Uber has noted in a blog post today that it will indeed be shutting down its taxi beta after around a month of operation, claiming its efforts to provide adequate Uber yellow cab supply was quashed by New York’s Taxi and Limousine Commission. Uber didn’t go into details about how exactly that happened, saying only that the TLC commented in private that Uber’s business is “legal under the rules.” Black car and UberX service will continue as usual.
This confirms an earlier report from The Verge, which claimed the shutdown would be costly for Uber. In the official blog post, Uber co-founder Travis Kalanick expressed optimism that the TLC would enable UberTAXI to return to NYC streets sometime next year, and cited Boston and Toronto as markets where the service was still available. Kalanick spoke at Disrupt earlier this fall, telling the audience and Alexia Tsotsis in an interview that he was finding it necessary to go to battle with regulators in order to provoke real change. In a brief email interview today, Kalanick said that this setback is mainly going to limit choice for consumers in NYC, but doesn’t really represent a major blow to the startup’s overall business.
“The laws, regulations and politics are different in each city,” he wrote, when asked if this would affect Uber’s overall plans with respect to other areas. “UberTAXI continues in a bunch of other markets, and we expect rollouts in many more cities over the coming months.”
Uber previously partnered up with rival Hailo in London to help get past regulatory hurdles, but the companies took two very different paths when they entered the Toronto market. Hailo went out of its way to talk to city regulators and become a licensed cab company, while Uber claimed its solution is a technology one, and that it isn’t actually a cab company, so individual driver licensing should be enough. Uber’s future in Toronto is still uncertain with regards to local bylaws and regulations, and in polling cab drivers for a previous story, I found that, anecdotally at least, some drivers were hesitant to risk partnering with Uber without a license arrangement in place in the Toronto market.
Of course, changing any industry with well-established players is going to engender resistance – Square has faced plenty of opposition from existing payment gateway operators like VeriFone. This is a blow to be sure, but on its own, it definitely isn’t one that Uber can’t bounce back from.