Uber now needs to move beyond disruption and start working with regulators
While Uber is disrupting the private car industry, there’s a difference between disruptive and illegal, says Liza McDonald.
Just who are the winners and losers in Australia’s fast growing private hire car market is yet to be revealed following yesterday’s revelation the NSW government had suspended 40 individuals who are driving under the UberX banner.
Uber has disrupted Australia’s private hire car market. But failing to work collaboratively with regulators doesn’t make a brand only disruptive. It makes it a little short sighted.
Some Australians have fallen in love with the brand. However, regardless of how popular a brand is, if it doesn’t operate within a regulated environment, it passes potential longer term danger onto its users with a risk of reduced quality of service should it be acquired by another investor or smaller ‘franchise’ type investor in the future who do not uphold the same standards as incumbents.
Regulation accounts for market failure and governments shouldn’t pick favourites. Regulation needs to be structured to ensure best practice for the safety of all people and not protect brands or the latest fad.
The word ‘regulation’ doesn’t quite have the same ring as ‘disruptive’, does it? But in Uber’s case, the conversation must move from disruption – to how they can work collaboratively with government to protect its customers now and into the future. It is inherent on government to protect its people – however it also has a responsibility to get out of the way of innovation and changing environments.
As for taxis, the centralisation of control in the taxi industry is to some degree a result of successive governments inaction to reform – they didn’t protect the taxi industry from itself.
Decades of Governments ‘tinkering around the edges’ and overly prescriptive regulation created an environment where innovation in the taxi industry didn’t thrive. Healthy competition benefits both businesses and consumers, with different businesses adapting and catering for different markets. The taxi industry has been in state of transition since the Fels reforms were introduced in 2013 and Uber’s entry into the market has only led to speed the process up.
If there are calls for the taxi industry to compete then it’s reasonable that prescriptive regulation on them also be removed. But that’s a whole other conversation.
Government should resist the temptation to a ‘quick fix’ because of sophisticated marketing campaigns and should not create new legislation for any one particular business model. If regulation is not amended thoughtfully and in consultation, then what happens with the next new thing that could be around the corner which hasn’t been even though of yet and is completely different to any current business model?
Consumer sentiment is mixed and many are quick to blame government for shunting new entrants in the private hire car market. However it’s worth noting the role the Government plays in supporting innovation – within guidelines that supports its constituency. While people will evangelise niche brands, there will always be a wider group of consumers who rely on regulated services such as people with a disability.
Private vehicles being used for commercial means is good for the share economy and very good for niche markets – however there will be sectors of the community that, for the foreseeable future, rely solely on taxis for their independence.
The biggest innovators in the world and the smallest businesses remain compliant with regulations – why should Uber be completely exempt?
Competition in the private car industry is a good thing. The message the government is sending Uber is, just like any competitive brand, they must be collaborative and abide by stipulations that protect the safety of its users.
- Liza McDonald is the principal – strategy & community at Bastion S+GO
For once, disruption actually means disrupting.
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No wonder start ups and smart people are leaving for other countries where smart ideas and disruption are appreciated.
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Regulation, or even de regulation needs to be viewed from an industry perspective.
We either need completely deregulate the taxi industry or enforce the existing regulations to stamp out Uber X. enabling both is dysfunctional and a failure of oversight
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Totally get that UBER needs to look at compromising but its a two way street vs it competition. The TAXI industry is heavily regulated but that regulation hasn’t made it any safer for the user. While this is just a personal opinion, I feel that UBER drivers are A LOT more accountable than taxi drivers with the way that you can not only contact them but at the same time review routes and give ratings – there is real incentive to “do better”. In terms of service i would compare a taxi experience to being on par with going to a mismanaged Mcdonalds (disgruntled employees and smells of BO, cigarettes and broken dreams) coupled with Grilled prices where as UBER, from my experience, is like a recently opened small-medium sized local cafe that realises first impressions with each and every customer can affect how others view them down the line. As a consumer I would pay current taxi prices for Uber like service over cheap prices for current Taxi service, the dream is real.
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Agree with everything Terry says.
The other evening I was trying to get a taxi at night, finally one pulled over (taxi combined). I was about to get in and he said ‘north shore?’. I said ‘Balmain thanks’
And with that he drove off without a single word. Not even a ‘sorry not going that way’. Just left a female with a ton of bags, alone on the street in the dark.
Ended up getting an Uber X which was far more pleasant.
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When non tech people shouldn’t write about tech startups:
“should it be acquired by another investor or smaller ‘franchise’ type investor in the future who do not uphold the same standards as incumbents.”
Yeah, about that: Uber’s current valuation is US$51b, second largest tech startup in the world by valuation…or maybe in fantasy marketing land Cabcharge with an AU$363m market cap could be acquiring it? 🙂
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when non-financial people shouldn’t write about finance
“Uber’s current valuation is US$51b, second largest tech startup in the world by valuation…or maybe in fantasy marketing land Cabcharge with an AU$363m market cap could be acquiring it?”
Yeah, about that. Ever heard of Webvan, which at one stage was a $1.2 billion NASDAQ listed company employing 450 people. It was liquidated 2 years later. What about the now-defunct VA Linux, then? In 1999 its NASDAQ IPO produced the biggest stag in the history of that exchange.
Uber has taken US$6 billion in venture capital yet has racked up US$415 million in accumulated losses, which are accelerating each year.
It is wildly UNPROFITABLE and opening new, loss-making markets on a regular basis
on the other hand, L’il “ol Cabcharge still made $57m in profit in FY2015.
and it’s only market is Australia
Duncan, if you ask mum and dad, or an older sibling, they’ll tell you that back in the late 1990s, there was a thing called the dotcom boom and bust, when capital was cheap and cool ideas defied gravity for a few years
Uber is a great example of why dotbomb 2.0 is just around the corner
(but you’ll tell us that everything is different this time, won’t you?)
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Why no disclosure by the author that they have the NSW Government as a client? Surely this needs to be disclosed?
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NSW Government is not currently a client and my piece was not endorsed by any third parties. Feel free to get in touch should you have any further queries. Regards, Liza
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There are entire suburbs in Sydney that taxi drivers will not pick up from at all, regardless of the ‘guarantees” regulation provides. Often it is because it is unprofitable for driver to so since owners of the cab plate and Cabcharge takes the lion’s share of the profit before driver.
The taxi industry is a franchisee model that (like 7eleven) is based on exploiting the workers – that is why Cabcharge is still making monopoly style profits.
Maybe if i) taxi drivers were forced to obey the rule of not being able to decline a fare based on – destination, appearance, having lots of bags, not being a man in a suit or shift ending ii) a booking meant a cab would actually turn up and not take a more profitable fare off the street and iii) drivers got p[aid fairly – then your article would make sense.
Without any discussion of political influence of Cabcharge etc and the need to ‘protect’ the capital value of taxi plates this op-ed is fluff.
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