TDE0098 - Evidence on The Digital Economy

Written evidence from Uber (TDE 98)

Uber appreciates the opportunity to provide comments to the BIS Select Committee on the digital economy. We have confined our response to Question 5: on digital disruption.

About Uber

In the early 1900s, London taxicabs had to be tall enough to accommodate a man in a top hat. But the world moved on, and regulations changed. Today, the smartphone makes it possible to push a button and get a ride in minutes - there’s no longer a need to call a long time in advance or stand on a street corner and wait for a taxi to come along.

Uber connects partner-drivers and their vehicles with riders who want to make a trip, and outside the UK also with restaurants that want to deliver food, and with customers who want at-home delivery. The services provided through the Uber platform continue to evolve, most recently with parcel delivery in the US and parts of Europe.

By seamlessly connecting partner-drivers with these customers through our app, Uber makes cities more accessible, opening up possibilities for customers and economic opportunities for partners. From our founding in 2009 to our presence in more than 350 cities around the globe today, Uber continues to bring people and their cities closer together.

Fostering an innovation economy in the UK

This country has a reputation for openness to new ideas, and for providing the certainty that entrepreneurs need to invest their time and money to get their ideas off the ground. Equally, British consumers have a long history of being early adopters of new products and services, whether they’re in mobile telephony, e-commerce or social media.

In the longer run, the UK’s reputation as a welcoming environment for innovation will remain very significant. New jobs, R&D and investment naturally go to places with policies that foster innovation; given the choice of where to locate, companies will choose to go where they’re welcome. States that impose heavy burdens on the advancement of technology are actively discouraging investment in their own economy in the future.

Public policy and regulation should aim to prevent harm and protect consumers against deception. Beyond this, markets should aim to provide people with as much choice as possible, since choice and competition make markets - and society - better off as a whole. Policy and law should be technology-neutral and designed to adapt to rapid change, allowing customers and users to pick winners and losers freely.

New technologies bring all manner of benefits to consumers - even enabling radically enhanced safety features like we’ve seen in the car industry over the last few decades. Progress like this should be welcomed, and regulations should be updated to reflect new standards and possibilities.

Groundbreaking technology developments sometimes lead to calls to ban a service outright. But a more balanced approach - one that opens the door to new business models and job creation - makes more sense. In some cases where the existing incumbents are regulated differently and placed at a disadvantage, it may be necessary to de-regulate that industry and level the playing field. Technology advancements spread rapidly once they’ve appeared in the market, and existing players should be encouraged to adapt their own products to compete for customers.

In London, we’ve seen the impact of competing innovation with the launch (or planned launch) of apps like Gett and Karhoo aimed at competing with Uber directly in the city. Such competition is, and will continue to be, of direct benefit to consumers and drivers.

Uber is now in over 350 markets and 63 countries around the world. The products we offer differ by city, because cities differ from each other, in regulations and economies. But the UK - and London in particular - has long been a reference point for our conversations throughout the world. Whether in China, India or Australia, Uber’s representatives are often quizzed about how things are done in the UK.

The UK Taxi & PHV market

The taxi and private hire vehicle (PHV) market in the UK has changed quickly in the last three years. Widespread adoption of mobile technology and improvements in GPS have improved the customer experience and lowered barriers to entry. They have also transformed the economics of the sector. Prior to now, access to taxi and private hire services was something of a lottery, with operators holding the majority of control in the market. Today, technology has put choice back in the hands of the consumer and significantly rebalanced the market in their favour.

The smartphone has changed the way we all live - making the previously impossible, possible. We can share photos with family and friends in seconds, and stand in our local store while comparing prices with stores miles away. We can get driving directions anywhere in the world in the blink of an eye. Smartphones are already indispensable in modern life, which is why the impact of the mobile revolution is being felt in virtually every industry from commerce and entertainment to banking and transportation.

At Uber we’ve made it possible for people with a smartphone to push a button and get a ride across town within minutes, anywhere in London and 10 other cities across the United Kingdom. It’s a safe, convenient, affordable and reliable way to get around, and it’s popular: We have well over a million customers in London alone, and 30,000 new passengers are still signing up for the app each week in the capital.

In the PHV market in the UK, new technology has enabled a number of changes to the service that transformed the market and customer preferences. These include:

1. Trust and safety. Most Uber riders believe they are safer in an Uber than in a traditional taxi. Because there is a record of every ride, every rider, and every licensed driver, the system is much more accountable than has been possible in the past. Even before getting into the car, a rider is supplied with a photo and the ability to contact the driver and this information - as well as a live map of your progress - is shareable throughout the journey.

2. Payment. With Uber you never need cash. The service relies solely on payment enabled through a smartphone application. Our partners tell us that they feel safer while working because they don’t have to carry cash and customers have extra flexibility.

3. Convenience. In cities where Uber has lots of available vehicles, pick-up times are on average, less than five minutes. The app has also brought new visibility and confidence about a vehicle's arrival time: you can see it on its journey towards you. As Uber becomes more established in a market, pick-up times continue to fall, and the product continues to improve.

4. Coverage. As Uber evolves in a city, the geographic area the products serve grows and grows. This enlarged coverage area not only increases the number of potential customers, but it also increases the potential use-cases. Uber is already achieving liquidity in geographic regions where consumers rarely order taxis, opening up new markets in parts of cities where they didn’t exist before. In London, for example, 29% of Uber journeys start or finish in areas underserved by public transport.1

1 In this case, underserved means more than 500 metres from a tube or bus stop.

In cities all around the world, including in London, so many people now use Uber that we see a significant proportion of passengers wanting to get to almost exactly the same place at the exact same time. It’s why we have launched our uberPOOL service in a number of cities, including San Francisco, New York and Paris. uberPOOL makes it possible for people going the same direction to share a car—which is great for passengers because it reduces the cost of a trip and great for cities because it helps reduce congestion and carbon emissions over time. It’s a service we are bringing to London soon.

Transport for London Private Hire Regulations Review

We understand that new technology can be disruptive and that some black cab drivers are feeling competitive pressure from services like Uber. But a better answer to level the playing field is to reduce the burdensome black cab regulations--not to introduce rules that will be bad for riders, drivers and London.

In the three years the business has operated in London, Uber has recognised the rigour of this country’s regulatory framework. Despite being forced to apply legal concepts (some of which date back to 1847) that don’t include innovations like GPS, smartphones and apps, regulators have sought to do so in a way that has been fair and kept public safety and consumer choice as their guiding principles.

This framework has provided the certainty that a business like ours needed, and as a result we’ve created 20,000 economic opportunities for Londoners and thousands more outside the capital. Yet new proposals in PHV Regulations Review would effectively ban many of the innovations that have made Uber - and services like ours - accessible and popular with consumers.

Specific proposals from the PHV Regulations Review include:

A compulsory five-minute wait time—even if a car is available just around the corner. Passengers won’t even be able to see the nearest cars when they open the app. This will slow things down and for no benefit. In fact, we estimate that a five minute wait time would have wasted 50K hours of driver and rider time last month alone. That’s the equivalent of 144,000 lost trips per month, which will cost partner-drivers around £19M in potential payments over a year.

Uber will be required to accept bookings up to seven days in advance—even though this will unnecessarily increase costs for everyone. The whole point about services like Uber is that you shouldn’t need to pre-book—your ride should only ever be a few minutes away.

Drivers will only be able to work on a single platform. This will reduce their choice and flexibility and will blunt competition between businesses and platforms for drivers.

Every passenger will have to be shown the fare in advance—even though this takes time and people who want an estimate today can already easily get one.

That these proposals (and these are just a sample of the most restrictive) are justified by reference to public safety is something we find puzzling, to say the least.

Uber’s technology - and that of our competitors - offers something people clearly want. Another 45,000 Londoners used Uber for the first time last week, with a similar number the week before, and demand shows no sign of slowing. That’s why so many commentators have questioned these proposals, and why 130,000 people signed a petition opposing them within 24 hours of publication.

London’s population will continue to grow alongside its economy, and there are more people taking more journeys than ever before. Fast, efficient and safe taxis and PHVs are vital to getting people out of their own car and into shared services that will reduce the pressure on London’s roads. Yet even on this, TfL’s consultation proposes to make life harder for those wanting to share their journey.

Today, the smartphone makes it possible to push a button and get a ride within minutes. There’s no need to stand on a street corner, hoping a taxi will come along, and you no longer have to plan ahead.