Limousine Commission continues to let it happen by allowing Uber to operate outside the law.

Uber is a true monopolist partially because its success involves destroying the medallion and the independent car service companies that have traditionally served the markets. Entry restrictions and other government-granted privileges that use to protect traditional taxicab owners from competition is now long gone. While Uber likely could have passed any restrictions to entry, had it chosen to do it the proper way, the problem is that they chose to do so in an improper and underhanded fashion. The key here is not that they entered in a destructive manner, but that they did so in an illegal and unfair manner. A technology company my ass. They are partially technology and partially transportation. But the fact of the matter remains that they entered the market and the government regulators took so long to get on the ball that by the time they did, it was too late. When the regulators finally woke up, Uber was already here to stay. So the government could only say to them "fine...you can stay so long as you submit to our regulations". By then, it didn’t matter, Uber was already a powerhouse. So much for the government protecting the small businesses that have served as the backbone of our neighborhoods for decades. Most of all, so much for the government requiring businesses to follow the rule of law. Uber broke the law (and continues to do so) and is either granted absolution by the NYC Taxi and Limousine Commission or they simply continue without any repercussions.

A monopoly in an of itself is not wrong or illegal. But an entity that becomes a monopoly by engaging in illegal anti-competitive behavior is an illegal monopoly. Using new technology to destroy a long-entrenched monopoly is not itself a lamentable, monopolizing development. Using aggressive tactics to obtain drivers and customers is also not improper. The ultimate problem is that for Uber to succeed, it must destroy all the competition. Uber can’t leverage anything if it’s just one of several competing ride-sharing apps. That’s why the company must behave so aggressively. Again, aggressive tactics are fine, but the law specifically prohibits certain exclusionary or predatory conduct because it is anti-competitive. Such anti-competitive conduct comes in many forms. Exclusionary conduct has been defined as conduct, other than competition on the merits or restraints reasonably necessary to maintain competition on the merits

Uber's actions and conduct is not just aggressive, but it is clearly exclusionary and predatory. Pick your poison.....Uber has engaged in Predatory Pricing, Predatory Bidding, Predatory Affiliation, violated the Federal Trade Commission Act (FTC Act) (15 USC 45) that prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce".....and most of all, we all know that Uber has intentionally engaged in Misclassification of Drivers for the Purpose of Gaining an Unfair Advantage.

Of course any company worth the weight of its corporate charter wants as large a market share as it can possibly achieve and will act aggressively in pursuit of that as-large-as-possible market share. That’s what competition is supposed to incite companies to do. Competition is good. Competition is healthy for the market and for the consumer. Competition, in the case of Uber, has required the traditional taxis and car services to find new ways to gain customers and to WOW them with their customer service. This was a well needed kick in the ass. BUT...the main point is that the law does not protect competitors, but seeks to protect competition itself.  Competition on some basis other than the merits or any conduct by an entity that secures market share by means other than the competitive merits of a specific service is anticompetitive and illegal. this is the essence of Uber.....illegal anticompetitive conduct.

The purpose of antitrust laws is to protect free enterprise and consumers. What if there were only one grocery store in your community? What if you could buy a phone from only one retailer? What if only one dealer in your area sold cars?  Without competition, the grocer may have no incentive to lower prices. The phone shop may have no reason to offer a range of choices. The car dealer may have no motivation to keep its showroom open at convenient hours or offer competitive financing. Competition in America is about price, selection, and service. It benefits consumers by keeping prices low and the quality and choice of goods and services high. Competition also encourages businesses to offer new and better products. Competition makes our economy work. Antitrust laws often have to be used by competitors in order to ensure that our markets are open and free. The law seeks to promote free and open competition and encourages challenges to anticompetitive business practices to make sure that consumers have access to quality goods and services at competitive prices, and that businesses can compete on the merits of their work.

The word “antitrust” dates from the late 1800s, when powerful companies dominated industries, working together as “trusts” to stifle competition. Thus, laws aimed at protecting competition have long been labeled “antitrust.” Fast forward to the 21st century: you hear “antitrust” in news stories about competitors merging or companies conspiring to reduce competition. Antitrust laws often have to be used by competitors and consumers to challenge business practices that could hurt consumers by resulting in higher prices, lower quality, or fewer goods or services.

While the government and its regulatory agencies are supposed to monitor business practices and challenge them when appropriate, the reality is that our government has done nothing to stop Uber and our elected officials are not going to take any corrective action. Thus, we need the industry to “think outside the box”. How ironic is it that one of the most successful monopoly-destroyers of recent years — Uber — is quickly becoming a monopoly itself.

The average consumer may not know it now, but when Uber is the only game in town, what will stop Uber from raising its prices beyond the norm and essentially raping the average consumer with its "surge pricing". The answer is NOTHING. When the competition is gone, Uber will be able to do whatever it wants. Some will say that no one will use the service if it gets too expensive. Remember that Uber changed the rules of the game. People now not only want, but they expect on demand transportation..... and Uber has shown that the consumer is willing to pay for it. When Uber is the only game in town, because they have gone unchecked for so many years, who will stop them then. The time to act is now. Contact me to discuss this matter further.

Driver Distraction - More than Meets the eye

Driver distraction is a real problem facing NYC for-hire transportation market. The number of accidents involving Black Car (a/k/a Uber drivers) is staggering compared to the statistics without them. But the main problem is not just the accidents and injuries caused thereby, but the government's reaction and the  implications to the consumer. First, the NYC TLC just recently instituted new "Driver Fatigue" rules limiting the number of hours a driver can operate. So while the TLC thinks the roads of NYC will be safer with drivers operating less frequently, the TLC also has a rule that permits a driver to accept dispatches from more than one base and to use more than one smartphone/tablet device to obtain dispatches. So according to the TLC, a driver should be limited in the number of hours they work, but it is OK for them to look at 2 different devices while operating their vehicle. Technically they are not supposed to do this, but lets be real. Drivers are doubling up and using two apps to get a dispatch from the first company that offers it. The TLC is blind and dumb if they don't see this. Also, the implications to the consumer are not so obvious, but are equally disturbing. Think about it. A driver can accept a dispatch from Company A and be on route to pick up the customer, and then receive a more lucrative dispatch from Company B (Uber) and simply not pick up customer #1 and leave them stranded in order to pick top customer #2 (the Uber customer). If you are the Uber customer (customer #2), you are not likely to know this or care, but if you are customer #1, then you will be left stranded and without transportation. Or company #1 will send a dispatch to another driver who will accept and perform the job, but will surely be late in picking up customer #1. Whether customer #1 is left stranded or the driver is late, customer #1 will surely be completely disgusted by company #1. Now remember, the driver is an independent contractor, so company #1 can not mandate that the driver pick up customer #1 and as such, when the driver leaves customer #1 stranded, company #1 is left to deal with the unhappy customer who ultimately is late for work or late for a meeting, leaves a nasty review on Yelp or some other social media and makes complaints to company #1 and the TLC. Company #1 is left to deal with the unhappy customer who was left stranded due to no fault of their own. The government regulators, who created this whole mess to begin with by allowing drivers to accept dispatches from multiple base stations, does not even consider the fact that drivers are causing accidents because they are using two different devices to obtain dispatches, all while driveling the vehicle. The effects of an accident from this type of driver distraction is obviously, but the driver that leaves customer #1 stranded to pick up an Uber customer has a more far reaching effect........this causes a total erosion of the good will most of the car services in NYC have built up for decades before Uber was ever born. So the next time you are left stranded without being picked up or the driver is late for a pick up, remember that there is more going on than meets the eye....and also don't forget, remember that Uber has more accidents than any other licensed base than any other in NYC. So if you are customer #2 and don't care about what happened to the customer #1 above, then you better make sure you are strapped in and have good insurance of your own because customer #2 (aka the Uber customer) is more likely to be involved in an accident in an Uber vehicle than any other for-hire vehicle on the road  Keep that in mind when you book your next ride with Uber. 

Federal Judge Rejects Uber's $100M Settlement Offer to Its Drivers

Now it is time for the real game of chicken. Since the Federal District Court Judge overseeing what is likely the biggest labor law case in history has rejected the $100,000,000.00 settlement Uber was going to pay to its drivers, both sides will have to move forward. The stakes are high for the drivers, even higher for the lawyers for Uber and the highest for Uber itself. The drivers have little to lose as most would only get peanuts. The lawyers for Uber agreed to reduce their legal fee from $25,000,000.00 to $10,000,000.00 to push the settlement through. But for Uber, it may be winner take all. Uber may move forward and win simply because the appeals court may not permit the class action to move forward at all, thus killing the case as all drivers would be then forced to arbitration on a case by case basis. On the other hand, if the case moves forward in class action status and Uber loses, the gig economy may be upended, Uber's $65 billion dollar valuation make implode and Uber as we know it may be over. I for one am happy that the case must move forward. The drivers are the client's and they should be zealously represented and not sold out by their lawyers who simply wanted to cash in before the oven got too hot and they were at a severe risk of losing any legal fee they could have earned. As I have written before, I have never seen a case so clear for employee-employer relationship as Uber and its drivers in my 20 years of practicing law. The Judge overseeing the case must agree that the case has great merit, otherwise, the $100M offered would have been a windfall and no judge would have declined to approve such a settlement for a meritless case. Time will tell what happens when the appeals court rules on the class action status (obligation of each driver to go to arbitration as opposed to court) and we will see who blinks first.......the 800 pound Gorilla (Uber) or the lawyers who are now forced to either move the case forward on its merits or to obtain a better and increased monetary settlement from Uber. Grab tour seats because this issue is far from over.