[sws_grey_box box_size="690"]SUMMARY - Mobile taxi app Uber has been banned in Germany by a court in Frankfurt, but it will continue to operate in the region. However, when will regulators try to create a level playing field for the industry? [/sws_grey_box]
Uber is facing fresh legal challenges in Germany this week after a court banned the use of the mobile taxi app, supporting a claim brought against it by thetaxi industry which argued that Uber does not hold the necessary permits to operate in the country.
And although the San Francisco-born company now faces penalties of up to €250,000 if it is found in violation of the injunction, Uber has said that it will continue to provide services to the public regardless.
Once again I will argue that what needs to happen is that the industry needs to create a level regulatory playing field for all to operate and compete, rather than just continue to penalise Uber, but more on that later...
This isn't the first time that Uber has faced a ban in Germany, where temporary injunctions have been dished out in the cities of Hamburg and Berlin - but this is the first nationwide ban in the country. Chairman of Taxi Deutschland, Dieter Schlenker, didn't mince his words when finding out the result. He said:
The Passenger Transport Act regulates the protection of drivers and consumers. That can't easily be overturned no matter how neoliberal the company.
Uber operates with billions in cash from Goldman Sachs and Google, wraps itself in a Startup-Look and sells itself as a New Economy saviour.
He also reportedly said that the sharing economy is a “locust” that is harmful to “the state, society and employees alike”.
However, this hasn't scared off the persistent start-up, which has faced similar challenges the world over. A spokesperson for the company said:
Germany is one of the fastest growing markets for Uber in Europe.
We will continue to operate in Germany and will appeal the recent lawsuit filed by Taxi Deutschland in Frankfurt.
You cannot put the brakes on progress. Uber will continue its operations and will offer UberPop ridesharing services via its app throughout Germany.
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Uber has said that the ban is not enforceable while there is an appeal process in place and according to the BBC there are Uber cars operating across Germany. Just last week Uber said that it was planning to rapidly expand its operations in the region.
The mobile taxi app has faced similar legal challenges and protests from the taxi industry in London. However, unlike in Germany, London's transport regulator Transport for London (TfL) ruled in July that the application is lawful and that it won't be taking any action against the company.
Create a level playing field
Similar to the complaints made in London, Germany's taxi industry argues that Uber is operating illegally because it is infringing current taxi regulations. In Germany, for example, there are stringent requirements in place for drivers to obtain specialist licences and drivers have to adhere to a certain fare structure. A Hamburg court recently said that Uber was “probably illegal” because it didn't follow these rules.
And herein lies the problem. Uber is trampling all over the old-school industries because it is offering a service that is easier to use and is more often than not cheaper – because it isn't having to jump through all the hoops.
For example, I went out on Saturday night in London. I needed a taxi at around 2am for what was probably a 4 mile journey. Instead of traipsing the streets of Finsbury Park to hail a black cab, or walking around some private hire firms to find a decent price, I was able to go on my Uber app and request a cab that picked me up within 5 minutes. All for the cost of £5 – a price I very much doubt would have been matched by the other more traditional services.
However, it is not fair for Uber to come in, ignore the rules governing the taxi industry and beat everyone to the customers. I've written before on the regulation of the taxi industry, where safety and pricing are two of the main concerns – take a look at that here.
But we have seen this before in other industries and unfortunately innovation always wins out. I can't imagine a world where taxi apps such as Uber don't exist, there is too much demand from the general public and too many cities around the world are giving it the green light. However, it isn't fair that taxi drivers that have spent years in the industry and have spent a stack of money to get to their position are having to move aside for Uber.
Regulation has always struggled to keep up with innovation and the internet, but if regulators want to protect the more traditional industries they need to figure out a way for Uber to exist alongside the regular players – banning won't work, the wheels are in motion. Either deregulate the taxi industry so everyone is on a level playing field, or hold proactive discussions with Uber about how it can operate legally in the region.
Because it is also worth noting that Uber isn't for everyone. I have friends that won't use it because they don't believe it offers as good as a service as a black cab and they believe there are risks involved. However, black cabs still need to be easy to use and they need to be able to compete on price. An open discussion needs to take place and changes to regulation need to be made.