Prominent tech leaders flooded Twitter with outrage at Seattle’s decision to severely limit the number of private ride-sharing drivers from companies such as Uber and Lyft. “Corruption. Literally. Seattle’s politicians are corrupt,” wrote early Twitter investor and Obama supporter, Chris Sacca. “Wow. Seattle. You’ve lost your mind. This is how you fall behind in innovation,” tweeted Box founder, Aaron Levie.
Is this a clear-cut case of public corruption to protect a powerful political lobby, or is there a rational opposition that the tech community will have to win through hard-fought debate?
Fortunately, unlike some of the more rushed, secretive council meetings to regulate ride-sharing companies, Seattle has had plenty of time to air their grievances in public. And at least one local representative is refreshingly honest.
“I don’t want to ‘temporarily’ kill innovation, but I do want to buy a year for the taxi world to adapt,” wrote Sally Clark, the chairwoman of the Seattle City Council’s Taxi, Limousine and For Hire Regulations Committee, in a post last month before the vote. “The idea seems to be that if you set the right number of vehicles, everyone gets a ride when they need it and the drivers have enough work to make a decent living.”
Clark explained to us in an interview that she’s not opposed to upending the current system of metering and supply controls, but that “it can’t happen immediately.” Instead, innovation must be studied and measured before it can be allowed to impact the economy in unforeseeable ways. “We need to measure the impact on our system and then respond accordingly.”
Clark worries specifically about wheelchair bound residents who rely on available cabs and taxi migrants who have invested their life-savings into a system they believed would be in place for the long-term.
To be sure, we don’t know whether Uber and Lyft ever cause any of these problems; the ride-sharing industry hasn’t been around long enough to know whether it will wipe out the existing system.
So why does a startup have the burden to prove it has the right to come into a new market? Describing the reason to regulate the number of Uber cars on the road, she argued, “Going ahead and doing unregulated numbers means that I go ahead and buy the cost of having to correct the problems later on.”
Clark also doesn’t completely buy the argument that Uber and Lyft drivers are small business owners that are trying to make a living, too. “Taxi owners in this area tend to be immigrant East Indians who have invested their savings in owning one or many vehicle licenses. Flat-rate owners tend to be East African immigrants who have pooled money together,” she wrote in the blog post. “The bank rollers of Lyft and UberX tend to be venture capitalists (think Google and Jeff Bezos).”
Taxi unions often disguise their support for regulation behind rules for safety. It’s true that drivers for Uber, Lyft, and SideCar do have the same insurance policies and training to ensure driver safety.
But, today’s vote is significant in that Seattle didn’t outright ban ride-sharing startups; it just severely limited their supply. As Ryan Lawler explained, “By ensuring that companies like Lyft and Uber can have no more than 150 drivers on each platform, the vote essentially kills any competition to the city’s existing taxi regime. It also will render services like Uber and Lyft relatively useless, by ensuring that they won’t be able to keep up with demand.”
This decision seems to be consistent with opposition around the country who see increased competition as the real problem. At a union-orchestrated protest I attended last summer in San Francisco, it was clear that many taxi drivers want the ride-sharing industry eradicated. After questioning a number of participants on whether they would support Uber and Lyft if they were properly regulated, one taxi driver admitted, “They shouldn’t even exist.”
The disquieting realization is that there is a trade-off between financial equality and innovation. Technology does away with the inefficiencies that give people jobs. Not everyone needs to be a full-time driver, nor do we need all the human-powered dispatchers that once routed taxis to passengers and maintained an optimal number of cars on the road.
Clark maintains that the “wait and study” approach is far more progressive than other cities, which have made it far more difficult.
The upshot is that tech companies are going to have to juggle protecting the workers they displace with finding a way to be profitable. “It is pretty difficult to shift the burden over to the folks who are going to lose service,” she explains.
This makes innovation a lot harder, and in some cases impossible. But if Seattle is any indication, this trade-off might not be a choice.