Regulating Ridesharing

The pink moustaches that adorn Lyft vehicles are now ubiquitous throughout New York City, and it’s become increasingly more common these days to hear “I’ll just Uber it there” than “I’ll cab it.” Uber, Lyft, Gett, and other “ridesharing” services allow customers to request rides, see driver ratings, track vehicles, and pay- all through a smartphone application. Over the past five years, these services have becomes a major disruptive technology with the potential to disrupt the status quo, alter the way people live and work, and rearrange value pools as was the case with iTunes and Spotify. Uber, for instance, is now valued at more than 15 billion dollars; However, like other forms of disruptive technologies, these ridesharing devices are facing potentially prohibitory legal issues in the US, the UK, Germany, India, and other countries across the world.

The regulatory issues are the result of the laws that developed decades ago. For instance, the Hackney Carriage Unit, founded in 1854, licenses taxis and cabs in Boston under the authority of Acts of 1930. A major problem is that existing laws will favor the entities that led to the manifestation of the laws in the first place- no matter how possibly archaic these laws may be. These ridesharing services are therefore often only able to exist through legal loopholes. As a result, the bias towards the existing industries and services results in the government’s major role as one of stabilization. However, almost by definition, disruptive products are ones that are significantly better than existing ones. The market will dictate that these products are the ones that will ultimately win out, one way or another. Therefore, prohibition of ridesharing services solely because they are prearranged rides or because they result in a supposed unjustified refusal of rides simply do not make sense. In fact, those who complain about the nature of a potentially “two-tiered system” between these services and cabs will note that a two-tiered system that already exists: those who can afford cab rides and those who cannot.

These ridesharing services certainly have existing problems, some of which stem from their basic elements (such as limited background checks and a lack of centralized liability). These issues include ones where drivers have kidnapped passengers, assaulted them, and sexually harassed them. Therefore, governments and municipalities should focus on solving the issues that will have a tangible effect: better background checks and developing styles of insurance that can allow the services to maintain their competitive advantages while keeping riders safe. After that point, we should let the market dictate the future of transportation options, not existing laws and industries.

Uber, Lyft, Gett, and all the others are likely here to stay. Though originally banned from New York City, Lyft managed to find itself back in the city only a few months later. However, attempting to impose regulations borne of an age bygone will result in more harm than good. Union strikes only aid Uber in its ability to gain market share, while protests that turn violent help no one. More importantly, however, Uber and Lyft will simply find more and more loopholes to aid their growth. The industry, with its substantial demand, would better for society if it evolved by working with the appropriate regulatory bodies, not by finding clever ways to continually skirt laws. Ultimately, an unsatisfying approach to resolving these legal issues and regulating the evolving ridesharing industry will have only one loser: not the services themselves, not the taxis and cabs, but the passengers of both of these services.

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