Uber and Lyft Threaten To Abandon Chicago To Avoid Licensing


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Harry here. RSG contributor Christian Perea and I will be heading to Austin next week to talk to some drivers about what life has been like now that Uber and Lyft are gone and to meet with some of the companies looking to fill that void.  You can follow along with our journey on Facebook – we’ll be posting updates, pictures and videos.  And an article or two on the blog once we get back.

Today’s lead story from RSG contributor John Ince might give you deja vu though from the recent news in Austin.  Uber and Lyft are now threatening to pull out of Chicago because of increased regulation and we now know that this isn’t an idle threat.  But with more stories by the day of serious safety issues with TNC drivers (see below), stricter regulation could be a good thing, right?

Oh, and if you’re looking for more Uber reading, Motherboard/Vice dedicated all of last week to Uber Earth – a huge series of posts examining everything from ‘Why Everyone Hates UberPool‘ to ‘How Uber is Changing Drug Dealing‘.  I also want to thank Louise Matsakis at Motherboard for her feature on me, I thought she did a great job capturing what we’re trying to do here on The Rideshare Guy and I’m happy to be able to provide so much help to drivers looking to navigate this industry 🙂

In this week's round up, John Ince covers Uber in Chicago, self-driving cars, and more. What do you think of this week's round up?

Uber and Lyft Threaten To Abandon Chicago To Avoid Licensing

Sum and Substance: A news conference by drivers for ride-hailing services and their political allies kicked off Wednesday’s PR battle, which included a hearing on an ordinance to regulate Lyft, Uber and similar services. 

Two-thirds of Chicago’s 50 aldermen want to license ride-hailing drivers to improve public safety and level the playing field with a taxicab industry fighting for survival against Uber and Lyft. That didn’t change Wednesday even after a daylong hearing that saw both companies play the race card and threaten to abandon the Chicago market if that’s what it takes to avoid licensing. 

“If this ordinance were to pass, ride-sharing as we know it would no longer exist in Chicago,” said Uber’s Chicago general manager Marco McCottry. Joseph Okpaku, Lyft’s vice president of government relations, said it’s a “distinct possibility” that the company would pull up stakes. Both Uber and Lyft have recently left the Austin, Texas, market after losing a regulation battle there. 

Okpaku argued that Lyft drivers — 80 percent of whom drive less than 15 hours-a-week — would not be willing to jump through the regulatory hoops to get a restricted chauffeurs license. That includes paying a $115 fee, passing a one-day course and undergoing a fingerprint-based background check. “We cannot operate under a regulatory framework like this. If you can’t get part-time, casual drivers on board, the model fails . . . If you shut off the critical mass of drivers, the whole system starts to crumble,” Okpaku said. 

Ald. Anthony Beale (9th), chairman of the City Council’s Transportation Committee, wasn’t cowed by the threats to abandon the Chicago market. He argued that a $68 billion industry can afford to absorb the nominal cost of licensing. “If you keep pulling out of every city that tries to regulate, you won’t have any place to operate,” said Beale, who made several threats to clear a City Council chamber filled with Uber and Lyft drivers.

My Take:  Is this a re-run of the Austin scenario?  Uber and Lyft threaten to leave Chicago, because what the aldermen are asking threatens their business model – which relies on recruiting part timers.  But filter this story through the story below about an Uber driver with longstanding criminal tendencies slipping through the cracks and it gives you pause.  Which is more important – Uber’s business model or the safety of passengers?

Police: Uber driver arrested after attempting to murder police officers

Sum and Substance: An Uber driver with an extensive criminal record has been arrested for allegedly attempting to shoot and kill Montgomery County Police officers with a homemade gun. 

Jonathan Hemming, 52, of Gaithersburg, is now facing two counts each of Attempted First Degree Murder and Attempted Second Degree Murder, plus an additional 17 assault, drug and weapons charges. On Wednesday, May 18, around 3:30 p.m., a swarm of undercover Montgomery County officers surrounded Hemming’s car along the 16000 block of Comprint Court in Gaithersburg. Hemming and his wife were leaving a doctor’s office at the time. The cops, assigned to the Repeat Offender Unit, were seeking to arrest Hemming on a bench warrant for multiple drug offenses, court documents indicate. 

Hemming, however, allegedly resisted, abruptly slamming the front driver’s side door of his silver Honda Civic. A dramatic struggle ensued, during which police say Hemming grabbed a homemade handgun capable of firing shotgun rounds from the front passenger glove compartment. The 52-year-old Uber driver then proceeded to point the gun at two detectives’ heads, attempting, but unsuccessfully firing the weapon, police say. 

After placing Hemming in handcuffs, officers found a needle cap, prescription vial, syringe, rubber tie off straps, live shotgun shells, live handgun rounds, pill bottle, metal pill holder, handcuff key, garden clippers, and pocket knife in his pant pockets. They located a second homemade weapon in his vehicle.

According to court documents, during a sit down interview with homicide detectives, Hemming stated he researched how to build firearms online. He also explained that he knew the devices were capable of firing. ABC7 has learned that Hemming was employed as an Uber driver at the time of his May 18 arrest, assigned to drive the same car officers discovered the handmade firearms stashed inside. ABC7 has also uncovered Hemming’s lengthy felony record in Florida, Maryland and Ohio for crimes like weapons possession, arson, armed robbery, burglary, cocaine possession, vehicle theft and malicious destruction of property.

My Take:  How many incidents like this can TNCs absorb and still maintain the trust of their clientele and the blessings of regulators?  This guy clearly was a security risk.  How could he have possibly slipped through Uber’s background check?  How can Uber make their case to regulators in places like Austin and Chicago who are demanding fingerprinting – and do it with a straight face?

No beating around the bush – this is ugly and it’s smearing Uber’s carefully crafted PR image.  It’s time for Uber and Lyft to face up to an underlying reality – having people get into stranger’s cars is inherently fraught with danger, both for passengers and drivers.  Yes, the percentage of incidents is low relative to the number of rides given, but it’s very difficult for me to accept the pursuit of profitability as a justification for cutting corners on the safety issue.

Lyft now lets you schedule rides up to 24 hours ahead of time

Sum and Substance: Lyft, one of the leading ride-hailing services in the U.S., announced Monday that it is testing a new option to let customers pre-order rides up to 24 hours ahead of time. 

The feature — common to traditional car services and a popular request for customers of on-demand startups like Uber and Lyft — will cost users a little extra. The minimum fare, according to a Lyft spokesperson, is $20 per ride.  “While on-demand rides remain core to our platform, we’re thrilled to offer even more options to passengers — as well as another opportunity for drivers to earn,” Lyft said in a statement about the new feature. 

Demand for this feature is clearly there, as evidenced by the existence of third-party applications like TaxiLater which helps Uber customers schedule rides for later.  A spokesperson for Lyft said it was important to offer the option to provide “additional peace of mind” to customers planning important trips to the airport and other destinations.  For drivers, the option could prove to be more complicated.  

“The biggest difficulty with pre-scheduled rides for drivers is that they have to clear out their schedule ahead of time in order to make sure that they’re available,” said Harry Campbell, a driver for Uber and Lyft and creator of The Rideshare Guy, a popular blog for drivers in the industry. “They will need to stay local on their regular on-demand rides leading up to the pre-scheduled ride.” By requiring a higher price minimum on the scheduled rides, however, Lyft may be able to ensure drivers that it’s worth any extra aggravation.

My Take: The evolution of ridesharing continues as they encroach on other markets.  Scheduled rides definitely have a place in this picture.  But Harry gets right to the point – does this make sense for drivers?  I had a neighbor who would give me a call whenever she needed a ride to the airport.  It’s worked well for both of us.  I can see how this could be a win-win.  What do you think?

Uber and Toyota confirm strategic investment and auto leasing deal

Sum and Substance: Rideshare wars just got even more interesting. Uber has confirmed a strategic investment and auto leasing deal from Toyota.

Uber would not disclose terms of the deal or the financing program and there aren’t many details yet, but according to a release from the car manufacturer, Toyota is interested in exploring the future of transportation with Uber and the companies have “entered into a memorandum of understanding (MOU) to explore collaboration, starting with trials, in the world of ridesharing in countries where ridesharing is expanding, taking various factors into account such as regulations, business conditions, and customer needs.” 

The Toyota leasing deal helps Uber expand its financing program for Uber drivers, Uber Xchange, but will also bolster Uber’s moves into a self-driving vehicle future.

My Take:  Strategic partnerships have become the norm in this industry and one can see why.  It makes sense for both the TNCs and the auto companies.  Both are hedging their bets and with capital so easy to come by … hey … why not?

Ed: Also interesting to note that Toyota is sort of already the de facto Uber partner with 20% of RSG readers surveyed driving Toyota and Prius’ making up 7% of all rideshare vehicles!

Meet Uber’s First Self-Driving Car

Sum and Substance: Uber has finally released the first official photo of the self-driving cars that it is testing on the streets of Pittsburgh, almost a year to the day since reporters in that city first spotted an earlier prototype.

The car, a hybrid Ford Fusion, is collecting mapping data as well as testing its self-driving capabilities, and is equipped with “radars, laser scanners, and high resolution cameras to map details of the environment,” Uber says in a blog post. But as it collects data, a trained driver is always behind the wheel.  

Uber also gave a reporter from Pittsburgh’s Tribune-Review a ride in the car, the first time a member of the media has been allowed to see it in operation up close. The reporter, Aaron Aupperlee, had this to say about the experience: “The car drove itself over the 31st Street Bridge and along River Avenue on the North Side before turning around at the Heinz Lofts. The car will accelerate, brake, steer and perform other basic functions on its own. It switches out of self-driving mode with a loud beep if its sensors detect a car swerving into its lane or it encounters something it does not recognize or know how to negotiate. The driver can take control of the car at anytime. The car’s sensors detected parked cars sticking out into traffic, jaywalkers, bicyclists and a goose crossing River Avenue.”

My Take:  Well, maybe the days of Uber’s self driving cars aren’t so far off, after all.  Could our days as drivers be numbered?  I don’t think so.  I still can’t see how a self driving car can make the kinds of personal judgements a driver learns to make when picking up passengers on crowded city streets.  What does a self driving car do when the PAX puts the pin down wrong?  I can’t wait for all the horror stories that the press will want to publish when self driving cars start messing up.

Uber and a Bay Area landlord will pay new tenants $100 a month to go car-free

Sum and Substance: Uber is teaming up with the owners of a massive real estate development in San Francisco to offer new tenants a monthly $100 transportation stipend if they agree to go car-free.

The money can be used for public transit, taxis, and car-sharing, as long as at least $30 is put toward Uber. The money is being provided by the owners of Parkmerced, a collection of 8,900 apartments in the Outer Sunset neighborhood of San Francisco. Uber also says it will cap Uber Pool rides between Parkmerced and public transit hubs at $5 by creating a geofence around the property.

Anyone taking an Uber Pool trip from the Parkmerced to the Bay Area Rapid Transit’s Daly City or Balboa Park stations, as well as the West Portal MUNI, will pay a flat $5 fare. Riders going from those stations to Parkmerced will also only pay $5. Parkmerced, which is owned by Maximus Real Estate Partners, says its partnership with Uber, and the $100 monthly stipend, will allow it to avoid having to create more parking spaces as it continues developing its property.

“The immediate benefits to residents will be to decrease or eliminate the need for private car ownership, facilitate a more efficient commute, reduce transportation costs, and minimize the need for parking,” said Rob Rosania, founder of Maximus. It’s the first time that Uber has partnered with a property owner to offer transportation incentives to residents. In a blog post, Uber called it “a building block for a smarter city future and exemplifies the creative ways in which Uber can make it possible for city dwellers to live car-free and connect the transportation network.”

My Take: Say what you will about Uber, but if nothing else they’re creative and aggressive.  Let’s look at the motivations here.  For the monthly cost of $100 per participant, the landlord / property owner saves a few parking spaces, which anywhere in San Francisco, especially Park Merced are at a premium.  This is a perk for tenants and likely makes renting there more desirable.  The real estate firm can easily recoup this amount by simply jacking up the rent a bit.  Uber gives up nothing of significance and gets a guaranteed $30/month in new business.  This is the kind of creative partnership that gives Uber a leg up on Lyft in their ongoing competitive battle.  It also gives Uber ammunition is dealing with regulators – casting them as on the side of smart transit.

Drivers, what do you think about the week’s top stories?

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John Ince

John Ince is a former Fortune reporter and Wall Street banker. He has about 1,000 rides under his belt driving part time for Lyft and more recently Uber.  He’s writing a book about his experiences entitled:  Travels With Vanessa:  A Rideshare Driver Tries To Make Sense of It all – For a sneak peak visit: www.TravelsWithVanessa.com

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