Regulating the P2P economy: uber 2015-182.1

After a frustrating night waiting for a taxi in Paris, Travis Kalanick and Garrett Camp returned to the United States with an idea. In 2010, they launched a limousine-to-order service in San Francisco which connected passengers to drivers via a smartphone app, for a percentage of the fare. Customers and capital soon started rolling in, while they swiftly rolled out the service across America and the globe. Over time the company, now called Uber, began enlisting ordinary licenced drivers who used their own private vehicles. By 2015, the company had become the world’s largest taxi service, despite not owning any cabs or employing any drivers. Passengers, long dissatisfied with taxis, hailed the company’s arrival and fares that were often 30-40% cheaper. Many drivers, meanwhile, were attracted by the promise of flexible employment that paid better than comparable jobs. However, Uber’s controversial business model and practices drew many detractors, while its rapid proliferation gave it a long head start over regulators. Taxi owners and operators, many of whom had invested significant funds in licences, strongly protested Uber’s arrival. Uber, they argued, was only able to offer lower fares because it used loopholes to bypass the bulk of regulatory requirements applied to taxis or hire-car companies and shifted risk largely to drivers and passengers. After the 2014 launch of UberX services in Australia, these issues (along with many others) came to the fore. Even as some states and territories began legalising ‘ride-sharing’ services in 2015, it was clear that there was still a difficult journey ahead.

This case is part of ANZSOG’s Regulating the P2P Economy series. This series comprises a ‘backgrounder’ outlining key aspects of the P2P sector, significant areas of concern and some of the challenges facing regulators, and three high profile company examples (Uber, Airbnb, and Seeking Arrangement). Instructors can use this case on Uber in various ways. It can be used as a standalone example of the impact of a disruptive service delivery platform and the key public policy issues being generated. It can be used to illustrate and expand on specific issues by pairing it with the ‘backgrounder’ case as preparatory reading for students, especially those not overly familiar with P2P platforms. It can also be used for contrast and comparison discussion with the other company examples in the series (Airbnb, Seeking Arrangement) or, alternatively, instructors can pair the case with an organisation or situation of their own.