The Uber explosion

11:43 am on 4 May 2016

What kind of explosion are we talking about?

Not of the dynamite variety. The app-based driver service Uber has, however, been growing at an explosive pace and generating some explosive anger among traditional taxi operators. In some places, such as New Zealand, Uber drivers are pretty pissed off, too.

Why are Uber drivers angry?

They're angry because the US-based company has cut fares by 20 percent, and made it far easier and cheaper for people to become Uber drivers.

Pull over for a second. What actually is Uber?

People know what Uber is. No need to bore them.

Don't assume.

OK. Anyone who already knows what Uber is should take the background bypass and scroll directly to the tuber.

The tuber?

You'll see.

OK. What is Uber?

Uber is a taxi alternative that uses digital technology to connect passengers with drivers. If you live in a city served by Uber and have their app on a smartphone, you can virtually hail a car, assuming there's one within an acceptable distance, which will deliver you to your selected destination. There is no meter per se, but an estimated fare. Each party can give the other a star ranking on the app. There are a range of variations around the world, but typically Uber fares are less than conventional cabs' fares, though at busy periods "surge pricing" can spring up, making it substantially more expensive for a ride, but encouraging more drivers to get on the road. Drivers usually keep 80 percent of the fare, paid via a pre-registered credit card, with 20 percent going to Uber.

The business model is part of the so-called "sharing economy" and takes advantage of "capacity utilisation" - in simple terms, enabling cars to spend a higher proportion of their active times transporting passengers than taxi firms. It is the very quintessence of market "disruption".

Please don't use the word "disruption".

All right.

Uber sounds German. Is it German?

No. Uber (originally UberCab) was founded in San Francisco in 2009. It has expanded rapidly and is currently available in more than 400 cities around the world, including Auckland, Wellington, and in fledgling form in Christchurch.

Where does it all leave taxis?

Old-school taxi operators around the world have furiously opposed the Uber explosion, saying it threatens the economic viability of their typically heavily-regulated, licence-requiring businesses.

In just the last few weeks there have been protests from taxi operators in Canada, Portugal, Argentina, Brazil, South Africa, Chile, Indonesia, Hungary and France, mostly in the form of on-road demonstrations.

Disrupting the traffic?


Is Uber allowed to operate everywhere?

No. It has faced numerous bans around the world, including cities in Germany, Japan, India and Australia.

But Uber drivers are unhappy, too?

Uber is currently facing a nationwide lawsuit in the US relating to the employment status of its drivers. The company was recently forced to make numerous concessions, and pay out as much as $US100 million to disgruntled drivers, to settle similar lawsuits in California and Massachusetts. There have been driver strikes in New York, California and South Africa, and New Zealand drivers are mulling a strike, too.

Will they?

They might. A group of about 30 met recently to discuss the Uber changes, with a spokesman saying the 20 percent cut left them working for "a slavery rate". Existing Uber drivers argue that, unless newcomers possess P as they do, the door will be opened to "cowboys".

Wait. Possess P?

Up to now, Uber has required would be drivers to gain a P, or passenger, endorsement for their licence, as well as a vehicle Certificate of Fitness, which altogether costs a reported $2000. Instead, to operate as "ride-share" drivers, Uber requires simply a licence for two years or more, background driving record and criminal checks, a car younger than 10 years and third party insurance.

What does the NZ regulator have to say about that?

It's unlawful, says the New Zealand Transport Agency, which rejects Uber's claim to be offering a ride-share service. "They are not operating within regulations," a representative said, "and we will issue warnings or infringements and can take people to court."

And Uber's response?

Their Australasian policy director told RNZ: "The last time I checked there was no problem with sharing a ride in your own vehicle and that's exactly what people are doing ... We think that it would be unacceptable if the government thought to punish people for providing safe and reliable transport."

That sounds like a standoff.

Yes it does.

Is the government doing anything to revisit regulation of the sector?

Excellent question. Yes it is. It has announced plans to regulate taxis, Ubers, tuk-tuks, the lot, under the category of small passenger service. It would considerably relax the requirements for existing taxi drivers and companies.

Sure about the tuk-tuks?


Is this why Uber has changed its driver requirements?

Whether or not it is a direct response to the government proposals, Uber obviously benefits by avoiding many of the costly regulatory demands for the old-school taxi firms. But Uber's big thing is rapid growth, or "scaling" as the disruption people like to say.


Don't know, they just love saying scaling and disruption, presumably.

No, why are they so keen on rapid growth?

Uber wants to become the Google of the roads - to make Uber ubiquitous, a byword for delivery of people and things in the same way Google is a byword for online search.

What's this "and things"?

Uber's "simple mission" is "transportation as reliable as running water everywhere and for everyone". Their ambitions are not simply about moving people, but also moving products - online purchases, pizza, whatever. They're keen on self-driving cars, too.

Can anything stop them?

In many cities there are already a number of similar competitors, the best known being Lyft, and there will be more. Uber is determined to keep growing juggernaut-style, and that growth is pivotal to its staggering $62.5 billion valuation. Uber has been described as the "most valuable American company of its generation", but it is not invincible.

Incredibly impressive. What's not to like?

There's the safety question, but while some, including taxi companies, have claimed Uber's lower barriers to driving make passenger safety more of a problem this is disputed by Uber, and in the US the evidence appears to be largely anecdotal.

Uber has been criticised for failing to cater for disabled passengers. The company says it has been introducing more accessible vehicles and other options, but these have been rejected as unsatisfactory.

Then there's the question of the culture.

What about it?

Some don't fancy the idea of using Uber owing to the behaviour of some of its executives. Co-founder Travis Kalanick says his pushy approach is a result of being a "fierce advocate" but acknowledges that some may choose a "different 'a'-word to describe me".

Apart from drivers' grievance claims, there have been reports of highly dubious competitive strategies as well as mooted attempts to punish critical journalists by digging into their private lives. Respected technology journalist Bobbie Johnson has written that despite the "dick-swinging, the gluttony, the not-quite-lies and the full-on bullshit" associated with the business, Uber prospers. Why? "We have our beliefs, our morals, our instincts. We have our dislike of douchebags, our mistrust of bad behaviour. We have all that. But in the end, it turns out that if something's 10 percent cheaper and 5 percent faster, we'll give it all up quicker than we can order a sandwich."

Scale it down to 25 words.

In NZ and almost everywhere, the furiously accelerating cab-app multinational Uber is bumping its bull bars up against the old-school taxis and the town halls.

And 80 percent of five words?

The information Uber highway.

Toby Toby stamp

* This column is part of a weekly series published every Wednesday, by graphic artist Toby Morris and journalist Toby Manhire.