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Uber Can’t Be Fixed – It’s Time for Regulators to Shut It Down

52 points by denzil_correa 9y ago

thaumasiotes 9y ago
There are some points in here that I broadly agree with: > Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules. > Uber’s most distinctive capabilities focused on defending its illegality. Uber built up staff, procedures, and software systems whose purpose was to enable and mobilize passengers and drivers to lobby regulators and legislators — creating political disaster for anyone who questioned Uber’s approach. > Having built a corporate culture that celebrates breaking the law, it is surely no accident that Uber then faced scandal after scandal. How is an Uber manager to know which laws should be followed and which ignored? Even this: > If we allow an illegal business model to flourish in one sector, soon businesses in that sector and others will see that the shrewd strategy is to ignore the law, seek forgiveness rather than permission, and hope for the best. That seems reasonable. But the author wants to draw a pretty different conclusion than I would -- his point is that it's necessary to stomp hard on this kind of behavior, because if people notice that breaking the law benefits everyone, they will lose respect for the law. I don't see that as a "problem" we should be attempting to solve. Where breaking the law benefits everyone, we should lose respect for the law. I would say the law should stop staking out such ludicrous positions and then trying to defend them based purely on the idea that if it loses a single battle, chaos will reign everywhere. Just yesterday I read a court judgment of a guy convicted of drug trafficking. He was caught after police pulled him over for driving 79 mph in a 75 zone. To me, that's not a victory for the cause of "respect for the law".
- aaroninsf 9y ago
  The silent erroneous elision you make is that you take as an axiom that at least in Uber's case, at least "broadly speaking" perhaps, "breaking the law benefits everyone." The silent proposition is that there is some body of law and regulation which benefits no one, or which benefits some in an unjust way (e.g. protecting markets from new entrants). That is certainly true but it's the crux of the entire debate, and reasonable position IMO is that if there are laws and regulations overdue for overhaul or discard, that is a debate we have first using established mechanisms. There can not realistically be any gray area here. The law and regulation cannot in a civil society be "opt in" and adherence be left in effect a matter of discretion on the part of those e.g. seeking to "disrupt" the status quo. There are always costs and benefits and extant law and regulation represents the state of play in our society as to which arguments (rightly or wrongly) have prevailed. There are mechanisms however painfully slow (from the perspective of would-be disruptors) for moving the lines. But maintaining collective complete commitment to consensus respect of those lines whatever they are despite personal preference or benefit is the very foundation of the rule of law. As an aside it's worth commenting that the overwhelming evidence is that transgression is inevitably to the disproportionate benefit of a few, with the costs disproportionately "externalized" on to the commons or the powerless. Uber's behavior has been one demonstration of that after another.
  - kinkrtyavimoodh 9y ago
    > if there are laws and regulations overdue for overhaul or discard, that is a debate we have first using established mechanisms. While this is all hunky-dory in the abstract, it's usually more complicated in reality. Established mechanisms are not always equally accessible to everyone (in practice, not in theory), nor are they equally effective for everyone. There's a reason protestors take to the streets* instead of calmly writing to their Congressmen about their problems. We can debate ad-nauseum about whether or not Uber crossed the line, but let's not pretend that changing (or even starting a discussion about changing) the status quo is straightforward. * Yes, I know that protesting in the streets is also an established mechanism, but I hope you get my point
  - thaumasiotes 9y ago
    > But maintaining collective complete commitment to consensus respect of those lines whatever they are despite personal preference or benefit is the very foundation of the rule of law. I hope not, or "the rule of law" has never existed and never will. Did you miss my point about the drug trafficker driving 79 in a 75? How far do you think we've gotten towards the goal of "complete commitment to consensus respect of" the traffic laws? Traffic laws are the poster child of the concept "trying to legislate what no one believes in just makes the law lose face before the people". They've turned the police from something people view positively into something people fear. You can be pulled over for driving at the speed limit, because that behavior is unnatural enough that it's suspicious. (And that's true! It is.) You can be pulled over for driving 4 mph over the speed limit. What happened to the rule of law?
    - aaroninsf 9y ago
      This is an analogy utterly devoid of any correlative lesson. Consensus adherence to norms of conduct codified are the definition of society and civilization. Objectivist fantasies to the contrary are only that; they invariably lose their charm the instant someone has the ground of largely unrecognized inherited protections and rights jerked out from under them. That law is selective, imperfect, and constantly trailing the realities of the day are problems worth solving. It is astonishing to me sometimes, listening to the cant of "disruption", how eerily similar the total dependence on parasitic herd immunity antivaxxers enjoy is, to the total dependence of the rule of law and benefits of regulation libertarians and other would-be disruptors enjoy. As the article says: Uber is a cautionary tale in almost every domain, from their relation to their workforce, their "contractors," the cities they work in... Everyone sure loves a subsidized ride, right up until the party's over. I enjoyed subsidized lots-of-things the last couple bubbles too. The party ended then as well.
- toss1 9y ago
  "Where breaking the law benefits everyone, we should lose respect for the law." In this case, it doesn't benefit everyone, especially not everyone equally -- it benefits Uber massively, and only incidentally benefits customers, and basically rips off the driver's time and investment. That said, you're resting on the point that this kind of thing can occasionally bring about marginally beneficial change faster than legal methods. What you are arguing is that "startups" should be allowed to freelance the rearrangement of benefits in our society and ignore the law in doing so. You want the rule of entrepreneurial people to override the rule of law. Yet, this is a society and country built on the rule of law. And yes, the rule of law is much more cumbersome than the rule of men/women. What you argue for is tantamount to anarchy, or at best rule by (economic) warlord. It may seem like a good idea at first, but it is a rapid path to a broken society.
  - dv_dt 9y ago
    Though it conflicts with other desirable principles, I think that without Uber, almost all of the innovation benefits from ride sharing would not have been pursued by the existing taxi industry. Customers have benefited directly and indirectly from the presence of Uber. While one does need to maintain a "rule of law" to maintain society, but I would argue that the application of that is not wholly a precise mathematical or computational execution of laws. There needs to be a human-based fuzzy medium in that rule, the binary and complete enforcement of the laws as the definition of "rule of law" is both an unattainable standard and a terrifying goal. That little human buffer isn't 'anarchy', it's a needed degree of freedom needed to prevent tyranny becoming a friction that grinds up the entire machine of our society.
    - toss1 9y ago
      The elements of "fuzzy medium", "buffer", human judgement should of course always be included in any justice system. That does not justify deliberately and systematically exploiting the slack in the system for your own benefit and to the detriment of others. Uber was and is not civil disobedience. Its business model was to exploit every bit of available slack in the system to its own benefit and to the detriment of everyone else. Notice how the typical driver only lasts a few months there. This is flatly unethical, and the broad-based unethical slime came right from the top in the form of scandal after scandal, which finally sunk the CEO (and rightfully so). And NO, the ends do not justify the means. Especially not when the means are a massive unethical and exploitative company being built to accelerate by a few years the hidebound practices of a minor industry for a minor improvement in the occasional transportation convenience of urban hipsters. And, while it of course had the minor benefit of accelerating improvement in the taxi industry, it also destroyed the business value of those in the industry, many of whom are aspiring small businesses whose retirement (value of medallion) is now 6-figure debt. It has also probably torched billions of investment capital that could have gone to other more productive and ethical uses in the technology industry. (my bet is that Uber is in a death spiral.) Moreover, it was completely unnecessary for it to have been so unethical. Merely remaining as a proper and ethical ride-sharing service as it (purportedly) started, would have created similar innovation at a more moderate pace. Again, the ends do not justify the means. Not in this case and not as a general rule. I recommend taking a few ethics courses or reading a few philosophers.
GrumpyNl 9y ago
Thats a great piece and right on the money.
PatentTroll 9y ago
And what about AirBnb? Or any of the many 'gig economy' startups that flaunt labor laws? I agree with the article. Let's not punish innovation, but let's make sure we don't get a new normal of startups making money by breaking the law. And not just abstract policy wonk big gummint type of law, but like the things that make sure people don't get taken advantage of and are safe.
- CodeWriter23 9y ago
  Your expensive rent, you can thank AirBNB for that, and they should be burned to the ground. The simple fact that the author glosses over is ridesharing, despite its scofflaw roots, has been legitimized and codified into law, because it is good for people and the people want it. Whereas what we're seeing with AirBNB is legislation to strictly curtail their activity. Because their activity is bad for people, and people who are locals don't want it.
  - naravara 9y ago
    >Your expensive rent, you can thank AirBNB for that My rent was expensive for years before AirBnB came on the scene. AirBnB might put some slight upward pressure on rents in markets with a lot of tourism, but it pales in comparison to the simple fact that supply does not meet demand. Thank the zoning regs and lack of transit investment in less-urban parts of your metro area.
    - CodeWriter23 9y ago
      You haven't been paying attention to rents pre-AirBNB or you do not live in a city that has a tight supply of housing.
    - ABCLAW 9y ago
      Recent analysis of several real estate markets in Canada indicates that the supply side explanation for total unit cost and rental price increases is not accurate.
      - 9y ago
CodeWriter23 9y ago
This article has a really bad "smell test" problem for me. Mostly because the author chose to actually point out that Lyft were the original perpetrators of the illegal Rideshare ride, then swiftly shifts focus back to why Uber is the company that needs to be crucified for this sin, and has not one gram of ire for Lyft. I mean it seems a bit of a bias against Uber to me. And I'm no fan of Uber. And let's be real, the underlying whine of this author is Lyft and Uber broke the status quo by bypassing the traditional way corporations get laws made - lobbyists, bribes framed as campaign contributions, and favors. Instead Uber put politicians in the position of having to pay for not passing legislation Uber wanted.
- ncr100 9y ago
  This comment smells like all-or-nothing thinking to me. The article may have a flaw of unspecificity which I think has resulted in bumping readers off of the writer's path of thinking, instead. The article is educational, illustrating a short-term financially successful, legally questionable approach to disruption, pitting evolving norms against regulatory laws. "Whining" is mere rhetoric, I assume from the commenter's perspective, since I cannot find that tone present in the article. Instead, a flaw I think the article has is overlooking pointedly justifying why regulatory laws are necessary. It describes normalizing lawbreaking, and implies Uber is establishing a cracked foundation for its new industry. But the article didn't say that's bad. Still, the article is valid in spite of it focusing on Uber: Uber pivoted after seeing and complaining about Lyft gaining an advantage. Unfortunately, why this is bad is undercapitalized by the article.
  - CodeWriter23 9y ago
    The headline implies that the Lyft/Uber approach is bad.
    - ncr100 9y ago
      Yeah the article could be much more strongly worded overall IMO.
    - 9y ago
canada_dry 9y ago
Perhaps Amazon will take them over... someone's gotta deliver the Whole Foods groceries. </sarcasm>
suyash 9y ago
The article failed to address one of the most critical problem with Uber - it's bully culture internally specially against women and other employees who were not bullies themselves. It starts straight from the top if anyone had any doubt.
- JKCalhoun 9y ago
  And get off my lawn, you, you ... bro-grammers. Sorry, somewhat serious though. I was going to say something about this recent "bro-culture" having cast a pall over the software engineering profession but realized I was going to sound like an old man.
georgeecollins 9y ago
I like the analogy to Napster. Napster was a fundamentally illegal business that people accepted because of its' innovation. When it was shut down, things didn't go back to the old model for music sales. Instead the old model was replaced with companies that were innovative and legal.
mee_too 9y ago
Uber is amazing. Some people want to get humankind back to the caves ...
davidf18 9y ago
Fascinating, an Associate Prof at Harvard who can't do research: "Get a TLC license New York City With more riders than any other app, Uber is a great way to make money driving in NYC. You'll need a TLC license to pick up riders, but we've made the signup process quicker and easier than ever." https://www.uber.com/drive/new-york/get-a-license/ https://www.uber.com/drive/new-york/get-a-license/ and this: http://driveubernyc.com/tlc-overview/ http://driveubernyc.com/tlc-overview/ Uber most certainly does follow the law. He should write a retraction. NYC is by far the largest market for Uber. It took me 10 seconds to google this information. If this professor can't take the less than one minute to do research, how can you trust absolutely anything else this man writes?

52 points by denzil_correa 9y ago

There are some points in here that I broadly agree with: > Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules. > Uber’s most distinctive capabilities focused on defending its illegality. Uber built up staff, procedures, and software systems whose purpose was to enable and mobilize passengers and drivers to lobby regulators and legislators — creating political disaster for anyone who questioned Uber’s approach. > Having built a corporate culture that celebrates breaking the law, it is surely no accident that Uber then faced scandal after scandal. How is an Uber manager to know which laws should be followed and which ignored? Even this: > If we allow an illegal business model to flourish in one sector, soon businesses in that sector and others will see that the shrewd strategy is to ignore the law, seek forgiveness rather than permission, and hope for the best. That seems reasonable. But the author wants to draw a pretty different conclusion than I would -- his point is that it's necessary to stomp hard on this kind of behavior, because if people notice that breaking the law benefits everyone, they will lose respect for the law. I don't see that as a "problem" we should be attempting to solve. Where breaking the law benefits everyone, we should lose respect for the law. I would say the law should stop staking out such ludicrous positions and then trying to defend them based purely on the idea that if it loses a single battle, chaos will reign everywhere. Just yesterday I read a court judgment of a guy convicted of drug trafficking. He was caught after police pulled him over for driving 79 mph in a 75 zone. To me, that's not a victory for the cause of "respect for the law".

aaroninsf 9y ago
The silent erroneous elision you make is that you take as an axiom that at least in Uber's case, at least "broadly speaking" perhaps, "breaking the law benefits everyone." The silent proposition is that there is some body of law and regulation which benefits no one, or which benefits some in an unjust way (e.g. protecting markets from new entrants). That is certainly true but it's the crux of the entire debate, and reasonable position IMO is that if there are laws and regulations overdue for overhaul or discard, that is a debate we have first using established mechanisms. There can not realistically be any gray area here. The law and regulation cannot in a civil society be "opt in" and adherence be left in effect a matter of discretion on the part of those e.g. seeking to "disrupt" the status quo. There are always costs and benefits and extant law and regulation represents the state of play in our society as to which arguments (rightly or wrongly) have prevailed. There are mechanisms however painfully slow (from the perspective of would-be disruptors) for moving the lines. But maintaining collective complete commitment to consensus respect of those lines whatever they are despite personal preference or benefit is the very foundation of the rule of law. As an aside it's worth commenting that the overwhelming evidence is that transgression is inevitably to the disproportionate benefit of a few, with the costs disproportionately "externalized" on to the commons or the powerless. Uber's behavior has been one demonstration of that after another.
- kinkrtyavimoodh 9y ago
  > if there are laws and regulations overdue for overhaul or discard, that is a debate we have first using established mechanisms. While this is all hunky-dory in the abstract, it's usually more complicated in reality. Established mechanisms are not always equally accessible to everyone (in practice, not in theory), nor are they equally effective for everyone. There's a reason protestors take to the streets* instead of calmly writing to their Congressmen about their problems. We can debate ad-nauseum about whether or not Uber crossed the line, but let's not pretend that changing (or even starting a discussion about changing) the status quo is straightforward. * Yes, I know that protesting in the streets is also an established mechanism, but I hope you get my point
- thaumasiotes 9y ago
  > But maintaining collective complete commitment to consensus respect of those lines whatever they are despite personal preference or benefit is the very foundation of the rule of law. I hope not, or "the rule of law" has never existed and never will. Did you miss my point about the drug trafficker driving 79 in a 75? How far do you think we've gotten towards the goal of "complete commitment to consensus respect of" the traffic laws? Traffic laws are the poster child of the concept "trying to legislate what no one believes in just makes the law lose face before the people". They've turned the police from something people view positively into something people fear. You can be pulled over for driving at the speed limit, because that behavior is unnatural enough that it's suspicious. (And that's true! It is.) You can be pulled over for driving 4 mph over the speed limit. What happened to the rule of law?
  - aaroninsf 9y ago
    This is an analogy utterly devoid of any correlative lesson. Consensus adherence to norms of conduct codified are the definition of society and civilization. Objectivist fantasies to the contrary are only that; they invariably lose their charm the instant someone has the ground of largely unrecognized inherited protections and rights jerked out from under them. That law is selective, imperfect, and constantly trailing the realities of the day are problems worth solving. It is astonishing to me sometimes, listening to the cant of "disruption", how eerily similar the total dependence on parasitic herd immunity antivaxxers enjoy is, to the total dependence of the rule of law and benefits of regulation libertarians and other would-be disruptors enjoy. As the article says: Uber is a cautionary tale in almost every domain, from their relation to their workforce, their "contractors," the cities they work in... Everyone sure loves a subsidized ride, right up until the party's over. I enjoyed subsidized lots-of-things the last couple bubbles too. The party ended then as well.
toss1 9y ago
"Where breaking the law benefits everyone, we should lose respect for the law." In this case, it doesn't benefit everyone, especially not everyone equally -- it benefits Uber massively, and only incidentally benefits customers, and basically rips off the driver's time and investment. That said, you're resting on the point that this kind of thing can occasionally bring about marginally beneficial change faster than legal methods. What you are arguing is that "startups" should be allowed to freelance the rearrangement of benefits in our society and ignore the law in doing so. You want the rule of entrepreneurial people to override the rule of law. Yet, this is a society and country built on the rule of law. And yes, the rule of law is much more cumbersome than the rule of men/women. What you argue for is tantamount to anarchy, or at best rule by (economic) warlord. It may seem like a good idea at first, but it is a rapid path to a broken society.
- dv_dt 9y ago
  Though it conflicts with other desirable principles, I think that without Uber, almost all of the innovation benefits from ride sharing would not have been pursued by the existing taxi industry. Customers have benefited directly and indirectly from the presence of Uber. While one does need to maintain a "rule of law" to maintain society, but I would argue that the application of that is not wholly a precise mathematical or computational execution of laws. There needs to be a human-based fuzzy medium in that rule, the binary and complete enforcement of the laws as the definition of "rule of law" is both an unattainable standard and a terrifying goal. That little human buffer isn't 'anarchy', it's a needed degree of freedom needed to prevent tyranny becoming a friction that grinds up the entire machine of our society.
  - toss1 9y ago
    The elements of "fuzzy medium", "buffer", human judgement should of course always be included in any justice system. That does not justify deliberately and systematically exploiting the slack in the system for your own benefit and to the detriment of others. Uber was and is not civil disobedience. Its business model was to exploit every bit of available slack in the system to its own benefit and to the detriment of everyone else. Notice how the typical driver only lasts a few months there. This is flatly unethical, and the broad-based unethical slime came right from the top in the form of scandal after scandal, which finally sunk the CEO (and rightfully so). And NO, the ends do not justify the means. Especially not when the means are a massive unethical and exploitative company being built to accelerate by a few years the hidebound practices of a minor industry for a minor improvement in the occasional transportation convenience of urban hipsters. And, while it of course had the minor benefit of accelerating improvement in the taxi industry, it also destroyed the business value of those in the industry, many of whom are aspiring small businesses whose retirement (value of medallion) is now 6-figure debt. It has also probably torched billions of investment capital that could have gone to other more productive and ethical uses in the technology industry. (my bet is that Uber is in a death spiral.) Moreover, it was completely unnecessary for it to have been so unethical. Merely remaining as a proper and ethical ride-sharing service as it (purportedly) started, would have created similar innovation at a more moderate pace. Again, the ends do not justify the means. Not in this case and not as a general rule. I recommend taking a few ethics courses or reading a few philosophers.

GrumpyNl 9y ago

Thats a great piece and right on the money.

PatentTroll 9y ago

And what about AirBnb? Or any of the many 'gig economy' startups that flaunt labor laws? I agree with the article. Let's not punish innovation, but let's make sure we don't get a new normal of startups making money by breaking the law. And not just abstract policy wonk big gummint type of law, but like the things that make sure people don't get taken advantage of and are safe.

CodeWriter23 9y ago
Your expensive rent, you can thank AirBNB for that, and they should be burned to the ground. The simple fact that the author glosses over is ridesharing, despite its scofflaw roots, has been legitimized and codified into law, because it is good for people and the people want it. Whereas what we're seeing with AirBNB is legislation to strictly curtail their activity. Because their activity is bad for people, and people who are locals don't want it.
- naravara 9y ago
  >Your expensive rent, you can thank AirBNB for that My rent was expensive for years before AirBnB came on the scene. AirBnB might put some slight upward pressure on rents in markets with a lot of tourism, but it pales in comparison to the simple fact that supply does not meet demand. Thank the zoning regs and lack of transit investment in less-urban parts of your metro area.
  - CodeWriter23 9y ago
    You haven't been paying attention to rents pre-AirBNB or you do not live in a city that has a tight supply of housing.
  - ABCLAW 9y ago
    Recent analysis of several real estate markets in Canada indicates that the supply side explanation for total unit cost and rental price increases is not accurate.
    - 9y ago

CodeWriter23 9y ago

This article has a really bad "smell test" problem for me. Mostly because the author chose to actually point out that Lyft were the original perpetrators of the illegal Rideshare ride, then swiftly shifts focus back to why Uber is the company that needs to be crucified for this sin, and has not one gram of ire for Lyft. I mean it seems a bit of a bias against Uber to me. And I'm no fan of Uber. And let's be real, the underlying whine of this author is Lyft and Uber broke the status quo by bypassing the traditional way corporations get laws made - lobbyists, bribes framed as campaign contributions, and favors. Instead Uber put politicians in the position of having to pay for not passing legislation Uber wanted.

ncr100 9y ago
This comment smells like all-or-nothing thinking to me. The article may have a flaw of unspecificity which I think has resulted in bumping readers off of the writer's path of thinking, instead. The article is educational, illustrating a short-term financially successful, legally questionable approach to disruption, pitting evolving norms against regulatory laws. "Whining" is mere rhetoric, I assume from the commenter's perspective, since I cannot find that tone present in the article. Instead, a flaw I think the article has is overlooking pointedly justifying why regulatory laws are necessary. It describes normalizing lawbreaking, and implies Uber is establishing a cracked foundation for its new industry. But the article didn't say that's bad. Still, the article is valid in spite of it focusing on Uber: Uber pivoted after seeing and complaining about Lyft gaining an advantage. Unfortunately, why this is bad is undercapitalized by the article.
- CodeWriter23 9y ago
  The headline implies that the Lyft/Uber approach is bad.
  - ncr100 9y ago
    Yeah the article could be much more strongly worded overall IMO.
  - 9y ago

canada_dry 9y ago

Perhaps Amazon will take them over... someone's gotta deliver the Whole Foods groceries. </sarcasm>

suyash 9y ago

The article failed to address one of the most critical problem with Uber - it's bully culture internally specially against women and other employees who were not bullies themselves. It starts straight from the top if anyone had any doubt.

JKCalhoun 9y ago
And get off my lawn, you, you ... bro-grammers. Sorry, somewhat serious though. I was going to say something about this recent "bro-culture" having cast a pall over the software engineering profession but realized I was going to sound like an old man.

georgeecollins 9y ago

I like the analogy to Napster. Napster was a fundamentally illegal business that people accepted because of its' innovation. When it was shut down, things didn't go back to the old model for music sales. Instead the old model was replaced with companies that were innovative and legal.

mee_too 9y ago

Uber is amazing. Some people want to get humankind back to the caves ...

davidf18 9y ago

Fascinating, an Associate Prof at Harvard who can't do research: "Get a TLC license New York City With more riders than any other app, Uber is a great way to make money driving in NYC. You'll need a TLC license to pick up riders, but we've made the signup process quicker and easier than ever." https://www.uber.com/drive/new-york/get-a-license/ https://www.uber.com/drive/new-york/get-a-license/ and this: http://driveubernyc.com/tlc-overview/ http://driveubernyc.com/tlc-overview/ Uber most certainly does follow the law. He should write a retraction. NYC is by far the largest market for Uber. It took me 10 seconds to google this information. If this professor can't take the less than one minute to do research, how can you trust absolutely anything else this man writes?