As the smart-phone app market explodes in all categories, the passenger service market in particular has grown beyond anyone’s expectations.
Companies such as Uber and Lyft have blazed a trail into the passenger service market so quickly that competitors such as taxis and limousines have lost significant portion of their customer base. As the 50-and-under crowd seeks the convenience of ordering a car with the push of a button, companies not embracing this evolution are losing ground.
Now after several years of near monopoly, it appears that the Uber honeymoon is coming to a self-imposed end.
In New Jersey and across the country, Uber has entered markets in direct violation of current transportation laws. Uber claims that its business model is so innovative that it should not be categorized as a taxi or limousine despite the fact that it performs the exact same service.
As state and local governments struggle with how to treat companies like Uber, these governments are being pressured by traditional passenger service companies to make certain that no matter how they regulate Uber, the same rules and regulations be applied across the board and a level playing field remain in place.
The number one issue that Uber absolutely opposes is a requirement to have its drivers go through the same background checks as taxi and limousine drivers. Taxi and limousine drivers must provide their fingerprints as part of a comprehensive background check. Despite the fact the law enforcement, the Department of Homeland Security and the Department of Defense all agree that fingerprints are the best way to check a person’s criminal past, Uber refuses to comply with local laws and has allowed its drivers to take passengers into its vehicles with nothing better than an internet search.
To some that may not sound like a big deal. What’s the worst that can happen, right?
Well, as investigators for the for the district attorneys in San Francisco and Los Angeles discovered, Uber’s background check allowed murderers, rapists, sex offenders, identity thieves, and burglars into its driver ranks.
This revelation turned into a lawsuit against Uber in which the District Attorneys filed a complaint stating that, “(Uber’s) false and misleading statements are so woven into the fabric of Uber’s safety narrative that they render Uber’s entire safety message misleading.”
In Austin, TX, when the local governing body decided to require fingerprint background checks on Uber to avoid the dangers found in other places like San Francisco, Uber stomped its feet and threatened to leave. Rather than caving into Uber’s threats, Austin officials decided to let the voters decide whether or not fingerprint checks were important to the riding public.
What happened next was not surprising. Despite Uber spending more than $8 million to defeat the referendum, the voters chose public safety over a company’s profits. As promised, Uber left with the belief that Austin was doomed without its service. But then something remarkable happened, the mother of innovation stepped in.
Rather than a void being created with the departure of Uber, several new tech-startups entered the market willing to provide exactly what the riding public wanted: Public safety and innovation. These companies are proving that one does not need to exist without the other. And some of these companies are based here in New Jersey.
In Trenton, two pieces of legislation are moving forward (S-2179 and A-3695) that seek to legalize Uber and give it a regulatory framework in which to operate. Neither completely meets the objective of having a level playing field with other passenger services, but there is hope that a compromise can be made, especially when one considers the results of Austin.
The other important factor that lawmakers need to appreciate is that under the 14th Amendment, specifically the Equal Protection Clause, a government entity cannot treat two companies, providing the same service, differently.
A U.S. District Court Judge in Chicago and a U.S. District Court Judge in Boston have both found that government entities providing a different level of regulatory scheme for Uber violated the Equal Protection Clause since these services, taxis/Uber, are all for-hire passenger service companies getting people from point A to point B for a fee.
Let’s face it, the transportation market in evolving rapidly and Uber should be given credit for this change. But similar to MySpace in the social media world, being the trailblazer doesn’t guarantee success especially when the company in question tries to force people to its business model rather than adjusting its model to meet the demand of the consumer. That’s why Facebook is the fourth-highest valued company in the world and MySpace is not even on the radar.
New Jersey lawmakers can get this right. A law that legalizes the so-called Transportation Network Companies that balances innovation and public safety is easily achievable all while keeping a level regulatory playing field with the existing passenger-service industry. But don’t take my word for it, just look at New York City and Austin where fingerprint background checks are the law of the land and public safety remains the top priority.