A common myth about regulation is that it is undertaken in the public interest. An alternative motivation is to protect incumbents in a market from competition.
Uber is an innovative service that provides point-to-point, luxury sedan and limo service. Uber operates in more than a dozen cities including Washington, DC. The DC City Council and its Taxicab Commission want to regulate it out of business to protect the owners of taxicabs licensed in the District from competition.
The Daily Caller’s Christopher Bedford summarizes Uber’s business model:
Uber’s concept is simple: Sign up and download their mobile phone application, and when you need a car, click a few buttons. Within a few minutes, a luxury sedan will arrive at your door, announce its presence with a text message, drive you to your destination and charge your credit card. It’s more expensive than a cab ride, but there is no waiting on the hold, and the cars and drivers are clean and professional.
In July, the City Council attempted to impose a “price floor” — a minimum price that Uber would be required to charge. Unsurprisingly, Uber CEO Travis Kalanick objected:
“The council’s intention is to prevent Uber from being a viable alternative to taxis by enacting a price floor to set Uber’s minimum fare at today’s rates and no less than 5 times a taxi’s minimum fare,” Uber co-founder and CEO Travis Kalanick wrote in a Monday press release.
The move by the council follows an Uber announcement that it was planning to launch UberX — a less expensive version of Uber with less luxurious cars.
The Council’s action was temporarily stymied because Uber engineered a substantial social media protest.
Bedford now reports that on July 10 the Council acted to bring Uber under the regulatory authority of the Taxicab Commission. (The DC Council’s website does not include any report of this action, and the agenda for the July 10 meeting does not include any items that appear to be relevant.)
Though Kalanick professes confusion about the Council’s motives, this does not appear to be genuine:
“It’s hard for me to understand the angle,” Kalanick said. Speaking of Councilwoman Mary Cheh, who sponsored the original price-floor legislation, he said: ”What I can say is it’s pretty clear with all legislation that she’s put forth, that there’s a number of provisions there attempting to protect the taxis from services like Uber.”
“If you look at the rationale for the law, which is in every law that the District passes — you’ll find in this rationale that it was actually really clear — they said they’re trying to keep Uber and services like it from competing with the taxi industry,” Kalanick added.