What is perhaps more interesting is that the web-enabled car-hire model raises some questions that didn’t arise in the same way in the previous taxicab industry.
For example, there are a combination of old and new concerns about discrimination. The old concern is that taxis may not be available for hire in certain neighborhoods, or drivers may not pick up riders from certain racial or ethnic groups. A web-connected car-hire service seems likely to reduce this problem. The new concern is that Uber riders are expected to evaluate drivers. What if such evaluations carry a dose of racial/ethnic or gender prejudice?
Another issue is whether the Uber drivers should be treated as “employees.” Rogers doubts that ultimately Uber drivers will be treated in this way, and refers to mentions that there are similar cases involving whether FedEx drivers are employees. He writes:
The most analogous recent cases, in which courts have split, involve FedEx drivers. Those that found for the workers have noted, for example, that FedEx requires uniforms and other trade dress, that it requires drivers to show up at sorting facilities at designated times each day, and that it requires them to deliver packages every day. Uber drivers are different in each respect. They use their own cars, need not wear uniforms, and most importantly they work whatever hours they please.
But ultimately, as these kinds of regulations are discussed and debated, the very success of Uber and similar services is likely to help in enacting and enforcing certain standards. As Rogers notes: “These developments could make it relatively simple to ensure that Uber complies with the law and plays its part in advancing public goals. The reason is simple: as scholars have documented, large, sophisticated firms can detect and root out internal legal violations—and otherwise alter employees’ and contractors’ behavior—far more easily than public authorities or outside private attorneys.”
In other words, Uber and similar companies are not going to be both enormous commercial successes and also untouched by regulatory concerns. Instead, Uber’s huge and growing database of drivers, fares, prices, time-of-day, locations, accidents, evaluations of drivers by passengers, evaluations by passengers of drivers, will all tend to provide information that can be used to monitor what happens and to motivate improvements where needed. Moreover, if enough potential customers or drivers are discontented with Uber and the existing web-enabled car hire companies, the barriers to entry for other firms to start up Uber-like companies on a city-by-city basis are not very high. As Rogers writes:
Moreover, it is not clear that Uber’s position at the top of the ride-sharing sector is stable. While Uber’s app is revolutionary, it is also easy to replicate. Uber already faces intense competition from Lyft and other ride-sharing companies, competition that should only become more intense given Uber’s repeated public relations disasters. While Uber’s success relies in part on network effects—more riders and drivers enable a more efficient market—the switching costs for riders and drivers appear to be fairly minimal. Uber may become the Myspace or Netscape of ride sharing—that is, a pioneer that could not maintain its market position. Concerns about monopoly therefore seem premature.
Those interested in this subject might also want to check out an earlier post on “Who are the Uber Drivers?” (February 18. 2015).