In Defense of Uber Infuriating Regulators

Uber has been in the news lately for all the wrong reasons.

The New York Times last week reported Uber’s use of a technical program called “Greyball” to evade city regulators in Boston, Paris and Las Vegas, among other cities where the ridesharing company had been restricted or banned.

The taxi unions like these regulations because they despise Uber’s offer of better service at lower costs. They know without the regulations that let them drive up costs, Uber’s model will win every time. And the regulators despise Uber’s refusal to submit to government’s ever expanding maze of rules.

The regulators’ basic strategy to catch Uber drivers has tended to go something like this: A regulatory official requests an Uber. The driver accepts the request believing it’s a normal customer. But on arrival the driver is hit with a fine for operating without a proper license or other official approval.

A regulatory official requests an Uber. The driver accepts the request believing it’s a normal customer. But on arrival the driver is hit with a fine for operating without a proper license or other official approval.

Greyball is one way Uber fights back. The system employs deception (broadcasting fake car blips on the app) and data exploitation (referencing a user’s credit card details or location to see if they conform with government accounts), while assuring drivers that Uber will pay any fines they may incur. These measures help Uber avoid an avalanche of fines and other challenges that could put the company out of business.

But the system also benefits rider like you and me. Fact is, needless regulations drive up legal and administrative costs. And by ignoring idiotic regulations, Uber keeps driver costs low.

Naturally, Uber’s strategy infuriates the regulators. And in response, they’re reviving the old complaint that Uber “endangers the public.” The claim is false. For one, if Uber’s behavior was as egregious as the regulators claim, liberal politicians would have approved a tougher crackdown. They might, for example, have brought in criminal sanctions, or a total ban as in France. They have not done so, likely because they know the public is on Uber’s side.

Millennials in particular support Uber. I can tell you why. At the moment, I’m visiting Naples, Florida. When I was last here a few years ago, I had to take taxis to go out. And oddly, traveling to and from the same locations varied in price without regard to time. I strongly suspected — as did others that I spoke to — that the taxi firms were manipulating their meters or colluding on fares. Regardless, even the shortest trips were extremely expensive.

research has shown how taxi regulations have a long and sordid history of ensuring that established companies are protected from new competition and that regulators often end up being captured by taxi special interests.”

But no longer. Today Uber offers Naples fares around 65 percent cheaper than taxis. Its drivers offer a speedier pick up, better service and easier means of payment. This dichotomy of outcomes should surprise no one. Michael Farron of George Mason University explains, “research has shown how taxi regulations have a long and sordid history of ensuring that established companies are protected from new competition and that regulators often end up being captured by taxi special interests.” But where competition is injected into an industry — as with Uber — the customers are first to benefit.

Uber’s future is far from certain. Having survived thus far against all the regulatory odds, the company has had to stay one step ahead of those that would destroy it. Yet this doesn’t mean that we should blindly worship the firm. It is imperfect. Uber customer service, for example, is inferior to its main competitor, Lyft. We should also welcome the rise of driverless cars from Google. Both these developments will challenge Uber’s dominant market position, forcing it to improve.

Nevertheless, in the tale of regulation versus Greyball, and the broader struggle between the regulatory Left and the free-market Right, the moral compass holds towards the latter.

Tom Rogan is a columnist for Opportunity Lives and National Review, a former panelist on The McLaughlin Group and a senior fellow at the Steamboat Institute. Follow him on Twitter @TomRtweets. Email him at Thomas.RoganE@Gmail.com