My Say: The Uber revolution and the ensuing war

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This article first appeared in Forum, The Edge Malaysia Weekly, on June 20 - 26, 2016.


Since it first hit the market a few years ago and revolutionised ineffective taxi services the world over, Uber — the innovative ride-sharing service provider — has been on the war path with the cab industry, regulators, its rivals, and even, on occasion, its customers.

Taxi drivers and public transport unions across the globe have been complaining that Uber and other ride-sharing service providers are competing unfairly as they are not subject to the same stringent legal requirements.

As Uber and other ride-sharing service providers like Grab become increasingly popular among the public, the livelihood of many cab drivers is invariably affected, which explains why acrimony has been on the rise, resulting in violence sometimes involving irate taxi drivers and those from the ride-sharing services.

A case in point is the commotion recently near the Queen Victoria Memorial Clock Tower in Jalan Tun Syed Sheh Barakbah, Penang, where 50 taxi drivers allegedly blocked at least three cars that they believed were Uber and Grab vehicles.

According to news reports, the group was quite aggressive, grabbing the handphone of one of the victims and  damaging the cars in the incident. But this is nothing new. In Paris, cab drivers have gone as far as slashing the tyres of Uber cars and smashing their windows.

The discontent of taxi drivers around the world over the “disruption” to their livelihood, thanks to Uber and its ilk, can no longer be contained. In fact, some ran out of patience with the regulators’ “inaction” and decided to vent their fury in public.

In February this year, close to 8,000 black-cab drivers brought central London to a standstill, protesting against the “unfair competition” from mobile taxi app Uber.

The London drivers demonstrated against what they considered a light-touch regulation of the industry that harmed the cabbies and promoted private hire companies. Their blockade was a mile long.

Not long after, their Kuala Lumpur counterparts followed suit. They took their protest against the ride-sharing services onto the streets, literally — they drove in the city’s Golden Triangle in a convoy, causing a massive traffic jam during the peak period.

Frustrated at the government’s failure to act against the “illegal” Uber and Grab, a group claiming to represent 3,000 taxi drivers in Kuala Lumpur have filed a lawsuit in the High Court to compel the Land Public Transport Commission (SPAD) — the regulator in Malaysia — to ban the ride-sharing services for non-compliance with the Land Public Transport Act 2010.

They are also seeking a permanent injunction against SPAD legalising the ride-sharing operations in Malaysia.

However, according to SPAD, based on its online survey conducted last year, an overwhelming 80% of the public prefers to use Uber and Grab. Accessibility, it seems, is the main reason the public would rather use Uber or Grab than the taxis.

If Prime Minister Datuk Seri Najib Razak’s recent statements on this contentious issue are any indication, the government seems more inclined towards regulating and not banning Uber and Grab as demanded by the taxi drivers.

As recently as March this year, the government openly urged taxi operators to embrace competition as a motivation to improve their services rather than seeing it as an obstacle.

While acknowledging the complaints of taxi operators about allegedly unfair competition from Uber and Grab, Najib advised them to learn to cope with the changes that technology and innovation bring.

Make no mistake, the emergence of disruptive technologies and business models like Uber not only impacts the conventional way of doing business but also challenges regulators to come up with more effective and flexible regulatory frameworks.

For example, Uber uses a mobile application, which falls under the purview of the Malaysian Communications and Multimedia Commission. Thus, this new innovative business model, unlike the conventional taxi service, requires inter-departmental and interdisciplinary collaboration to regulate and manage.  

Besides “battling” the taxi industry, regulators and fierce competition, Uber sometimes also has to rein in its “uprising” drivers.

One of the wild cards would be the class-action lawsuits filed against Uber in the US, which seek to make the drivers full employees. If the suits are successful, this could cripple Uber’s business model, although some legal experts have said they are sceptical that the drivers can prevail since they use their own vehicles and decide themselves when and whether to pick up riders.

In Malaysia, Uber suspended one of its drivers in Penang after he publicly voiced his dissatisfaction over the new low rates, which affected his earnings. Francis Loke was a full-time driver with Uber for three months before the ride-sharing company terminated him. He is reportedly now a spokesman for the “Penang Uber Partners” group, which champions the livelihood of the drivers.

It is worth noting that though Silicon Valley start-ups give their conference rooms whimsical names, like Twinkie and Pong, the main conference room in Uber’s new offices on San Francisco’s Market Street is called the War Room.

This seems most appropriate for Uber founder Travis Kalanick and his ever-growing ambitious and combative team. As Uber expands to cities across the US and around the world, Kalanick must continue to wage what has already become an ugly and protracted battle with the taxi industry and regulators.

That Uber has transformed the global taxi industry is an indisputable fact. But it is also an irrefutable truth that with its inevitable march towards dominance, its battles with adversaries on all fronts has earned Uber the undesirable reputation of being ruthless.

Yet, David Plouffe — the high-profile mastermind behind the 2008 Obama presidential campaign, who is now in charge of Uber’s public policy and communications campaign — when asked about Uber’s image problem, had this to say: “I don’t subscribe to the idea that the company has an image problem. I actually think when you are a disrupter, you are going to have a lot of people throwing arrows.”

As a market disrupter and innovator, image is the last thing Uber, and maybe the world, would care about. Ultimately, the market will judge Uber on its innovative capability in delivering a better and faster service at a lower cost.

Khaw Veon Szu, a former executive director of a local think tank, is a practising lawyer. The opinions expressed in this article are the writer’s own.