I’ve been open about liking Uber in the past, and devoted ink to writing about its prospects for ridership in a new market, or how it empowered female drivers. The folks in the transportation industry, myself included, have generally liked the regulatory-bashing, market-inefficiency killing style of Uber. My goodwill ended today with news reports that they fought dirty against an upstart, Gett. Yellow card. Uber’s on Transportation Planner notice.
Why Uber Was the White Knight
Economists hate regulatory capture and market inefficiencies, and taxi regulations with taxi medallions being given out in small numbers has always been one of those thorns of inefficiency we love to hate. As Matt Yglesias at Slate constantly points out in his blog over at Slate, the taxi cab system is a ball of idiocy needing some disruption.
In came Uber, a firm outside the transportation world with a tech startup mindset. They came into NYC and other cities, and they fought all sorts of lawsuits and more lawsuits. They never cared, have always been aggressive in new markets, and generally put their thumb in the eye of entrenched cab-license owners who stand to gain from the old system.
The old way of transportation was inefficient, and many of us appreciated a disruptor coming in and showing a new way of doing things. We came to love the idea of app-based car services, sometimes cheaper than a traditional cab, and in doing so upending an inefficient market. There were never too few drivers willing to take rides, only too few licenses to let them do so. Uber opened up the market so there was freedom of entry to drive for any driver who joined Uber.
It’s Not About Uber, its About a New System
The thing about upending the old guard is that it was never about one player or one company doing it. I was never rooting for Uber specifically, but what it represented: a way of disrupting an inefficient market and giving consumers better options. I love the idea than an app can connect me to mobility, on demand, at a reasonable price. I also love the idea that this enables more drivers to enter into the market.
Uber Can’t Be a Monopoly
However, Uber has grown to over 33 cities in North America alone, and became the ubiquitous household name for what it does. How many of you even know of the competition? There’s HailO, Gett, and even Lyft in a sort of way.
The thing about upending an entrenched market is that you can’t then want to become a monopoly yourself. What happens if Uber becomes the only platform of choice for cabs? What if they become the MS Office (or WalMart?!) of taxi app platforms?
You may like the pricing now, and the way UberX prices are really competetive. However, the thing about monopolistic firms is that they will maximize profit and consumers lose. Like WalMart entering new markets, nothing keeps them from flipping the switch after the mom-and-pops were run out of town to change pricing and reap profits.
All companies need competition. That is what a really open and efficient free market is.
Uber’s Transgressions and Hypocrisy
In the little town of New York City came this upstart called Gett. They basically do the exact same thing Uber does, but a bit differently. They don’t use the controversial “surge pricing” that Uber uses, and thus served as a market differentiator.
Great right? If Uber want’s to open up taxi driving to anyone who wants to enter, they should welcome competition in the taxi app platform market.
But they fought dirty in New York, with some vile filth coming from leaders of the firm. Gawker pointed out the dirty tricks they used and it went something like this:
- Step 1: Uber managers and employees make all sorts of fake accounts on Gett.
- Step 2: The Uber employees use said accounts to make all sorts of fake reservations.
- Step 3: Uber employees cancel said reservations to get drivers pissed off at Gett.
- Step 4: Uber employees contact the pissed off drivers to recruit them to Uber.
There were at least 13 employees at Uber engaged in this muckraking, including the head man in NYC, Uber NYC General Manager Josh Mohrer. And yes, the TechCrunch later pointed out that Uber’s nice PR people did the typical thing and blamed it on a few overzealous employees gone too far. I’m not here to let PR people smooth talk their way out of some really sleazy moves.
I call bullshit.
The thing about organizational culture is that things like this don’t happen outside of a culture where leadership is encouraging patterns of behavior. In this case, Uber has been aggressive in its marketing and clearly has a fear of competition. If they didn’t have a fear, then why try and cap Gett at the knees?
I love the idea of taxi app platforms, and I love competition. Let competition thrive and consumers win.
Uber is on Transportation Planner Notice
Uber, sorry, we’ve been friends for a long while, but I’m pulling a yellow card here. You’re on notice. I will blog and tweet the hell out of it if I here about your people doing crap like this again. Oh, and I’m definitely using HailO and Lyft for a while when I’m in DC.