Lagging Regulation: Uber and Amazon

I was reading the Amazon book “The Everything Store,” and it was interesting to see the parallels between them and Uber. They both took industries by storm and one way they were able to win a lot of territory in the land grab was that regulation didn’t catch up to them for a LONG time. It took years before legislation for an online sales tax was passed. The fact that an Amazon “store” wasn’t located anywhere worked to their advantage. They had a 8% advantage on price for years. They also had a model where they didn’t have to store inventory, and many other advantages over Barnes and Noble, but still, this helped.

Looks like the same thing is happening with Uber, Taxi drivers legislated their protections in by way of minimum prices and many different hurdles to becoming a taxi driver, medallions, etc.

Regulation has given Uber and Lyft the legal right to operate and without any of the “protections”, which have really become restrictions, that Taxis have, and I suspect it will be some time before the playing field is made more equal.

The regulation that has passed has not really leveled the playing field so much as legitimized what Uber was already doing.

At some point there will probably be a 3rd class of employee between contractor and W2 employee, and Uber will be forced to take more responsibility for their workers.

At some point they will be forced to provide a guaranteed level of service to more dangerous areas (which Taxis are legally not allowed to reject right now but an Uber driver can) and people with disabilities.

At some point Taxi companies will realize that making a taxi driver who only has a license to pick up in one city, take a passenger-less trip back to their city when they drop off someone in the suburbs, is a dumb idea, and get rid of that. (Yes, this exists, many cities have restrictions that say the taxi can only operate in that city, and if they drop off in another one, they can not pick up a passenger on the way back into the city they came from, they have to return without a passenger. Stupid, right?)

The “regulation” that will pass over the next few years will probably ramp up the downside of Uber, giving them more liability, but also remove regulation on Taxi companies so they can compete better.

Once that happens it will be a more level playing field and Uber’s massive advantage will decrease a little. But by that time they will be so far ahead that it won’t matter if a little of their edge has been eroded, they will have changed the industry permanently.

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