You could argue that Toronto’s government is fighting against the inevitable in seeking a court injunction
to shut down the mobile cab-hailing and ride-sharing service Uber. Indeed, mayor-elect John Tory hinted at that in his own response to news of the court battle, when he said Uber and businesses like it are “here to stay.”
He may be right, but the thing about inevitability is that it doesn’t need people to argue on its behalf; inevitable things inevitably demonstrate their inevitability. That’s what makes them inevitable.
But it is worth asking whose interests the city is seeking to serve in trying to shut down a service that has proved, in Toronto and elsewhere, to be very popular with consumers of taxi services.
The city’s Municipal Licensing and Standards division executive director, Tracey Cook, says she has moved to shut down the service entirely in Toronto because it is jeopardizing Torontonians’ “health and safety.” Even keeping in mind that this is a city agency that considers investigating complaints about the length of the grass on your lawn a health and safety issue, this explanation does not seem particularly credible.
Especially not as it applies to the main Uber service, which uses taxi drivers licensed by the city and applies additional accountability safeguards (identity disclosure, customer review tracking, GPS logs) on top of those already in place. In the realm of the more recent and controversial UberX service, it’s not clear to what degree the safety concerns are any different than they would be for a ride-board at a university, for instance, or for any dating service someone might choose to use.
The customers using the service, at least anecdotally, don’t seem to feel they have interests in need of protecting, and Cook acknowledged that in the two years Uber has been operating in Toronto the city has not received a single complaint of injury.
So who is being protected here? Well, in the case of the main service, it’s easy to see that existing cab companies who have long enjoyed oligopoly protection would see their entire business model, in which they have invested a lot of money, threatened. Many cab drivers, on the other hand, love the main service because it allows them to earn extra income, but feel threatened by the UberX service that opens them up to competition from amateurs.
In other words, the most obvious opposition to Uber comes from those who’ve built their businesses and livelihoods around a particular business model. It may seem odd that the city government would seek to protect those interests at the expense of both innovators and customers.
While Uber’s managed to jump around controversial incidents in the past, two reports by Buzzfeed have drug the ridesharing company into the spotlight.
But it seems less strange considering the city has charged fees to those interests on the promise it would protect them from competition, and has assembled an entire regulatory regime around that protected-cartel framework.
The need for cab regulation emerged out of an environment where customers couldn’t possibly have enough information to protect themselves — to tell if they were being shortchanged on the meter or if the car they were getting into was safe. The need for regulations and standards to protect those customer interests led, one thing to another, to the assembling of a vast apparatus to set rates and to control the supply of cabs and drivers.
Technology has drastically reduced the need for that kind of consumer protection here, as in so many other areas, and so the regulator is left defending itself, and the industry that provides its reason for being, from innovation that threatens to make it irrelevant.
This is not a unique problem. The CRTC, created to adjudicate access to and use of scarce airwaves and expensive communications infrastructure, has suddenly seen distribution channels expand to infinity and costs of distribution contract to zero. It has struggled recently with how to regulate services like Netflix and YouTube, even as the very reason such services need regulation has vanished.
The situation faced by cab companies and drivers will seem even more familiar to those in other industries: bookstores, record stores and movie rental shops — just for starters — have faced similar problems posed by online competitors and been driven to near extinction. Newspapers and professional journalists face stiff competition from blogs and social media and online ad services.
In each case, old gatekeepers constructed themselves around solving a problem for the public, but technology has now eliminated the problem. It’s not the inevitability of new players in the market we all need to deal with in these cases, it’s the question of what valuable job we perform for the people we claim to serve that still needs doing, and how to best do it now.
That’s a tough one to answer for many businesses. Some will (like the candlestick makers and typewriter repair shops of old) find there’s no place for them anymore.
But there are new problems, created by new technology, that may need solving. How can we maintain a Canadian culture industry when distribution channels are increasingly global and low-budget? How do we fund professional accountability journalism when the advertising market no longer finds underwriting it useful? How do we ensure that drivers charging people for a ride are trustworthy when technology cuts out intermediary authorities? How do we ensure privacy and protect against fraud when the emerging industry gatekeepers are not government agencies or large local concerns, but private global technology companies?
For established industry and regulators alike, it seems like looking for solutions to these new problems would be more helpful than attempting to banish innovative technologies and companies in an attempt, as the writer Clay Shirky has put it, to preserve the old problems to which they were the solution.
Perhaps inevitably the regulators at the city will get around to these new problems. But at the moment, it appears that instead of asking how to solve them to protect the people of Toronto, they’re simply protecting established industry interests, and their old regulatory approaches, from innovation. Which is the exact opposite of what a good regulator is supposed to do.