How to regulate Uber-style apps and taxis | Business| Economy and finance news from a German perspective | DW | 18.05.2016
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How to regulate Uber-style apps and taxis

Governments need to regulate Uber-style ride-hailing apps better or it's customers will suffer, a think tank has said as Chris Cottrell reports from the International Transport Forum in Leipzig, Germany.

The debate over how to keep madly popular transport services like Uber and Lyft under check is far from over, and on Wednesday, the International Transport Forum, an intergovernmental organization linked to the OECD, became the latest body to join the fray.

Unveiling a report that outlined a number of policy suggestions for countries all over the world, the ITF addressed what it said had been weighing heavily on many member countries: How to regulate ride-hailing apps and taxis simultaneously?

"Our member countries are coming to us with a lot of anxiety, a lot of angst of the type of services they're seeing rolled out on their streets," Philippe Crist, an ITF economist and one of the report's authors, told DW. "They've been caught a little on their back foot."

An entrenched bias

The explosive popularity and exponential growth of companies like Uber and Lyft in the United States, Ola in India or Didi Chuxing in China, have left many regulators scratching their heads, unsure of how to react to the sudden and severe disruption of their commercial transportation markets.

Oftentimes, the default reaction has been to ban certain services outright. This course of action betrays what the report's authors identified as a bias toward incumbent providers of for-hire transportation, particularly taxis.

UberPop app

Ordering an Uber-style cab couldn't be any easier and more convenient

In a national context, that bias makes sense. The taxi industry has the ear of politicians, who are keenly aware of cab drivers' unique ability to literally stop traffic to make their point.

"They have the power of industrial action, of stoppages to make their point," Crist said, reminding of the violence in France this past year, in which cab drivers in Paris blocked a main road to the airport. "Governments are susceptible to those messages."

But in the end, that bias only serves a limited number of people. As the report noted, that's not the goal of sound transportation policy. That's why governments would be well advised to bring their oversight back in equilibrium and stop disadvantaging new ride-hailing apps at the behest of incumbent industries.

Quid pro quo

Other suggestions listed in the report and presented on Wednesday included leveraging technology to facilitate regulation in the first place. A regulator could, for instance, offer data-driven ride-hailing services a quid pro quo, trading laxer regulation for access to useful data on how the companies operate. Basically: Give us access to the data you collect, and we'll give you a break.

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Such data-led regulation could allow for more precise and effective oversight, as governments would be able to monitor the condition of a provider's fleet, for safety purposes, or the amount of fares it collected, to ensure a company was paying enough taxes.

The ITF's report, and the stance it took, drew from the conclusions of a two-day workshop back in October last year. There were dozens of attendees, the ITF said, including representatives from Uber and Lyft as well as two people from Taxi Intelligence and Taxi Deutschland.

There were regulators from the Philippines (which has made Uber legal everywhere), Germany (which banned UberPop), and Belgium (which also forbids Uber from operating), among others.

The prospect of allowing new, innovative services to disrupt the for-hire transportation market may still be controversial, but there was one thing everyone seemed to agree on in Leipzig: Things may seem complicated now, but they're only going to get more complicated once cars begin to drive themselves and people can book a fully-automated ride through an app.

"One thing we know is what we face now won't be the same thing in five years," Crist said.

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