Uber has been the subject of controversy for more than three years now and our research team wanted to find out why that was. We wanted to discover what drove this “Uber – Taxi War”, how it all began, why is it still an issue and how it could be potentially solved.
For this project, first of all we dove into some literature review, to get a better understanding of what Uber actually is and how it works. Then we had a look online to see what has been happening with this trend worldwide and saw that there were actually a lot of issues between Uber and the traditional taxi industry. After this, we took the roles of covert ethnographers and researched relevant online communities on the social media platforms Instagram and Twitter. We looked at over 300 posts from people all over the world, sorted through them and ended up collecting a bit over 150. Next we coded them and ended up with four main categories, divided in people who support Uber, people who are against it, people who simply do not have a preference between Uber and taxis, and people who were very aggravated by the violence taxi strikers showed towards Uber drivers in their protests.
In the conclusion, we ended up observing that Uber had a lot of supporters for its company. Ranging from new users to frequent users or new drivers to already experienced drivers, the app based business has a lot of people to back up what it is trying to do, namely bring the world to a whole new level of comfort and simplicity through technological advancement. But even with all of this support, there will always be people who do not agree with change. In this case, traditional taxi companies are the biggest threat to Uber, not only as a business concept, but also to its drivers, as cab drivers have a tendency to become very violent when it comes to protesting Uber. However, even though taxi drivers are the biggest threat to the company, there are also internal issues that still need solving, and that is mainly in part due to the fact that Uber brought to the market such a new concept, that laws have not caught up with it yet. In this manner, the company can get away with a lot of things, simply because they can evade certain accusations based on the fact that there is no law in place to hold them accountable.
Our recommendations to solve all of these issues would be to, first of all, make traditional cab drivers and companies realize that if they want to compete with Uber, they need to be doing exactly what they are doing. The only difference would be that the traditional taxi industry already has its reputation around the world and it would definitely be at an advantage in this scenario. And second of all, if the industry cannot or does not want to change in order to compensate with Uber, then Uber should take full advantage of this situation by expanding even more. They already offer services in more than 75 countries and 459 cities (Uber Estimate, 2016), but they have the potential to expand even more, have even better customer reviews and thus, more clients and more revenue. But in all of this, they should never forget about their employees! We have come across a lot of drivers protesting the working conditions of Uber and they are not asking for much. For this reason, Uber should take some action in this sense and offer them better working conditions. As long as their drivers are happy, their customers will be even more happy.
Uber is a multinational online transportation network company founded in 2009 by Travis Kalanick & Garrett Camp. Uber is an application for smartphones that drivers can use to provide transport services which are relatively cheaper than regular taxis or transport services. The app is predominantly used to transport people, but recently Uber has been active as transport for general goods as well such as; groceries, shipped products, etc.
Private drivers can download and use the app to provide transport services to other individuals. In return they get paid by the service user and a certain percentage of that income goes directly to the Uber company itself.
Lately, however, Uber has been subjected to be rather controversial. Since it remains unclear whether Uber is a legal form of transport, because Uber-drivers do not have to undergo a designated training in order to become an Uber-driver, in comparison to regular taxi-drivers who do have to undergo special training in order to get their designated taxi drivers license. Subsequently, regular taxi drivers don’t take Uber service providers seriously and that consequently makes for tension between the regular taxi drivers and Uber drivers.
The subject of Uber is so controversial at the moment because of running court cases in several countries. Therefore, the newspaper write about Uber at least once a week which partakes in the relevance of the chosen subject.
How did the success of Uber change the taxi industry?
Why would clients prefer uber over regular taxis?
What are the advantages and disadvantages of uber compared to regular taxis (for the drivers)?
Why would taxi drivers be angry at uber services?
What are the reasons for the uber taxi wars? Where did it begin?
What would be the best way to resolve the uber taxi war?
Since Uber seems to represent a growing issue worldwide for the taxi industry, we decided to focus our research on discovering what it is that makes it such a big problem. Our group gathered at the beginning of the project and brainstormed ideas as to what we should emphasise on. We decided that in order to get a better grasp of our topic, we need to make use of firstly literature review, so that we can understand how Uber and the sharing economy works, and then next we used Data Scraping & Visualization and Nethnography, so that we could see what communities have to say about the issue.
In order to find relevant and also reliable scientific articles for our project, we made use of the HU Library Databases. In this way, our literature reviews can be trustworthy and can be used for a better understanding of the causes for the war between taxis and Uber. And since there seems to be a growing number of altercations between the two parties and even physical violence coming from taxi drivers, we also dove in some journalistic articles, as they provide very recent information on our subject.
For Data Scraping and Visualization we used the Instagram Hashtag Explorer tool and Gephy, a program which helped us better visualize and then analyze the results generated with the tool. However, a problem has surfaced during our research process. After only being able to test the tool and see how we can maximize its use, Instagram has recently changed its platform regulations. This tool had stopped working on the 1st of June, and we managed to gather only one graph.
Furthermore, for Nethnography we studied what people had to say on the matter on Instagram, as well as on Twitter. We used Instagram and Twitter threads because we found them to be the best way for us in which we could gather useful insights, while also being a simple and fast way of collecting data. By using different hashtags, such as #uberwar and #taxistrike, we could see people’s personal, true and unaltered thoughts on this issue, compared to maybe having them become biased in a focus group or interviews.
In the last few years, there has been much debate whether ridesharing services such as Uber should be subjected to the same firm regulations as normal taxis are, since a large number of people seem to think that the company represents just an unlicensed and unregulated taxi service. However, this new app-based method of transportation should not be regulated in the same way as traditional taxis, as they might be just categorized as a “technology middle-man” (Barglind, 2016). It is simply an innovative way of helping people get across towns or even longer distances, while it also opened up an entirely new market, which means that the old regulations cannot apply for Uber in particular. If anything, governments should actually tailor new regulations in order to avoid the uncertainty that the ridesharing company, as well as its drivers, seem to be operating under.
Innovation, technology and transportation
What seems to be the biggest issue with Uber’s lack of regulations is the fact that taxis and taxi drivers, by comparison, have to follow a large number of persistent government requirements, such as:
- Entry restrictions
- Fare controls
- Restrictions on the types of service delivered
- Requirements to offer certain amounts of service
- Quality regulations (driver qualifications, vehicle safety, liability insurance coverage)
All of the above mentioned regulations constitute the biggest reasons why taxi companies and taxi drivers in particular are mad at Uber. Tough as they are, the taxi industry did not oppose these requirements as they reduced the competition in the “for-hire” transportation market (Barglind, 2016). But when Uber emerged, evading all of these rules on the premise that they are not a transportation service, but rather a technology provider, taxi supporters felt they were treated unfairly.
What seemed to spike the most appreciation in customers, yet the most criticism in rival taxi companies was the launch of UberX in 2012. But no matter how much hate it dragged along with it, there is no denying that UberX was the reason for the substantial growth in popularity for Uber (Barglind, 2016). The launch has drawn so much attention to it because it implemented something the transportation industry has not seen beforehand: the drivers of UberX were not required to be commercially licensed (DePhillis, 2015). For this reason, taxi drivers felt that they were discriminated since they had many extra expenses that came with the profession, while Uber drivers did not, hence all the scandals and fights between the two parties.
Challenges on Uber’s liability for accidents
What is more, another big issue causing problems for Uber is that in its terms and conditions for the UberX services, they deny any liability for accidents that might occur during rides booked through the app (Uber, 2016). This represented an issue when in 2013, when the UberX driver, Syed Muzaffer, killed 6-years-old Sonia Liu. The crash took place on New Year’s Eve in San Francisco, when Sonia, accompanied by her mother and brother, were walking through a crosswalk. The driver was using the app to locate a fare when the accident happened, however, he was not carrying any passengers in his car (Barglind, 2016). For this reason, Uber was able to argue that their policies do not cover the driver’s liability in between fares, thus expressing that they are not to be held accountable to insure Muzaffer since he had not accepted a ride request before the accident happened. They could only be responsible for their drivers’ insurance when they are either driving towards a passenger to pick them up, or are already giving a passenger a ride at the time of an accident.
Therefore, in response to the issues raised by this tragic incident, California’s legislature introduced a motion in February 2014 to close the alleged “insurance gaps”, which came into effect from the 1st of July, 2015 (Barglind, 2016). The same happened in Colorado, as the law now requires that either the driver take out a personal insurance on which they can carry the passengers, or that the company provides them with one, for the gap period between two pick-ups (Smith, 2014).
Uber the Job Destroyer
Diverse types of people are allowed to drive for cab companies. Taxi driving advertises itself “as a way you could work the hours you want and make the money you need.” The contract was forthright as all that had to be done was pay stand dues which is a fee the drivers pay to associate with a company or rent a car owned by the company as well as paying the gas bill. Anything earned after was there’s to keep. All authorities have rules constraining drivers from changing companies. The system has assured work and promised drivers a wage to live from by reducing the total number of cabs (Liss, 2015).
In 2013, Uber started offering rides in Virginia. Uber is an international business with loans from Amazon’s Jeff Bezos and Google, which lets customers order a ride through the use of an app on their smartphone. The app allows the customer to track and read about their selected driver as well as allowing them to pay with their credit card. In the time of two years, Uber has created a large market for itself, working in 54 countries. The hasty growth of Uber has serious consequences for both the industry and taxi drivers (Liss, 2015). Questions that arise are “Are Uber drivers earning full-time living wages? Are they protected from arbitrary or discriminatory dismissal? Can they support their families? What does this mean for the future of work?”
For all the opportuneness that Uber may offer its users, one of its main spin-offs has been the depravity of working-class jobs that at one point made a living wage. In the summer of 2015, Uber had claimed that the average UberX driver in New York earns over $90,000 a year, however entrepreneur and blogger Justin Singer said differently. He exposed this amount to be highly deceptive. When “breaking down average traffic speed, rates and the number of trips, Singer found that drivers in the city netted around $50,000 per year, provided they worked seventy hours a week. The income level and hours are similar to what a standard taxi driver would enjoy.” (Liss, 2015)
And this was not going to change because has little reason and motivation to make well paying, stable conveniences with acceptable hours at incomes of $50,000 yearly.
“It’s little wonder why Uber fights regulations that would require it to insure its drivers’ vehicles, conduct background checks, pay fees or limit its workforce: without restraints on the number of passenger-serving- cars, and with a very low barrier of entry to the profession, the number of drivers will continue to grow until the market hits a point of saturation, sending costs plummeting in the process. Because Uber has few operating expenses to speak of the investment is all made up front in developing the app, after which maintenance is minimal the company enjoys a substantial profit no matter how many drivers flood the market.”
UberX drivers swamp the streets on the weekends as well as every evening when jobs end. During these time lots, cabs park on their company lots because of the declined demand. Many cab drivers have given up their company association, have given up and going to pay around $200 in stand dues weekly in hope of becoming an Uber driver. (Liss, 2015)
The entrance of Uber within the market has been both a curse and a blessing for drivers. It has interrupted the fixed power inequity between cab companies and taxi drivers. Companies’ necessity for allies in the conflict against Uber has given drivers power in negotiations. “Uber is my friend; they are weakening taxi companies,” says Arlington driver Teguwaze Gabreselassie. “We can join with tire companies to fight against Uber but only if the companies push for laws that respect our rights too.”
Cab companies unite against Uber and other ride-share services
Additionally, because Uber seems to upset so many people on the traditional side of the transportation business, the quick rise of the ride-share service has aroused the Washington region’s taxi industry in a new spirit of cooperation. Taxi drivers are joining labour unions, labour organizers and cab companies are lobbying jointly, and rival taxi companies are sharing notes and filing complaints and lawsuits. Together they are resisting an industry, which they say threatens their basis of existence and the well-being of consumers (Lazo, 2014). Cabdrivers complain that Uber has an unfair advantage because, in most cases, they are allowed to operate without any rules, regulations and licensing requirements, which traditional taxis have to follow. In August 2014, a Maryland commission ruled that Uber must comply with the state regulations and apply for a permit to continue operations in the state.
The D.C. Taxicab Commission proposed rules requiring Uber, and other ride-share services to buy insurance, put drivers through background checks and force them to have their vehicles inspected. Taxi drivers fear for their jobs, because their future is unknown. Their struggles with Uber is followed by citing battles with cab companies, stressful working conditions and low wages (Lazo, 2014). The most important thing to do now, is to modernize to stay competitive with ride-share services.
Some cab companies have taken the fight to court, including seven Northern Virginia cab companies that filed a lawsuit against Uber and Lyft in July 2014, arguing that the services were operating without the required licenses and permits (Lazo, 2014). According to Teamsters organizer Joel Wood, Uber is basically stealing work from drivers who are doing everything completely legal.
Just a better taxi?
We refer to these services—provided by companies like Uber and Lyft— as “ridesourcing.” Ridesourcing dynamically matches supply and demand by allowing travelers to request car rides in real-time from potential suppliers using a smartphone application.
Ridesourcing is distinguished from traditional taxicabs by its use of smartphone technology and a dynamic matching algorithm—which some taxi companies have also adopted (L. Rayle et al., 2015).
“Ridesourcing has attracted significant criticism from its most direct competitor, the taxi industry, which views ridesourcing as an illegal service that flouts existing laws and competes unfairly. Ostensibly, taxis would fill the role played by ridesourcing services.” (Austinand Zegras, 2012; Gilbert and Samuels, 1982; King et al., 2012; Wohl, 1975).
Some also argue that ridesourcing differs from traditional taxis due to the efficiency and reliability of the matching platform and pricing mechanisms, along with the accountability of the rating system.
To get an even better grasp on how Uber differentiates itself from the traditional taxi industry, we looked into a survey-based comparison of taxis, transit and ridesourcing services in San Francisco, and this is what we found:
Ridesourcing market share
Of all surveyed trips, UberX provided the majority (53%), while other Uber services (black car, SUV) represented another 8%. Lyft provided 30% of trips, Sidecar 7%, and the remainder was other services. This is consistent with anecdotal information on the market share of each service (L. Rayle et al., 2015).
Ridesourcing survey respondents were generally younger and better educated than the average population in San Francisco. Ridesourcing survey respondents were generally even younger than frequent taxi users, although this difference may be influenced by the sampling method—individuals surveyed may be younger on average than the actual ridesourcing user base.
Respondents were relatively well educated – 84% of ridesourcing customers had a bachelor’s degree or higher, which is subsequently more than the general San Francisco population.
Surveyed ridesourcing customers matched the income profile of San Franciscans fairly closely, with the prominent exception that households making less than US$30,000 were underrepresented. However, a high percentage of respondents (12%) refused to answer, and these individuals may not have the same distribution as the rest of the sample (L. Rayle et al., 2015).
Trip origins and destinations
The survey captured trips from across San Francisco and else- where in the Bay Area, as did the sampled taxi trips. As expected, the ridesourcing destinations were concentrated in the three survey locations, while the taxi origins and destinations were heavily concentrated in the downtown area. While the vast majority of both ridesourcing and taxi trips served San Francisco’s central area, a smaller number of trips began or ended in lower density areas outside of San Francisco or in the city’s outer neighborhoods. In conclusion, taxi trips were more likely to begin in the downtown core, even if they ended in outlying neighborhoods, whereas ridesourcing trips outside of the downtown might begin or end in outlying neighborhoods (L. Rayle et al., 2015).
The two sets of responses are not directly comparable because the ridesourcing survey asked for the nature of the trip’s origin and destination, whereas the taxi survey asked respondents for the “most common reason” they use taxis. Of all ridesourcing responses, 67% were social/leisure (e.g. bar, restaurant, concert, visit friends/family). A smaller 16% were commuting to or from work, 4% were to or from the airport, and 5% were other (e.g. doctor’s appointment, volunteer). A large percentage (47%) of trips began somewhere other than home or work—a restaurant, bar, gym, etc.—and 40% were home-based (L. Rayle et al., 2015).
Reasons for choosing ridesourcing
When asked why they chose ridesourcing, variations on speed and convenience were the main attractions, but other reasons were important too. More than 20% said they wanted to avoid drinking and driving. Only 2% said they could not get a taxi, and only 6% said public transit was not available.
Among those who would have taken the bus, the most common responses were: fastest way to get there (24%) and short wait time (12%). For those who would have taken a taxi, the top reasons were about convenience—25% said ease of payment, 17% said short wait time, and 11% said easy to call car. These particular respondents did not consider ridesourcing to be generally cheaper or more reliable—only 3% said they chose ridesourcing due to cost and only 7% cited reliability (L. Rayle et al., 2015).
Ridesourcing wait times are dramatically shorter than typical taxi dispatch and hail times. When calling a taxi to their home, only 35% of San Francisco residents said they usually waited less than ten minutes on a week day during the day; on nights and weekends, this figure dropped to 16%. By comparison, close to 90% of ridesourcing respondents said they waited ten minutes or less at all times, and 67% waited five minutes or less (L. Rayle et al., 2015).
Trip distance and vehicle occupancy
For surveyed ridesourcing trips, the average length was 5.1km (3.2miles), while equivalent taxi trips were on average 6.2km (3.8miles).
Vehicle occupancies were somewhat higher than for taxi trips and about the same as for driving journeys-to-work. Half of ridesourcing trips had more than one passenger (not including the driver), and the average number of passengers was 2.1. For the matched taxi sample, the average was only 1.1. The difference is likely due to the fact that the ridesourcing trips overrepresented social trips.
Therefore, we can say that the growth of Uber, which connects ride-seekers with private car owners, who want to earn extra money through technology, is a threat to the taxi industry, which has been criticized to be slow to improvement and keeping up with the technology-driven times (L. Rayle et al., 2015).
Competition in the sharing economy
So seeing that traditional transportation companies struggle more and more and the technologically developed world, they need to start looking at things differently. Traditional companies now have another set of competitors to worry about—Internet startups in the “sharing economy.” These new companies are actually Web platforms that bring together individuals who have underutilized service assets with people who would like to rent those assets short-term (Cusumano, 2015).
Sharing-economy startups are in many ways a logical outgrowth of social media platforms such as Facebook, Pinterest, and Trip Advisor, which bring together people with common interests to share ideas, information, or personal observations. They threaten established companies to the extent that peer-to-peer networks can grow exponentially through the power of platform dynamics and network effects.
Not all has been smooth sailing in the sharing economy, however. Some startups have already run into legal and regulatory hurdles from city governments, courts, and traditional unions or lobbies that want to restrict them or shut them down (Cusumano, 2015).
Taxis are highly regulated and restricted as well as not universally available, such as in small or rural communities, whereas individually owned cars and potential drivers are everywhere. Uber got its start in 2009, also in San Francisco, as a private luxury car service. It then began raising venture capital and launched a mobile smartphone app in 2010 that enables potential customers to call for a ride, get a price quote, and then accept or reject it. The company expanded to UberX in 2012, enabling customers to arrange for rides in smaller, less expensive cars (Cusumano, 2015).
In some cases, such as in Germany, you may file a claim in court and win a nationwide ban. But most people like the concept of the sharing economy because it means greater access to goods and services at lower prices. In Boston, for example, the number of taxi cab licenses (“medallions”) was established in 1934 at 1,525 and has increased only by 300 in subsequent decades. The system has created an artificial shortage of cabs, even though drivers generally work in shifts of three per medallion. It took pressure from average citizens and intervention by state government officials and the courts to overcome temporary legal actions that restricted Uber’s operations. Like hotel chains, taxi companies can offer a standardized level of service and price that Uber will not always be able to match (Cusumano, 2015).
The challenge for differentiation is tougher in the taxi market, since a car ride is a car ride, and does not require the same level of discretion as choosing a hotel. Nonetheless, traditional enterprises should be able to provide more reliable, consistent, broader, and safer services than sharing-economy competitors. There is also nothing to stop traditional companies from becoming more like their sharing-economy counterparts.
Sharing-economy startups also have weaknesses. Uber, like airlines and some hotels, relies on “dynamic pricing.” This means prices go up when demand is high, such as during rush hours or rainstorms. Uber drivers can also decline to provide service, such as when they do not like the requested destination or the rating of the customer (yes, both customers and drivers are rated on Uber). These are features of the Uber service that taxi companies can exploit since they are obligated to offer standardized prices and provide service to anyone who calls (Cusumano, 2015).
In short, the sharing economy has ushered in a new age where underutilized assets become peer-to-peer services for hire, enabled by the Internet and smartphones. But there are still many uncertainties. Web startups are easy to launch but many will not survive once their funding runs out. Moreover, network effects lead to positive feedback loops, increasing returns to scale, and winner-take-all shakeouts that favor the bigger platforms—much like Amazon and Google have come to dominate Internet retailing and search. Uber is already big and probably here to stay. It is likely to become bigger, better, and more varied in the services it offers. Traditional companies in these markets are not likely to go out of business, but they cannot stand still. They must adapt and compete based on their own unique advantages or they will become much diminished versions of what they used to be.
Our research topic was chosen rather unexpectedly. While we were brainstorming about what trends have recently been relevant and which ones would actually make us want to explore them in depth, we casually started discussing Uber. We then realized that all of us had heard of the company only in the past 2-3 years, even though it has been on the market since 2009. We also remembered seeing more and more news articles related to violence between Uber drivers and traditional taxi drivers, not only in the United States, but also worldwide. We wondered why that was the case and that was how we started really diving into the subject.
Trends Analysis Findings
First of all, our hunches that Uber has become relevant only in the past 3 years proved to be funded. We looked at the trends on Google and we saw that the interest in Uber started spiking at the end of 2013. This only made us more motivated to dig in the subject and find out what is causing the recent feuds between traditional taxi companies and Uber. What we found, however, exceeded our expectations towards how many and also how violent these altercations actually are. We discovered plenty of news reports covering Uber drivers being attacked by normal meter taxi drivers all over the world.
One such case is when Uber employees were attacked outside the Mexico City Airport during a taxi driver protest, in the summer of 2015. They were ambushed outside the airport, having not only eggs and flour thrown at them and inside their cars, but also stones which managed to completely ruin some of the rideshare company’s drivers’ cars (The Guardian, 2015).
In addition, another similar instance took place very recently in Kuala Lumpur, on the 22nd of June 2016, when 50 taxi drivers attacked an Uber car in which an Iranian couple had just stepped in. The passengers as well as the driver were pulled out of the car, before they taxi drivers started throwing rocks at the car’s windows in an attempt to break them. This incident matters because it was not just an innocent protest, people actually got injured, as one of the passengers had to have her wounds treated at the Kuala Lumpur Hospital (FMT News, 2016).
Another recent event on the same note happened on the 3rd of June 2016, in Cape Town, when a 22-year-old was dragged out of her Uber car by several taxi drivers, while others were harming her Uber driver. But this was not the only incident of these sorts that has happened in South Africa. In May 2016, during a protest against the Uber service, three people were injured after several shots were fired outside the Gautrain station in Sandton‚ Johannesburg (Phillay & Hyman, 2016).
Other examples and Features
We have seen plenty of issues regarding what the rapid success of Uber brought to the company and its employees. However, when our team started looking into the transportation service, we saw it as maybe one of the best innovations during our time. But the truth is, the more we researched it, the more we started seeing the “dark side” of Uber. There are entire articles, videos and even websites dedicated to uncovering what Uber has been so good at hiding these last few years. The “truthaboutuber.com” is one of the websites that tackle the issues with the company.
Barglind, K. (2016). Innovation, Technology, and Transportation: The Need To Address Ondemand Ridesharing and Modernize Outdated Taxi Regulations in the Us. Wisconsin International Law Journal, 701-727.
Cusumano, M. A. (2015, January). How Traditional Firms Must Compete in the Sharing Economy. Communications of the ACM, 58(1), 32-34.
DePhillis, L. (2015, January 19). Can taxi unions build an app to take on Uber? Retrieved from The Washington Post: https://www.washingtonpost.com/news/storyline/wp/2015/01/19/can-taxi-unions-build-an-app-to-take-on-uber/
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Liss, J. (2015). Uber the Job Destroyer. The Nation, 16-21.
Phillay, D., & Hyman, A. (2016, June 6). Cape Town passenger tells of frightening attack during Uber ride. Retrieved from Times Live: http://www.timeslive.co.za/local/2016/06/06/Cape-Town-passenger-tells-of-frightening-attack-during-Uber-ride
Rayle, L., Dai, D., Chan, N., Cervero, R., & Shaheen, S. (2015). Just a better taxi? A survey-based comparison of taxis, transit, and ridesourcing services in San Francisco. Transport Policy, 168-178.
Smith, C. F. (2014, June 6). Retrieved from San Francisco Business Times: http://www.bizjournals.com/sanfrancisco/morning_call/2014/06/colorado-uber-lyft.html
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Uber. (2016, January 2). Terms and Conditions. Retrieved from Uber: https://www.uber.com/legal/terms/us/