Alberto Mingardi  

Uber reacts to the Spanish ban

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One thing that regulators, and regulation's enthusiasts, rarely get is that private businesses will do their best to off-set the impact regulation has on them. This is particularly true in instances in which regulation is considered the second-best option to outright punishment.

That is the case of Uber, which is being punished pretty much everywhere in Europe for embodying a less corporatist alternative to the traditional taxi-license system, that we believe suits the "European social model" so well. Many city governments react to Uber coming to town, due to the lobbying of vested interests: taxi drivers move around not just people, but voters too, and they are commonly considered quite influential. Uber's strategy is certainly rather new, and problematic, as it seems conceived to force a regulatory shift at some point. But Uber also faces the opposition of those who cannot make peace with the fact that innovation happens, and sometimes new technologies, or new bundles of technology, can make laws as written in the books basically obsolete.

The Spanish authorities have banned Uber in the country, but instead of going home, the American company has decided to adopt a different business model: if they cannot carry human beings around, why not goods?

Professor of Business Administration Juan Pablo Vazquez Sampere here suggests that regulators may have done Uber a favour.

That's because Uber has decided that the company will switch from transporting people to transporting food in Barcelona. This is how it works: Restaurants in (initially) four neighborhoods within the city can order an Uber transport for just 2.5 euros. The Uber driver will deliver the order to the customer in less than 10 minutes. Uber makes 20% of the 2.5 euros. Uber has promised that its delivery drivers will be required to pay taxes as a condition of employment.

Sampere maintains that "One of the most effective ways to launch a successful disruptive innovation in a highly regulated industry is by building your business model in the 'other' category". By gaining traction in the food distribution market, Uber may get big and "important" enough, in Spanish society, to be able to go back, at a certain point, to the original plan and offer taxi-like services. His article is well worth reading.

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CATEGORIES: Regulation

COMMENTS (4 to date)
Hans B Pufal writes:

So will an restaurant customer be allowed to order a take-out and ride home with the delivery?

david writes:

Sampere's thesis requires that the "other" business remain profitable enough to power growth. That seems unlikely in this case - too labour-intensive. Uber's food delivery in the US has drivers ferry around large numbers of pre-prepared meals, not doing one-by-one pickup and delivery.

The strength of the taxi lobby stems from (1) popular redistribution bundled with the product (2) a highly effective ability to strike, by simply deliberately driving on roads slowly. It is hard to see Uber putting together that kind of heft.

ilya writes:

Charging about 10 euros for an hour of riding – this doesn't seem to be a sustainable business model for a Uber driver (humans pay much more, and we still read driver horror stories in the US).

Or I must be missing something.

Perhaps the point here is that the black car legitimately appears at customer's door and there's nothing preventing them driving somewhere and settling in cash, while Uber is officially denying any knowledge?

Seriously curious here.

Silas Barta writes:

Can't find it at the moment, but on Reddit, a Polish user described a scheme that gypsy caps used to get around the regulations: instead of being "cabs", they would claim to be "counseling on wheels", where the real service being sold was ostensibly the service of having someone to talk to. As an afterthought, they would drop you off where you needed to go after the session.

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