Opinion: Cracked down upon by government? There’s an app for that

An ambitious company looking to take over the world can deal with government in one of two ways. It can reach out to friendly legislators and shower them with bribes and/or campaign contributions. Or it can ignore them, and the laws on the books, and try to get its way by bullying and generally running roughshod over them.

The private pseudo-taxi service Uber clearly prefers the second approach.

The company is only a few years old, yet it has rapidly expanded into hundreds of cities around the world and potentially could be worth as much as $50 billion. It is celebrated and reviled as the ultimate Silicon Valley “disruptor” of what it characterizes as a dying, archaic, out-of-touch “legacy” industry: the taxi business. Though it is certainly debatable whether taxis deserve to go the way of the dinosaur (disclosure: I drove a taxi in New York during the 1980s), and Uber’s claims that they pay a small fortune to its drivers are, to be charitable, questionable, what is undeniable is that the company has earned powerful, especially among the young, supporters among its users. Some even claim to be addicted to it.

Uber executives are banking on that base of support among influential opinion-makers online and in legacy media outlets to protect them against political backlash. Some of that anger is, understandably, led by politicians beholden to the traditional taxi industry. Others are skeptical of the so-called “sharing economy” embodied by companies such as Uber and Airbnb. They are worried that the already hollowed out middle class will lose even more full-time jobs to subsistence existences at the mercy of freelance gigs that come and go at the whim of market preferences.


There also are those who don’t have an ax to grind, but insist that the company follow the rules. Such is the apparent motivation of a California judge who ruled last week that Uber should be suspended from operating in the state and fined $7.3 million for willful failure to comply with state regulations. Those rules require car companies to document that they are not discriminating against would-be passengers, such as disabled people and/or those who want to bring their service animals.

“They had a year to comply with these regulations, and didn’t do it,” a spokesperson for the California Public Utilities Commission pointed out.

This isn’t Uber’s first time at the legal rodeo. In Europe, “More than a dozen lawsuits have been filed in recent months in countries across the continent, where some analysts say the company is in danger of being shut down or becoming so entangled in legislation as to be neutered,” report Laura J. Nelson, Andrea Chang and Paresh Dave of The Times.

Like many fast-rising Silicon Valley startups, Uber just doesn’t seem to understand its obligation to be subservient to government regulations. It violates the directive on a parking garage sign that I like to quote: “know your level.” In Uber’s case, that means don’t try to box above your weight class.

Michael Pachter, managing director of equities research at Wedbush Securities, said it like this: “No amount of bluster is going to get the CPUC off their case. You don’t pick a fight with someone who can kick your butt. Uber needs to restrain its hubris.”

Excellent advice.