The Taxi in Uber times

The Taxi in Uber times

Leopoldo Mitre – June 8, 2015

Technologies are naturally disruptive: they modify the status quo. The case of Taxis vs. Uber makes me to remember Napster; no matter the Record Companies gained the legal battle they couldn’t prevail.


Mexican hashtags like #UberSeQueda and #UberSeVa have been on fire over the last weeks. They have been all around: in social networks, media and also the blankets that have accompanied the demonstrators of the recent blockades and marches who have upset Mexico City population in the last days. It seemed that the society has been divided in ‘UberFans’ vs. ‘AntiUber’, where both proclaim: “you are with us, or against us”.

In such a polarized debate it is important to understand both points of view and what detonates the problem before taking sides.

First, it is necessary to clarify that Uber is not a pager of free taxis, is a Peer-2-Peer (P2P) commission agent that links the client –who pays a stipulated price- with a driver using the GPS of both, no matter the driver have or not a permission emitted by the state. And here it is where Uber clashes with taxi drivers, who do not see with good eyes that someone takes from them what for concession belongs them. And this without taking in consideration the regulations and fix prices that they have to obey just for being concessionaires.

Now then, when the State grants exclusive permissions generates artificial monopolies that have the purpose to give certainty to the investor on the capital that he or she has to spend. This is clear when the interested parties are small, because they need a lot of specialization or just because investment is difficult to obtain, and the State wants to attract resources to a particular sector. And this one does not seem to be the case of the taxis, a sector that because of a lack of competition have ended giving a bad quality service and they have not worried for the implementation of new technologies.

Technologies are disruptive for nature. From the invention of the wheel up to the appearance of the Internet, the use of a new technology always has modified customs, beliefs, social structures and certainly the status quo. The Technologies of Information and Communication (TIC’s) are not the exception. Its usage and adoption has force the society, markets and governments to evolve. This change, certainly, not always is smooth.

When the established groups perceive a change they resist naturally, especially if it affects their power or economic interests. Nevertheless, if TIC’s have demonstrated something it’s whenever they penetrate in a niche of market is that there is no reverse. So, why to resist trying to support the status quo? Those who deal on this phenomenon know that it is better to bet on regulation, sooner than later, instead of demanding a total prohibition of its usage.

The clash between taxi drivers -in the all the world- and Uber makes me to remember the case of Napster, the P2P service to share files created by Sean Parker and that faced the Record industry when it got a great success had among the teenagers that wanted to share digital music. As Uber now days, at the beginning of the millennium it was not clear if this type of services were legal. In favor there were appearing many voices that were crying out the need to break with the “domination” the Record Companies in order to favor the freedom of the user. Ultimately Napster faced lawsuits for violation of copyrights that ended in a closing of its operations.

No matter the Record Companies gained the legal battle they couldn’t prevail as the status quo. When they ended with the Napster’s war iTunes appeared in the panorama, turning Apple into the player who not only would dominate the sales of the musical industry but it would impose the conditions over the Record Companies. And all because Steve Jobs understood that there was no reverse, that the technological adoption had brought with it a potential enormous market in the digital music. So he decided to launch a service, paying the corresponding copyright, allowing to the consumers to do what they had not could until that day: to unload easily their favourites songs instead of the entire disc, to store them for thousands in a unique device, to accede to the music of the whole world, etc.

In Uber’s case, the debate -as well as as the conclusion- is very interesting. Both decrees have valid arguments and it will be necessary to listen to them thoroughly to find solutions that favour the common good, especially treating itself about a public service. Nevertheless, it seems to me that the winner of this battle will be whom looking for competitiveness sees in the use and utilization of the TIC’s, without despising a correct regulation that would not affect rights of third parties.

On one hand, we have a monopoly that proves to be grieved by the economic affectations on his way of life and that has decided to answer using the muscle of social pressure that has been exercised for years: using marches and blockades they wanted to press the government to take concrete actions to stop the companies that affect his interests. But this monopoly continue despising the advantage of the technologies to improve his service. Such what if instead of demanding Uber’s closing they propose to the authority the implementation of a similar technology that inspires fidelity on the customers? Imagine a great service as Uber but supported by a taxi drivers’ union, interesting isn’t it?

In the other hand, we have a company that has been breaking the law just to offer a service that has a potential market. Invoking a crusade against the monopolies and taking advantage of the usage of technology, they have evaded the existing regulations. The fact of realizing a virtual transaction to feign that they are not a service of public transport is a simulation that violates the law. Why not they better reach an agreement with the authorities to obtain permissions for all their units in exchange for licensing their surge-pricing algorithm? If the law is not adapted to the times it is necessary to change it, but we cannot transgress it only because it goes against our business… or just because we have the money to give free rides to buy loyal customers- if such a thing as a free lunch really exists-.

I am sure that we must not leave the future of the public services, as the taxis are, to the result of the war between this opponents. The State must legislate -and soon- when a new technology appers, to guarantee its usage and utilization in benefit of our basic rights as education, health, safety, free traffic and the well-being of the society. To entrust the service of some of these rights to some companies is valid while the Government could guarantee to all the citizens the correct management of this services.

In this case, those who want a better taxi-cab service must continue pressing the Congressmen in order that they legislate respect of new technologies that already allow it. That is to say, not only to open the regulative frame to allow services as Uber, but also to demand to all taxi drivers the implementation of technologies that enable their competitiveness in order to break all the vices (rights for use a particular site, permissions in exchange for votes, quotas, grafts and insecurity for costumers) that have motivated that a good part of the citizens wanted to say: #UberSeQueda.