Taxi Dancing around the Question of Regulation
Uber is a ridesharing service introduced in San Francisco in2009 and quickly expanded to 140 U.S. cities and 40 foreigncountries. Customers “e-hail” a ride through an app on theirsmartphone and a ride is there within minutes. The service ischeaper than a typical taxi and there is no cash involved as thecharges come straight from the customer’s credit card. The servicehas its detractors, including cab services and some dissatisfiedcustomers.
Management Update: Add drivers to the list of possible Uberdetractors. In September 2015, a California judge grantedclass-action status to an employee status lawsuit filed against thecompany. The suit is open to all Uber drivers in California. Thelawsuit claims Uber misclassified its employees as contractworkers. It alleges Uber treats drivers like employees withoutproviding the requisite benefits. Uber plans to appeal the decisionsaying there really is no “typical” driver, the key question atissue. If the suit is successful, it could mean the end of Uber
“Innovation and regulation simply don’t work together.” So saysLarry Downes, the victim of the cab ride described at the outset ofthe case and formerly of the Northwestern University School of Lawand the University of California-Berkeley’s Haas School ofBusiness. Assuming that he’s right, why is this so? Why isregulation often incompatible with innovation? Why do we regulatemost industries in the first place? In your opinion, what sort oftradeoffs should we seek when we try to balance the opposingadvantages of regulation and innovation?
