With 12m users world wide every week, it seems like nothing can stop the rise of Uber
If you live in London, you will spend a few days next month in spectacular gridlock. Unless the Transport for London authorities do something fairly quickly, the entire city will grind to a sweaty, stalling, road-raged halt normally reserved for the Arc de Triomphe, because every single cab in the city will have evenly spaced themselves and come to a total standstill. The target of their protest is Uber, the taxi-hailing app dreamt up by tech entrepreneur Travis Kalanick. Every digital entrepreneur dreams of radically changing a market, but Uber, with it’s five-star ratings from customers at Apple and Google, generally-loathed status by taxi unions and local authorities, and successful establishment in 110 cities around the world has set a new bar- and now, may have gone too far.
The taxi driver’s beef is pretty straightforward. Uber, the Licensed Taxi Drivers’ Association claim, is in fact a cab company. You may have thought so too, but oh no. In a scheme apparently devised by the same people who say peanuts aren’t nuts and pandas aren’t bears, Uber, as uber.com explains “is a business connecting riders with drivers”. The cars, which come in several types, aren’t owned by the company. The drivers- sorry, “partners”- are approved by Uber, and supplied with equipment by Uber, but are technically self-employed and own their own vehicles, though since they aren’t licensed as public cabs, they can’t pick up passengers outside the digital hailing system- an important distinction from competitors like Hailo, which works as an add-on for an already-licensed taxi or mini-cab driver. Incidently, Hailo have received a share of the taxi-driver’s wrath this week too, with the app’s London office being attacked and the word ‘scabs’ graffitied across the walls.
All of this has important implications for Uber’s long-term strategy, which might be brilliant and might be illegal. In the case of London, cars with taxi meters are considered taxis, but Transport for London says that Uber’s time-and-distance-measuring machines aren’t taxi meters, because they are not physically connected to the cars- most other cities have similar restrictions in place. Taxi drivers around the world say that’s a rubbish argument. Customers say the service is better, the wait times are shorter, the drivers are less weird and the cabs are clean, all of which sum to over $200 million in estimated revenue for 2014. The Google juggernaut (which at this point, is clearly intent on world domination) is siding with the customers. Google acquired Uber last year for $258 million, estimating it’s long-term value at £3.5 billion, comparable to the most valuable privately owned tech companies like AirBnB, Square, and Spotify.
Google acquired Uber last year for $258 million, estimating it’s long-term value at £3.5 billion
Travis Kalanick, Uber’s chief executive, said in a blogpost that the proceeds would allow the San Francisco-based company to “expand into new markets, begin marketing efforts, and fight off protectionist, anti-competitive efforts”. Mr Kalanick also explained that Google provided complementary technology such as maps, self-driving cars and its Android mobile platforms. “Once you deliver a town car in five minutes you can deliver almost anything,” Mr Kalanick told the FT in an interview last year. “Right now we are focused on transportation. I call it an urban logistics fabric.” In short, they’re thinking way beyond just taxis. After experimenting with one-off deliveries of ice cream, manicures, Mexican food or Valentine’s day gifts, Uber may be able to use its large network of vehicles and drivers to offer new kinds of services. Over the July 4 holiday this year, its app even offered $3,000 helicopter rides between New York and the Hamptons.
Even more excitingly, Google, Tesla, and Uber could team up for the autonomous taxis of the future. Google drops $258 million on Uber and promptly makes a public statement promising self-driving cars in four years, coincidence? Tesla CEO Elon Musk (great name) has spoken with Google CEO about incorporating self-drive technology into Tesla’s future cars. This sounds like a recipe for the driverless cabs of the future, although no self-drive car has yet gotten around a roundabout, so it may be a while before they arrive in the UK. Battery-electric cars would make great taxis – fewer moving parts than a combustion engine dropping maintenance costs, alongside obvious advantages of reducing noise and emissions, as well as low fuel costs. Google could easily acquire both and turn the whole thing into a very profitable app. Musk’s goal has always been to transform the nature of transport. This could do just that.
The Licensed Taxi Driver’s Association, alongside London’s minicab union, remain sceptical. They’ve hired top PR agency Fleischman-Hillard to help convince the public that so-called ‘cowboy cab apps’ need to be regulated as strictly as cabs and minicabs, so as not to pose a threat to public safety. Uber faces a class-action lawsuit from American drivers over its tipping policy- tipping is actively discouraged by the company itself and the app, although their website claims that “a 20% gratuity is added for your driver by default.” Resistance in Washington was so fierce that a filmmaker made a documentary called The Uber Wars. Uber is also facing, or has faced, bans, restrictions, court cases or protests of some kind in Brussels, Paris, Berlin, Houston, Portland, New Orleans, Seattle, Miami, New York, San Francisco, Chicago, Washington DC, Vancouver and Toronto. In Paris an Uber car, with passengers inside, was violently attacked by a taxi driver.
It’s time, it seems for Uber to play politics, which Travis Kalinick, a self-described “disruptive influence” seems to be no good at. Revolutionizing urban infrastructure can’t happen over night, and cash-strapped local councils have an interest in gathering maximum revenue, so the next year may prove to be an interesting and uncertain time for the company in cities such as London. Uber has vision, ability, and since it’s acquisition by Google, a steady amount of cash, but it’ll be a test of digital integration to see how well Kalinick’s long-term vision holds up, and it’s commercial success will rest, ultimately, on convincing the general public and authorities of sound business practice. Watch this space.