Monthly Archives: February 2016

The secret strategy behind the Uber invasion of Canada

File illustration picture showing the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. A Frankfurt court earlier this month instituted a temporary injunction against Uber from offering car-sharing services across Germany. San Francisco-based Uber, which allows users to summon taxi-like services on their smartphones, offers two main services, Uber, its classic low-cost, limousine pick-up service, and Uberpop, a newer ride-sharing service, which connects private drivers to passengers - an established practice in Germany that nonetheless operates in a legal grey area of rules governing commercial transportation. REUTERS/Kai Pfaffenbach/Files (GERMANY - Tags: BUSINESS EMPLOYMENT CRIME LAW TRANSPORT)

Even though Uber is competing for the exact same passenger dollars as the rest of the taxi industry, Uber wants to play by its own rules when it comes to fares, insurance, and licensing fees. Uber even objects to being subject to the same background checks on its drivers as the rest of the taxi industry.

This is the second of  four Canada Fact Check articles on Uber’s entry into Canada.

The main argument in Part 1 was that Uber’s flagship UberX service is unambiguously illegal in most cities in Canada because the law considers UberX a taxi service and Uber refuses to apply for a taxi licence. And it doesn’t apply for a taxi license for its UberX service for the simple reason that it does not want its UberX service to operate under the same rules as the rest of the taxi industry and incur the same licencing fee, insurance, and consumer safety costs that the rest of the industry pays. In other words, while Uber is competing for the exact same passenger dollars as the rest of the taxi industry, Uber wants to play by its own rules when it comes to fares and industry regulatory costs.

But Uber also knows that sooner or later the fact that its UberX service is operating illegally is going to catch up with it. In other words, it knows that UberX eventually has to operate under some sort of government sanctioned regulatory regime in Canada. And that’s why, long-term, it needs to have Canadian licensing jurisdictions implement separate sets of taxi rules tailored to its business model. Not tailored to its “innovative” technology as Uber and some of its boosters might claim, mind you, but tailored to the way Uber maximizes its profits.

To accomplish this, Uber has written its own taxi rules and hired well connected, high powered lobbyists with close ties to politicians such as Toronto’s Mayor Tory, to shop Uber written rules around to key Canadian licensing jurisdictions. And Edmonton is the first major Canadian city to make the Uber authored rules law.

To summarize: at the heart of Uber’s global business strategy is a political strategy. Because Uber doesn’t have the business smarts to compete with established taxi companies under existing industry rules, it has to operate either illegally or pressure local licensing authorities to create a separate set of taxi rules for its main service – UberX – to operate under. Continue reading

Why Uber is Bad For Canada

16-02-02 uber

Taxi drivers in cities across Canada have taken to the streets to pressure municipalities to enforce existing taxi industry regulations in the face of the Uber challenge.

Just over five years after it began offering rides in San Francisco, the Uber passenger service now operates in 342 cities spread across more than 60 countries. It retains some 327,000 freelance drivers in the U.S. and hundreds of thousands more around the world. In Uber’s most recent round of financing, investors assigned it a value of $51 billion—a milestone it reached faster than Facebook had before it. According to a recent report by Reuters, Uber has told prospective investors that it will reach $10.8 billion in global ride payments in 2015—giving it $2 billion in revenue when it takes its 20% cut. It projected those numbers, the Reuters report says, to more than double to $26.12 billion this year.

While it primarily offers car rides today, Uber is aiming to be much more. With its UberRush service, the company has experimented with delivery. Uber CEO Travis Kalanick has described Uber as a new platform to help replace inefficient 20th-century transportation systems. Continue reading