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UberCab Ordered to Cease and Desist
Over the weekend UberCab, a startup determined to disrupt the current taxi industry, was ordered by the city of San Francisco to cease and desist all operations:
UberCab Inc. has been issued a cease and desist order from the SF Metro Transit Authority & the Public Utilities Commission of California. While we are looking into the issues raised, we believe that the service we offer is in compliance with the cited regulations.
UberCab is a first to market, cutting edge transportation technology and it must be recognized that the regulations from both city and state regulatory bodies have not been written with these innovations in mind. As such, we are happy to help inform the regulatory bodies on this new generation of technology and work closely with both agencies to ensure compliance and keep our service available for our truly Uber users and their drivers.
Our commitment is to facilitate an improved transportation option that provides safe, reliable, and convenient travel. That will not change. We will continue full speed ahead with the mission of making San Francisco city a great place to live and travel.
This story caught my attention. I am somewhat familiar with how the taxi industry operates and am not at all surprised by this cease and desist order.
Over on Quora, Gil Silberman breaks it down one step further:
Ubercab has described itself as an “on-demand car service”. They appear to be operating a dispatch service without a dispatcher’s license, sending fares to drivers operating as taxis without taxi licenses.
“No person, business, firm, partnership, association or corporation shall drive, or operate or cause to be operated any Motor Vehicle For Hire within the City or [operate a dispatch service] without a permit…”
A taxi, per section 1102(ss), is a licensed vehicle “legally authorized to pick up passengers within the City with or without prearrangement”.
A dispatch service, per section 1102(g), is “any person, business, firm, partnership, association or corporation which holds itself out to the public as a service by or through which taxis may be summoned or dispatched by radio, telephone, or other means of communication.”
There doesn’t seem to be a lot of wriggle room in there. I wonder whether Ubercab has thought this through thoroughly in advance, or is making justifications after the fact after getting caught. The angle would probably be that they’re a private town car service, which is governed by different rules.
However you look at things, whether you agree with the law or not these are regulated industries, and you flaunt rules at your peril. Very occasionally, operating at the margins of the law means you are the first one out of the gate once the laws change.
UberCab (now called “Uber”) must concentrate on bilking themselves as an alternative to using a dispatch service.
In other words, their argument should read:
UberCab != taxi dispatch service
They need to come off as something new and different. Something that does not fit under the current regulation statutes. The city will inevitably want to regulate them (as they should), but I see no reason why UberCab will not be able to live on.
For some added justification, do you really thinking UberCab’s investors would have invested in the company before performing a bit of legal game theory? This one has already been played out in investors’ heads. UberCab lives.
