Advancements in technology have allowed entrepreneurs to experiment with radical new ideas that wouldn’t have been possible even a few years ago. However, often these innovations end up disrupting established businesses that have operated the same way for years. The latest example of this phenomenon can be seen with the new wave of “ridesharing” companies like Uber, Lyft and Sidecar. Although these startups have made a splash with young, tech-enabled consumers, taxi companies and local governments don’t share the same enthusiasm.
For the past three years, people in cities like Seattle and Los Angeles have used ridesharing to avoid costly cab fares and unreliable drivers. After all, hailing an Uber car takes only a few taps on a smartphone and can cost significantly less than hiring a taxi. That’s because the company’s pricing model shifts with demand, leading to smaller fares when drivers aren’t as busy. Other ridesharing startups don’t technically charge fares at all. The San Francisco-based Lyft only asks that passengers leave a “donation” for a ride in the company’s pink mustachioed cars. The company weeds out the welchers by blacklisting riders who leave nothing.
With payment methods and driver qualifications varying at each company, the burgeoning rideshare industry has been notoriously difficult to regulate. This stands in stark contrast to the taxi business, where strict licensing rules leave nothing to the imagination. Angry cabbies have criticized municipal governments for playing favorites with startups rather than standing by professional drivers. However, many local lawmakers are taking a stand against ridesharing companies. Seattle’s city council recently voted to limit the amount of cars deployed by rideshare services to just 150 vehicles at a time. Meanwhile, Georgia is contemplating charging companies a fee to operate within the state. Uber and Lyft recently expanded their insurance coverage in an effort to stave off regulation, but lawmakers are likely to start devising rules for ride sharers sooner or later.
- Should ride sharing companies be subject to government regulations?
- Is it fair that ride sharing companies prices are much lower than cabs?
Source: Maya Rhodan, “Hack Attacks,” Time, March 31, 2014. Photo by Alfredo Mendez.