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Yes, Uber is a Taxi Company

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Yes, Uber is a Taxi Company

Bill Crittenden
30 January 2016

Uber is one of the more controversial tech companies in the news lately. They claim to merely connect riders with independent contractor drivers, which sounds as though they're selling themselves as a communication service. They believe that this exempts them from following the laws regulating taxi companies, and thus much of the controversy.

Uber is a technology company that has developed an app that connects users (riders) with driver partners who provide transportation to the user. Uber is not a transportation carrier, and does not employ any drivers.

This is rooted in the concept of "ride sharing," which in its essence is the idea that if two people are heading the same way, they could share the ride and the costs.

This is where the basic idea started: two people are going to the same general destination. One has a car, the other doesn't. The guy without a car pays the guy with a car to give him a ride. The guy without a car gets a cheaper ride than a traditional taxicab, and the guy with a car just got his gas paid for.

Uber, if it is what it says it is, would simply connect drivers and riders. That's what sites like Craigslist or Facebook groups can do. There would, of course, be some way for Uber to monetize the transaction for providing the service, such as eBay charging for listings or taking percentages of sales.

"Sharing economy" systems break down when people start using them as employment. Drivers who have nowhere to go and nothing to do will sign on to Uber to drive for a living. Some even buy vehicles specifically for use as taxicabs.

Uber crossed the line from ride sharing app to taxi company in its control of the transaction and relationships with the riders. When you send for a ride, an Uber vetted driver selected by the company shows up in an Uber regulated car to take you somewhere based on a price that Uber sets. At the end, you don't pay the driver, you pay Uber, and Uber pays the driver.

Sounds a hell of a lot like a taxi dispatch company to me.

Their claim that they're just connecting riders and drivers is pants-on-fire false.

Their claim that they don't employ drivers is true, but on a technicality. The drivers are independent contractors, much the same as Realtors working out of their own home offices. If you're doing business with Joe Bob the Re/Max agent, everything he does is done with the Re/Max logo on it, the Re/Max logo is on the sign in your front yard, and you may have been set up with Joe by calling the local Re/Max office's front desk.

Now imagine if you had a problem with the agent and Re/Max said "we don't have to follow real estate laws. We're not a real estate company, we're a tech company that just connects home sellers with Realtors."

You know that's not how the independent contractor model works. The taxicab industry does, too, because many taxi dispatch companies use independent owner/operators who keep their fares and pay the dispatcher franchise fees for rides. So independent contractors are a known standard in the taxi industry, and they're not trying to deny that they're taxi companies.

I suspect Uber knows all this as well, but they're going with the "see how long we can get away with it" business model. Silicon Valley calls it "Move fast and break things."

That comes from a quote by Facebook founder Mark Zuckerberg and has come to epitomize the attitude of successful entrepreneurs who change how the world works with their products or apps: "Move fast and break things. Unless you are breaking stuff, you are not moving fast enough."

Uber really is just an international taxi company that seems to believe that it's doing good by openly breaking local laws its execs feel are beneath them.