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Have Your Say: Is the Uber Case a One Off or a Sign of Deeper Divisions?

Have Your Say: Is the Uber Case a One Off or a Sign of Deeper Divisions?

Any city that we go into, we look at the regulatory environment. It’s the very first thing we do. We’re confident that, having looked at the regulatory environment here in Berlin and elsewhere in Germany, we’re able to operate here.

So said Simon Breakwell, previously a co-founder of travel site Expedia and then the head of EMEA for Uber, in an interview with Silicon Allee last year ahead of the car platform’s launch in Berlin.

Well, that’s not going well so far. As you may have heard, the chairman of Berlin’s taxi association was successful in gaining an interim injunction against Uber on Thursday, arguing that it is effectively a rental car rather than taxi business.

It’s not quite ‘Berlin bans Uber’ – Richard Leipold, the chairman in question, is not enforcing the ruling in case it is later overturned and he might be ordered to pay compensation for lost earnings – but it is a blow for the Silicon Valley-based company, which only this week launched its ridesharing service UberPop.

Uber has vowed to fight the decision, while Mr. Leipold was at pains to avoid the case being seen as David vs. Goliath; the plucky disruptive tech newcomer struggling against the established order protecting its turf. According to the Financial Times, he said: “This isn’t a student startup against a big taxi cartel. Uber is backed by Google. If I’m wearing gym shorts I don’t want to compete against someone wearing hobnailed boots.”

In a statement, Uber countered that by claiming that such legal action only served vested interests: “The only thing these companies care for is maintaining the old, blocking the new, preventing more people from having more choice, failing consumers and their own drivers.”

Time will tell whether the ruling is confirmed or not. But it might serve as a warning to new technologies and platforms looking to disrupt established markets and make them more efficient – beware an industry scorned.

Have your say – does this ruling illustrate a wider clash between the old and the new, or is it just a one-off based on this specific market? Comment below.

About David Knight

David is co-founder and Editor-in-Chief of Silicon Allee. Originally from London, he has lived in Berlin for over seven years, having previously worked for news portals including Bild.de and Spiegel Online before helping to found Silicon Allee in 2011.

3 comments

  1. Two obvious mistakes here: One, the argument against Uber is not that it is a rental car company, but that it is running an unlicensed taxi service using rental cars with drivers (so-called livery vehicles). Two, Mr. Leipold cannot enforce the ruling, he is the chairman of an association and has no federal powers.

    On the question whether this is old vs. new, the reason why taxicabs are a regulated business are manifold, and only one of them is to artificially increase prices. The most obvious one is the potential for fraud, the second one incompetence and endangerment of the passenger. In the Uber discussion this has little bearing (assuming that Uber drivers are competent and qualified), since the claim is that Uber decided to start a livery car business but runs it as a taxicab business without the proper licensing. Nothing of this is new, encroachment of livery cars into the taxicab business preceded the internet. (Just for clarification, the main difference between the two is that livery cars are not allowed to pick up passengers but must be booked in advance and must return to their base of operation after finishing a tour.)

    As much as Uber wants to paint this as an old vs new dispute, the reasons for regulating taxicabs have not gone away with the emergence of the internet, smartphones or Uber. The task for Uber is much more to decide if they want to be a livery service or a taxicab service, and to follow the rules of either business.

  2. I don’t think it is an old vs. new issue.
    I think competition has been identified. All measures possible will be taken into account to prevent revenue loss. The service has gone bad and the threat seems real. It sure is no quality issue. It happens so often, that a taxi driver has no clue, wheee he needs to go.
    I hope for Uber, it will work out

  3. There’s always been (protective) incumbents and some (usually younger) companies bending the rules. For the consumer, it would be ideal if there are taxis and (higher-priced) alternatives, with a better standard of service, in the end, that are regulated in a similar, not identical way.

    Regarding the entrants, it is hard to feel sorry for Uber, or also for Airbnb, given the way they are marketed, the financial backing and scale they have, but also, most importantly, given how little they have done proactively.

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