New York City introduced a cap on how many drivers may paricipate in ride-hailing apps. Now Uber is suing NYC. But is the city stifling innovation, or is it merely bringing about a balance? If one considers how NYC was first to ban Airbnb, first to go against federal law to in an attempt to clamp down on CBD – and an early mover against ride-hailing apps, it begs the question as to whether New York is being protectionist, or acting for greater good?
UBER, in its lawsuite, asserts that the freeze on rid-hail licenses is anticompetitive and that the city is acting beyond its authority in doing so.
Just like London introduced an extortionate congestion charge to clamp down on traffic, so did the city start with a $2.75 fee, albeit that it is much more affordable than across the pond in London. Digital Taxi companies would argue that this is a more appropriate solution than to target their businesses specifically.
The lawsuit is likely to bring focus to the NYC metro system – where it can be argued that the system is in desperate need for a revamp, all the more reason for taxis to alleviate pressure on the metro.
Arguments for the actions of NYC:
- Many feel that traditional businesses are being put out of business and forced to adopt new channels
- In the case of banning AIRBNB, residents felt that their buildings were being over used and neighborhoods disturbed
- Hotel lobbies, not surprisingly, argued that governments will lose out in tax revenue with the rise of the sharing economy
- TECH companies often do not comply with local regulations – and need to be brought in line. Their fortunes make them arrogant and often acting above the law.
Arguments against the actions of NYC:
- In 3rd world countries like Greece, taxi drivers smoke. UBER is more strict than local governments in some parts of the world – making for a more reliable service. However this is of no use to US consumers.
- By protecting certain industries, it actually prevents them from innovating, since there is no need when business is guaranteed
- By stifling innovation and clamping down on TECH channels, the city is simply being anticompetitive.
- In some countries, the sharing economy helped cities and locals to overcome the effects of the recession. Malaga in Spain, is one place where peak tourist numbers were exceeded thanks to additional capacity offered by Airbnb – and ride hailing companies. Without Airbnb, the city would never have managed to increase arrival numbers. Restaurants and service businesses all benefited from higher arrival numbers.
Silicon valley venture capitalists will agree on one thing: After R&D, legal is the next big expense to budget for.