5 Ways Startups Are Upending the Car Business

You might think the taxi industry would be overjoyed by the arrival of apps that let people hail a car by smartphone. After all, it eliminates inefficiencies on both sides?frustrated passengers trying to flag down a car on the street, and cab drivers cruising around looking for somebody to pick up?that cut into a driver's earnings. But while passengers have flocked to car-hailing apps, the most notorious, Uber, has found itself in a fight in numerous cities where the app has appeared.

Uber works by giving iPhones enabled with the Uber app to drivers, but this removal of the middleman is the source of much consternation. Legally, Uber's position leaves it in a weird gray area. Most of America's cities and states have byzantine rules governing cars for hire; one common provision is that livery cabs (those black cars you hire by calling a car service, which is the kind of car Uber usually uses) aren't supposed to pick up passengers who try to hail them on the street?that's for taxis only. But is Uber acting as a dispatcher? Or is it just a higher-tech way for a potential passenger to raise her arm and hail a cab?

In response to a San Francisco lawsuit, Uber's lawyer said, "Uber complies with all laws and regulations applicable to its business. Any claim to the contrary is baseless and motivated by those who seek to deprive the public of this safe and convenient transportation option. Uber would rather compete for business on the streets of San Francisco than in the courtroom, but Uber will defend these claims in court and is confident of the outcome." Company co-founder Travis Kalanick blamed old-fashioned politics for Uber's legal woes, saying last year, "The older the industry you are tackling the more protected it is by government or by corruption or both."

San Francisco, Chicago, and Washington, D.C. have all filed complaints against the company. New York City did, too, but things are changing. In December, New York reversed course and agreed to allow taxi drivers to connect with passengers-to-be via smartphone apps. UberTaxi just rolled out in D.C. last month; black cars remain the default setting within the app, but users can now hail a taxi.

If nothing else, the notoriety gained by fighting so many major cities has given Uber more publicity than startups like Flywheel, which have tried to play nicer and work with cab companies.

Source: http://www.popularmechanics.com/cars/alternative-fuel/news/5-ways-startups-are-upending-the-car-business?src=rss

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