A Feisty Start-Up Is Met With Regulatory Snarl

By BRIAN X. CHEN
December 2, 2012

WASHINGTON - Summoning a taxi or car service with your smartphone 
feels like the future. City governments around the world can agree on 
that. But many of them are proposing new rules that would run Uber, 
one of the most prominent ride-requesting apps, off the road.

At a recent conference here, transportation regulators and car 
service operators from cities in the United States and Europe met to 
talk about how smartphone apps were changing the hire-a-car business. 
Some of these apps are integrated with dispatching systems run by the 
car companies, while others allow drivers to directly connect with 
passengers, phone to phone.

While the regulators discussed ways to clarify the legality of these 
apps, they also proposed guidelines that would effectively force 
Uber, a San Francisco start-up, to cease operations in the United 
States. Uber also faces new lawsuits filed by San Francisco 
cabdrivers and Chicago car service companies, and a $20,000 fine from 
the California Public Utilities Commission.

The battle between Uber and city governments underscores the tension 
between lawmakers and technology companies at a time when Web sites 
and mobile apps can outmaneuver old rules. Services like Uber, Airbnb 
and Craigslist can cut out the middleman and lead to more efficient 
markets. But regulators say they could also put consumers at risk.

Uber has rattled regulators in many cities with its unusual approach 
to expansion. It says that it first consults a transportation lawyer 
in a city on whether it is legal to operate there. When it comes to 
town, its employees contact local car service companies to discuss 
working with them; in cities where Uber works with cabs, employees 
put up fliers or approach drivers at airports and gas stations. 
Participating drivers get free iPhones that run Uber's navigation 
software, which helps them find people nearby who are requesting 
rides with their smartphones.

The start-up, which has raised $50 million since 2010, generally does 
not consult transportation regulators before it starts rolling in 
each city. Because it is not an actual provider of rides, it says 
that it is not subject to such regulation. To date, this approach has 
generally worked for it in 18 cities, including San Francisco, 
Washington, New York, Chicago, Paris and Amsterdam.

...

http://www.nytimes.com/2012/12/03/technology/app-maker-uber-hits-regulatory-snarl.html

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