Data. Driven.

Is Uber a tech company, or a taxi service?

By Sarah Sidlow

Phrase to know: gig economy. As in a labor market characterized by short-term independent contractors. As in your weekend and evening side-hustle. Today’s gig economy has popped up almost overnight; and it’s left a lot of people wondering whether it’s a brave new world for business. Perhaps one of the most relevant examples of today’s gig economy is Uber—the ridesharing company that matches independent drivers with customers looking for a ride.

Recently, Uber has been doing a lot of reflection to determine whether the company is really the tech startup they claim to be, or whether they are a transportation company of the traditional order. Why does it matter? Because transportation companies are subject to way stricter government regulations than startups.

Bad news for Uber: Europe’s top court declared Uber to be a taxi service—a label that brings with it stricter business limitations, including (potentially) the company’s ability to use drivers without professional licenses. Unsurprisingly, the groups most strongly in favor of Uber being considered a taxi business are those in the taxi business. Professional taxi drivers in Spain took Uber to court, arguing that the startup had an unfair advantage because the Uber service didn’t have the taxi licenses required by the city of Barcelona.

Similar arguments were made stateside as well, as unions of professional drivers pushed to impose stricter regulations on Uber, its drivers and its pick-up abilities (hello, airports).

Not only do people believe stricter regulations would even the economic playing field and ensure safety, many argue that classifying Uber as a transport service would benefit the company’s drivers, who would qualify for minimum wage and other protections afforded to transportation workers.

Yet many, particularly those who favor less regulation across the board, are lamenting the decision which is expected to increase the cost of fares by as much as 20 percent as soon as the company starts passing along the extra tax and licensing expenses on to the customer.

Others view it as a blow against the creativity of the free market—if new ideas will eventually be subjected to antiquated laws, what’s the point of innovating at all? Basically: Why create a new method of communication only to be reclassified as a phone company?

While Uber’s new designation currently applies only in the European Union, the move is likely to raise eyebrows here in the United States as well. Uber has dealt with its fair share of scandal and legal drama this year, activity that will only become more difficult for the company to weather if it is forced to play by the regulatory which govern U.S. transportation companies.

Take a taxi

Uber is fine on its own

By Missy Mae Walters

Uber drivers and riders beware, our government could soon be looking to impose restrictions on this technology. If it does, the simple tap of a button on your cell phone to “hail a driver” could be in trouble, and this modern-day convenience could become anything but convenient.

Just a little over two weeks ago, the European Union’s top court ruled Uber should be regulated like a taxi service and be required to only employ drivers with “professional licenses” as is the case with the European taxi association. Funny enough, a “professional license” really only means they have a year of driving experience and are 21 years of age. Uber argued not only is it just a technology platform, which differs it from the traditional taxi service, but it already adheres to the requirement. Essentially, the ruling was pointless but sent a strong message to Uber that more is yet to come. 

While I am not confident the U.S. will plan to take any cues from Europe, I do think we need to be watchful of the baby steps taking place abroad and domestically in targeting this industry for regulation. While some local municipalities and state governments have tried, they have not had much success in implementing regulations. What has happened is they have witnessed firsthand the backlash when Uber is pushed.

Back in 2015, the Kansas legislature passed stronger requirements for insurance coverage and background checks for drivers. I guess the current system was not up to their standards, which already require a criminal background check and car insurance. In response, Uber simply stopped operating in the state. The demand from customers and drivers was so great on social media that the legislature, in response, went back to the drawing board. The outcome: Uber is required to inform drivers they need to purchase both comprehensive and collision insurance—if their car is under a lien. If Uber does not enforce any provision, a civil suit from the state’s attorney general could be filed.

Uber accepted the updated requirements and reinstated operations immediately. The strong response from customers and drivers in Kansas is not isolated. It inevitably will be the response in many jurisdictions from Uber. 

The technology of connecting drivers and riders developed by Uber has revolutionized the way we travel. Customers now have direct access to drivers and have more control over their trips, in contrast to the iconic, yet outdated, checkered taxis of the past. They are able to get an immediate quote, a map overview of the trip from anticipated pick-up to arrival of their quoted destination, review driver performance, and even make a payment directly from their phone. Technology has provided for a stress-free experience.

The last time I took a ride in a “government-regulated” taxis service, I had a rude driver with a smelly cab who charged me nearly $50 for a 25-minute ride to the airport. The service was poor, and I really felt robbed to pay what I felt was a premium price for not-so-premium anything and everything. And I even had to wait nearly 45 minutes to be graced with the taxi driver’s service. 

Fast-forward to my experience with Uber, which is not currently regulated by the government. My driver was a young man—we’ll call him Eddy. Eddy provided premium service. He opened my door both in and out, helped me with my bags, engaged me in a conversation, and provided a spotless ride. He even had a cold bottle of water for me. The bill for the ride was a fraction of what the taxi driver had charged previously. That is the power of the market and competition. 

While Uber has required drivers to complete background checks for criminal activity, and does require drivers to have registration and carry insurance, I only see this as a means for government to have their fingers in just one more pie. It is not a matter of public safety. With a background check and the ability to rate drivers, there is already a mechanism in place to see how a driver treats its riders. 

So, for all of us who love Uber, the corruption of Uber will be done through a variety of regulation tools. There are three ways specifically, whether on the local, state, or federal level, where this technology industry will be stifled.

The lower prices will be a thing of the past. Any industry that sees regulation will ultimately have to increase their prices to meet with extra requirements added on by regulation standards. While it might still be a cheaper service, it definitely will not be a deal as it is now. Additionally, price controls could allow for the government to set the price charged per mile or instances of emergency service. This could be the case for those who opt to use Uber for transportation to the hospital rather than by ambulance. 

Instances of barriers to entry could also be instituted. This regulation would limit the quantity of vehicles allowed in a city or the number of competitors in a region. This amounts to prices being higher and the quality of goods and services being lower compared to a market made up of entrepreneurs who drive when they are available. 

So, with that said, if a government-regulated product is something that you believe in, then take a cab.

Scheming semantics

Uber reaps profits from unequal regulations

By Don Hurst

Uber should be treated like a taxi company in Europe (and in the U.S.) because it is a taxi company. They deserve credit for developing high-end packaging for transportation services, but at the end of the day, it is a company picking up passengers and driving them to their destinations. That sounds an awful lot like a taxi company. Uber has been using semantics to get around abiding by the same regulations as taxi companies.

The app makes the process feel new and cutting-edge, but the basics remain unchanged. When a passenger needs an Uber ride, they push a button on the app and Uber dispatches a vehicle to that location. When needing a taxi, a passenger can call the taxi company or use the Yellow Cab app. The taxi company then dispatches a taxi to that location. With Uber, the passenger pays Uber, Uber takes a cut, and then pays the driver. With Yellow Cab, the passenger pays Yellow Cab, Yellow Cab takes a cut, and then pays the driver. If that sounds pretty much the same, that’s because it is.

But I know…I know. Uber cars are so much better than smelly taxis. Most of the time they are. Uber is the new hotness and taxis are the old busted. I understand that, but governments impose artificial constraints against taxi companies that hinder their ability to evolve and compete against ride share services. 

Most countries in Europe require budding taxi drivers to possess special licenses that cost more than a basic driver’s license and require more extensive training. For example, in London, the process can take between two and four years to pass the certification test to drive the coveted black cab. London requires drivers to basically memorize city maps so they can navigate without GPS. Uber doesn’t have to abide by those regulations, so they are able to churn out drivers faster and charge less, so they don’t need to recoup training costs.

Governments also inflate taxi company rates through added taxes. European laws often did not force Uber drivers to pay these taxes because they are small independent operators. Cabs can cost 20 percent more than Uber rides just from the government’s tithe alone. 

Regulators also forbid taxi companies from raising their rates. Many locations have fare maximums posted where passengers can see them. On the other hand, Uber employs surge pricing to inflate rates during high demand periods up to 400 percent of base fares. Since Uber drivers in Europe don’t add taxes to their fares, that money can go to upgrading vehicles and technology, providing a better customer experience.

Official taxi drivers submit to a mandatory law enforcement background check which costs money. Uber employs a less rigorous background screening that, in almost all of its locations, doesn’t include a fingerprint check. Sure, not paying to properly vet employees, I mean independent contractors, keeps profits high, but degrades safety for the passengers. 

The rise of criminal complaints against Uber drivers in the past few years supports the idea that Uber’s background checks might not be stringent enough. Daveea Whitmire, a convicted felony drug dealer who passed Uber’s background check, wound up physically assaulting a passenger after throwing down racial and homophobic slurs. Last month the State of Colorado fined Uber $8.9 million for employing, I mean independently contracting, 60 drivers with felony convictions and for some drivers operating vehicles with revoked licenses for DUI. Saipov, the ISIS-inspired terrorist who plowed into pedestrians in New York a couple of months ago, passed Uber’s background check as well.

Don’t get me wrong, official taxi companies have some real winners working for them too, but if one of their drivers does something crazy the taxi companies are on the hook. If your Uber driver punches you or wrecks the car and puts you in the hospital, are you protected? From reading Uber’s user agreement, I’d have to answer, not really. When it comes to accepting responsibility, Uber’s response is a helpless shoulder shrug. The agreement clearly states that Uber does not accept responsibility if anything goes wrong during the ride. Uber does not guarantee any relief other than banning a driver from its app. I’m sure that alleviates the concerns of passengers injured by Uber’s independent contractors.

Taxi companies don’t get off the hook as easily. Courts hold them financially responsible for their drivers’ actions. Accountability like that costs money, which cuts into the profit margins.

The most significant difference is how European laws mandate companies treat their drivers. American companies and Uber classify their operators as independent contractors with no extra benefits beyond a flexible schedule and 80 percent of the fare. Most European taxi drivers are employees, not contractors. They earn a minimum wage, paid holidays, and compensated sick time as the law requires. Uber sidesteps those laws so they can financially undercut the taxi companies.

So for recap. Uber is allowed to pay their drivers less, ignore taxi licensure requirements, and charge passengers whatever they want. Less regulation. More profits. 

Uber might be the superior company. The destiny of the taxi might be to fade away like the stagecoach. But so far, the fight between the two hasn’t been fair. Let government regulators treat these companies that provide the same service the same and then we’ll see which is still standing.

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Sarah Sidlow
Reach DCP editor Sarah Sidlow at

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