New York’s Attempted Requirement That Uber App Updates Gain Regulatory Approval Will Cede Control to China

Uber is a technology platform which connects riders and drivers around the world. They process as many rides in China as the rest of the world combined.

Like many technology companies they regularly update their ‘app’ for both riders and drivers — to add new features (like splitting a fare with someone else, add a new kind of service like grocery — or kitten — delivery, improve geolocation services).

The DeBlasio administration in New York City, through its Taxi and Limousine Commission, had planned to require that Uber (and Lyft, and other similar services) receive regulatory approve in advance each time they wanted to update their app.

They’ve dropped that plan, although they still intend to exercise veto rights over the technology the world uses to interact with the global ridesharing service. They require notice to the Commission every time there’s an app update, and:

“We can still review their application change after the fact,” said Allan Fromberg, TLC spokesman. “If we see a problem we can still advise them and insist that they make any necessary changes.”

This seems on face absurd – even if there’s a compelling interest in spelling out the terms under which a business is allowed the favor of operating (as many view it) in a jurisdiction the notion of approving user interface changes falling on politically appointed New York bureaucrats is perverse.

They backed off, and my first thought was that they want to seem just crazy enough to do something like that so that whatever rules they settle on appear reasonable by contrast.

The role they’re attempting to play here, though, is actually interesting to model.

  • Some jurisdications, like New York City and California may be big enough that Uber acquiesces. They could become de facto regulators of what the rest of the world uses.

  • We’re beginning to see regulatory competition to play this role. Each jurisdiction imposes its own costs on the businesses, and there’s a game of chicken to see how far a given company will go before they exit that market. Smaller jurisdictions won’t have a role to play because an Uber or other company will leave. California and New York represent enough revenue that companies acquiesce.

  • But under this model it’s actually China that wins the regulatory war, decisions they make following a Taxi and Limousine Commission model, would dictate how the business operates and interacts with consumers and drivers. Because the biggest market is China.

It’s very interesting times as we interact with new technologies — and our regulators learn what role they’re able to wrangle in a globalized economy.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Let them withdraw from the US and keep China. Someone else who actually pays fair wages can take their place in tbe US.

  2. Sometimes I think I’m reading the drudge report here. You don’t know how technology or economics works, Gary. Stick to points and miles.

    Every tech company of a certain size localizes its products for different markets. If Chima wants to have some crazy demand, and Uber feels a need to agree, there will be an Uber China version, the same way many other companies have done it.

    Don’t get me wrong, this is still ridiculous on NYC’s part. And won’t happen. But it has nothing to do with China.

    Oh and btw, I bet the U.S. uber market is bigger than the China one right now. So if there’s one version, the U.S. will win.

  3. Gene, for some of us, money is not the primary reason to drive. Simple human contact and collecting experiences and information figure in as well.

  4. Not sure why an Uber China iOS app and an Uber US iOS app couldn’t have different rules and regulatory structures…

  5. Two posts in one day about Uber, yet neither of them mention that you receive/have received compensation on a regular basis from them through your Uber affiliate link. Sounds like both a conflict of interest AND an FTC violation to me…

  6. @Ben there are no referral links in this post. There is no benefit to me from writing it. It is not sponsored at all. You may not like Uber (or me) but be careful what sort of unfounded accusations you toss out.

  7. I don’t think it rises to the level of a FTC investigation, but I think limiting your vision to one post is pretty weak. Generally conflict of interest applies to the person, not to the narrow activity.

    To use a hypothetical example, if a journalist worked as a well paid consultant to Company X and then wrote about Company X in the newspaper without disclosing the payments, would the defense “Oh, but they weren’t paying me for this story, just other stuff!” really be persuasive?

  8. @Mike, I have received free rides from readers that have used my link. There are no such links here. This post expresses no opinion of Uber. The last post mentioning Uber, also with no referral links. I’m comfortable covering these issues.

    The subject I’m writing about (competing regulation systems for uber) isn’t something I received for free at a discount or for free. I haven’t been paid to support Uber in any way. What I’ve received, free rides, was from readers receiving free rides for using the service. It didn’t involve even direct contact with anyone at Uber (to the best of my knowledge I have never even spoken with anyone that works for Uber).

  9. Look, I like Uber. Its a great idea. But the thought that they shouldn’t be regulated at all is a libertarian fantasy. Taxis and transportation services come under the city for regulations, and they are doing so. We may want to argue what SHOULD be allowed and not, but the very fact that NYC is trying to say that before any new feature is added to Uber that may affect a regulated service is nothing newsworthy. To throw in China is a red herring.

  10. @joelfreak – Where in this piece do you read that ‘they shouldn’t be regulated at all’..? New York City saying that they Uber should have to submit updates to their app for advance regulatory approval is batshit crazy. Anyone breaking the law is subject to action of course, but getting bureaucratic approval for technological innovation, even the smallest tweaks, is a terrible idea for the world.

    What struck me interesting in all of the stories about different regulatory directions — and you and I have separately discussed how many smaller jurisdictions aren’t geting the regulations they want, Uber says ‘take it or leave it’ and small cities back down — is that those places large enough to extract something can, they need to rank order their priorities. California and New York are probably big enough. But neither is as big a market as China. The regulator where a company sees its greatest market potential likely is the one that wins.

  11. reading the comments here, it’s amazing how many socialists/progressives must read your blog, which is so funny since anyone of that mindset should be flying Spirit and cursing that people have options for a better airline. The best description I’ve ever heard of a first class flying liberal was from a friend who worked at one of the hundreds of worthless taxpayer sucking NGOs in DC, and their description of “caviar communist” rings so true.

  12. @Robert

    Yes, I would fly Spirit, except the airline doesn’t fly out of my local airport. The generous Demorats have ensure floor buffers and bathroom cleaners at the airport, receive over $16 an hour.

    According to today WSJ editorial, Comrade DeBlasio and fellow travelers have decided to reform NYC car wash industry. Businesses will either get reamed to stay non-union or “go along, to get along” which dropped a new mandated surety bond by 80%, along with the scale back of Big Brother reviews.

    Lets not forget the regular NYC cab companies are permitted under a medallion system, which is ran by a NYC commission. New medallions are rarely offered at bid. Finally, under Bloomberg last term, NYC decided vehicles used as a taxi are limited to certain models.

  13. After spending my life in Asia, Europe and the U.S, I actually find China is way more capitalistic and “Free Market” than anywhere else…….See how many taxi apps they have there

  14. @Gene – It’s a free country, if you don’t think Uber pays enough then simply don’t work for them.

  15. In today WSJ, on the Opinion page, was a piece, California’s Uber Raid. Given the recent decision related to an independence contractor or an employee, the editor suggests the future winners might be unions and plaintiffs attorneys. It was also pointed out that sharing service businesses like Lyft, TaskRabbit and HomeJoy could soon go through similar hassles.

    By chance, today the local paper has an article, Taxi commission to focus Tuesday on future of Uber in St. Louis, Compared to NYC Uber snafu, the way STL cabbies dress seems a more serious matter, along with the ban on the usage of phone apps by customers to find a taxi. Bottom line, whether it’s STL or KC, where the Democrats have power, Uber must go through hoops.

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