[themagician]

This is not unique to Uber. It's a trend.

Step 1: Find a regulated industry (taxi, hotel, liquor, etc.)

Step 2: Create an app and label yourself as being part of the "sharing economy" that is disrupting the industry

Step 3: Completely ignore all regulation

Step 4: Profit — largely because you don't have to pay for licensing, insurance, etc. while everyone else in the industry you are trying to disrupt does

[HappyTypist]

That's not true. Uber is paying for insurance for all drivers while in a ride. Furthermore, why is licensing needed? You know a $40 billion company wouldn't be a scam.

I see companies like Uber disrupting the industry by removing inefficiency. Licensing, medallions, appeasing public bureaucrats, etc are inefficiencies. That's not to say that regulation is inherently bad, but we need to let new industries grow and see its challenges first -- instead of applying outdated concepts (like medallions, licensing) to new technology.

For example: USPS, by law, has a monopoly on mail delivery. Just imagine if USPS banned all e-mail providers and forced you to use your @usps.com inbox. Is this a net benefit? Is the taxi industry banning all ridesharing apps and forcing you to use taxis a net benefit?

[themagician]

They pay for some additional insurance. They don't require drivers to carry commercial insurance. They don't require drivers to get passenger carrier permits. They don't really have to follow or comply with any of the other regulations imposed by the CPUC or things that plague the taxi and limo industry.

All of these things have costs. Uber didn't remove the inefficiencies from the system, they just ignored the laws that cause them. I too can remove "inefficiencies" from my bottom line by not paying my taxes, right?

I love Uber. I love that's it's on demand. I love that it's cheaper. But if you recall the time before UberX—when their was only black car service and all drivers had to have Passenger Carrier Permits, commercial insurance, and comply with CPUC rules and regulations—it WASN'T cheaper. The minimum was $15 a ride. SF to Sausalito was $80.

Uber started with a great premium service that was compliant with the law and fixed a real problem. Uber expanded by saying, "We need to grow. Fast. The law no longer applies to us."

[superuser2]

>They don't require drivers to get passenger carrier permits. They don't really have to follow or comply with any of the other regulations imposed by the CPUC or things that plague the taxi and limo industry.

Uber enforces the paperwork requirements of each (product type, geofence) permutation. Why would it require something like a Passenger Carrier Permit, if local law does not require it?

If you RTFA, you'll notice that the issue is failure to hand over trip data and GPS logs. Regualators allegedly want them to make sure disabled people and people with service animals are not discriminated against, but I'd be stunned if that's all the data was used for once it fell into government hands.

[HappyTypist]

Uber doesn't require drivers to carry commercial insurance, because they already provide commercial insurance.

    Uber maintains commercial automobile insurance that covers U.S. partner drivers that operate under the “Ridesharing” or “Transportation Network Company” (“TNC”) model through Uber’s TNC subsidiaries, Rasier LLC and its affiliates.(1)

http://newsroom.uber.com/2015/01/certificates-of-insurance-u...

Most of us sees a purpose in paying tax. But, say example, you made an app that files your taxes just like an agent. You could call it TurboTax and sell it, and save $100s of dollars for tax filers. You provide insurance so that if your app does something wrong, you will reimburse people who get penalised.

[FireBeyond]

I think it's disingenuous (of Uber, not you) to tout this and -not- note that it's third-party and UI/UM only.

[themagician]

Yeah, they provide this now, after getting slapped. And even still it has gaps.

The point is, the law has always been: if you drive commercially, you need commercial insurance. This is what keeps most people from driving commercially.

[Anechoic]

You know a $40 billion company wouldn't be a scam.

Bernie Madoff's investors would disagree.

[HappyTypist]

In Madoff's case, he passed SEC audits, licensing requirements, etc with flying colours.

Licensing primarily works by raising the barrier to entry, discouraging 'bad actors' from signing up because society-wise, 'bad actors' are more distributed among poorer demographics and are unable to afford licensing.

[FireBeyond]

Not overly so. He did in some cases. In others, the SEC had plenty of warnings, concerns, but chose not to act on them (which is a different issue entirely - 'why not?').

[s73v3r]

Lack of resources.

[meatysnapper]

Nearly everybody thought Madoff had a serious insider trading scam going on, but everybody wanted to get in on it so they ignored the red flags.

[FireBeyond]

User's insurance isn't particularly great.

For one, they make no mention of requiring commercial vehicle insurance (https://www.uber.com/driver-jobs) and say that drivers only need personal vehicle insurance.

They have contingent liability injury insurance with a total available of $100K.

They talk of having commercial insurance during trips, but it is only third party liability and UI/UM. If you're a passenger in an Uber accident and insurers decline to cover when they become aware the vehicle was driven commercially, you're out of luck.

[colechristensen]

Licensing holds people to standards. Uber might not be a scam, but what if I want to create Cole's Driver Service? With that logic what stops me and a million other scammers from creating shady unregulated taxi services?

[icebraining]

You can create a service, that doesn't mean anyone will use it. And you don't need a license to get arrested and convicted if you do something illegal.

Of course, that requires you to commit a crime first, but it's not like the licenses prevent you from doing so.

And even then, The overwhelming majority of cabbies who killed and maimed passengers and pedestrians in the past five years are back behind the wheel. Of 16 fatal or serious crashes since 2009 examined by The Post, only two of the drivers had their licenses revoked, according to a review based on a Freedom of Information Act request.

http://nypost.com/2014/02/09/cabbies-who-kill-or-maim-in-nyc...

[FireBeyond]

"You know a $40 billion company wouldn't be a scam."

Licensing isn't just 'we are not a scam' any more than a "site seal" on a website means anything.

Plenty of companies with valuations in the 8 and 9 digit range have a history of doing dubious things up to and including things that have been known to cost lives.

Licensing doesn't prevent that. But does help with some of the things needed to minimize. Uber just "opted" out of "inefficient regulation".

[s73v3r]

"You know a $40 billion company wouldn't be a scam."

How much was Bernie Madoff's fund worth when he was arrested?

[SilasX]

I agree that Uber has ignored some regulation that has a legitimate public-interest justification [1]. But what complicates the issue is regulation has also failed to keep up with technology: for example, it doesn't make much sense to mandate taxi meters when GPS do it better, or to have a phone system for complaints when an app has much more data and a better complaint response time and satisfaction.

So Uber has provided significant positive sum gains on top of whatever negative externalities they've thrown off, which makes it much harder to claim that this is a case of merely avoiding regulations others have to follow. Taxi companies could have done all of positive-sum things Uber did [2], but didn't.

So I don't think that narrative fits the situation, or at least, can't account for than 1/3 of Uber's appeal.

[1] specifically, some insurable events that are generally accepted to be the company's responsibility to cover and not the driver's.

[2] easy-to-use app, removing the tipping dance, clean cars, mutual rating, quick action on complaints, reliable follow-up when a ride is requested, pooling rides, cashless transactions, etc

[danieltillett]

Are we sure uber has achieved step 4? I would think it is more like:

Step 4: Find a sucker to dump the whole company on before the law catches up and walk off into the sunset.