Oh Aye?

The number of Uber drivers in London should be capped to ensure ‘healthy competition and consumer choice’, the boss of a rival minicab app has claimed.
Kabbee chief executive Justin Peters called for a limit on the proportion of minicab drivers overseen by one company if Uber overturns a decision not to renew its operating licence.
Some 116,000 minicab drivers hold licences in London and Uber says around 40,000 use its app in the city.

An entry for the “Please use the law to hobble my competitors” competition then.

39 thoughts on “Oh Aye?”

  1. So Much For Subtlety

    Yeah. Absurd on the face of it. Naked self interest.

    On the other hand he may just have seen the writing on the wall. Toys’R’Us has filed for bankruptcy and it is said that the big toy companies cannot allow it to go out of business because if it did, they would be stuck with Amazon. Given Amazon’s pricing policies that might be a tough slog for the manufacturers. Even for the consumer.

    If Uber is going to eat the competition alive, until there is just one left, then the consumer may be worse off. Uber does understand the appeal of surge pricing. What is that going to do when there are no other minicab or Black Cab companies?

  2. If Uber is going to eat the competition alive, until there is just one left, then the consumer may be worse off.

    But that just doesn’t happen, does it? Except where the state legislates that there should be only one provider.

    If Uber became the only cab firm in London and then used that position to double prices, it would represent a massive business opportunity which multiple competitors would take up in no time.

  3. How does limiting the availability of anything ‘improve consumer choice’? What the hell is he smoking to be able to say that with a straight face?

  4. @SMFS – You mean exactly what toys-r-us did? Sell cheap to put others out of business then increase prices… The problem with that plan is people see an opportunity…. Tesco, Asda etc move in as does a new smaller retailer, The Entertainer, until they’ve eaten your breakfast and you fail…

  5. Why isn’t anyone writing column pieces or appearing on tv on this issue just calling such ideas and proponents ‘greedy self interested ducks who should shut their cunt mouths’?

    Really don’t get the polite tolerance of groups that are using every trick to limit my choices and make travel cost more for their benefit and our expense.

  6. Isn’t this standard competition law? When Morrisons took over Safeway, it was forced to sell off some of the stores to maintain a competitive market. Why should Uber be treated any differently?

  7. I’m surprised some company hasn’t come up with a software package that basically does what Uber does and sells it to cities. Instead of, say TFL, moaning they could just run the back-end and let private cab drivers tout for business on it.

  8. @Andrew M – the planning system restricts the supply of supermarkets. If an Uber rival wants to introduce 10,000 new drivers to the market, it can.

  9. Bloke in North Dorset

    I’m going to be in Bristol tonight and was pleasantly surprised that the People’s republic allows Uber to operate. I shall be using it but expect prices to be higher when the concert finishes than before it starts. Oh well, that’s a market for you and I’ll be happy to pay.

  10. Bic – the Entertainer is weird. How do they manage to stay in business with all that competition, on the high street and not open on Sundays?

  11. MC – I’m not talking about planning for new supermarkets. Morrisons bought up Safeway’s existing stores: there was no planning issue. It was a ruling by the then Competition Commission (now the Competion & Markets Authority).

  12. @Hallowed – no idea how they survive but they are growing and always seem busy… Guess different business model and they have figured out how to keep costs low…

  13. Andrew M: When Morrisons took over Safeway…

    The problem with this is that Uber aren’t taking anyone over. A better analogy would be Tesco losing market share to Lidl and there was no intervention to prevent that.

  14. Had an uninsured “private hire” car driver hit me on my motorcycle the other night. Tfl told me that the fact he was registered with them didn’t mean he was insured…

    They are useless and should be scrapped forthwith.

  15. Sean O’Connor;

    “I’m surprised some company hasn’t come up with a software package that basically does what Uber does and sells it to cities”

    To cities.

    The licensing system is regional, organised by council district.

    Uber is not a regional player. Uber, to a certain degree, initially exploits high-volume inter-regional travel by reducing the search costs for both drivers and passengers, via the app, and creating the brand, which seems to be a wall of money approach.

    To create a competitor to Uber, or the conditions under which a competitor could emerge, the simplest way would probably be to push operator licensing up to national level, and adding specific conditions and requirements for platform operators there.

    Creating strong regional players, particularly with the licensing authority in charge of the platform, won’t resolve the problem. Remember that it is the licensing authorities that set maximum tariffs, which is equivalent to a rent control policy.

  16. TMB-
    you’re right insofar as the Monopolies and Mergers commission reviews are there to stop monopolies from emerging from inorganic (takeover/merger) growth.

    If a business with potential monopoly power emerges through organic growth then nothing to be done until they start to engage in outlawed behaviour or anti-competititive practices.

    So AndrewM’s point is still valid. Shoud Kabbie’s self interest be so scoffable when if uber were going to take over addison lee then we might very well say no you don’t meladdies. On balance it is though because an organic growth, without the use of anti competitive practices, just tells you that Uber are better at such growth than Kabbie are and why shouldn’t consumer preferrence be reflected in the market place.
    So on balance Kabbie can go hang.. but it’s understandable that the COE should ask for it .. because in such a highly controlled market everyone is relying on some sort of protection from truly free competition.

  17. The Meissen Bison, Hallowed Be,

    You’re right that organic growth isn’t the same as a takeover. But there’s precedent (awful, terrible precedent) of governments trying to nudge consumers into not choosing the market leader: look at the EU’s browser choice regulations.

    I happen to think that Uber’s market position isn’t unassailable. The barriers to entry are fairly low. Plenty of other companies appeared to have devastating monopolies (Tesco, Microsoft), only to come unstuck either by more nimble competitors or by the progress of technology.

  18. I’m surprised some company hasn’t come up with a software package that basically does what Uber does and sells it to cities.

    Dear God no. Right now I have a choice of apps: Kabbee, Uber, MyTaxi, etc. If there were only one app called TFL Cars, you can be assured that it would be terrible. Even if it were developed by a private company, the fact that they would only be subject to a contract renewal every X years, rather than having to fight for customers every minute as Uber presently do, means they have little incentive to perform well.

    Same applies to many services contracted out by local authorities. I’d rather choose my own rubbish collection, choose my kids’ teachers, etc.; than have the local council choose for me.

  19. ‘All licensed private hire drivers must work for a licensed private hire operator.’

    Therein lies the whole problem.

  20. SMFS,

    “If Uber is going to eat the competition alive, until there is just one left, then the consumer may be worse off. Uber does understand the appeal of surge pricing. What is that going to do when there are no other minicab or Black Cab companies?”

    Prices might rise.

    The other example of a company in this position is eBay and after they felt secure enough, they raised prices.

    But, even then, it wasn’t by that much compared to what people had before. They know they can’t take the piss that much without people running away. And ask a bloke with a Nintendo game if he wants to go back to selling to Game and losing about £10 or selling on eBay and losing about £3.

    Uber makes taxis cheaper by reducing the wasted time of a driver getting to a passenger. They might be sweetening up the fares to destroy the competition, but there is an efficiency improvement, too.

    It might even be the case that they become a monopoly and we regulate them like with the utilities. Maybe we stick a bit more tax on their profits?

    But I suspect we’ll see a lot of other things that affect Uber before they get to that point. Maybe the idea of millions of people living in one small area of the country will become less popular as everyone gets more used to workflow software.

  21. “I’m surprised some company hasn’t come up with a software package that basically does what Uber does and sells it to cities.”

    I’m guessing you’ve never dealt with software for local authorities.

    But beyond that, Uber isn’t just about a “software package”. It’s about operational management and that’s being constantly refined.

    Running operations like Uber, Facebook and Amazon with millions of users and billions of requests at 24/365 is ridiculously hard. You have to think about balancing load, dealing with servers going down, rolling out new features and how to manage and monitor new release programmes. You can’t have council people doing this work. If the leisure centre booking system goes down for a couple of hours, it doesn’t matter like a taxi app does.

  22. @Andrew M

    “Dear God no. Right now I have a choice of apps: Kabbee, Uber, MyTaxi, etc. If there were only one app called TFL Cars”

    I’m not saying it’s necessarily a good idea, I’m just saying I’m surprised it’s not happened! I write apps for a living, and I don’t see a decent Uber-type app + backend being that difficult to write. Say a load of open source geeks get together and knock something out that works well, then all TFL have to do is host it and you could have the convenience of one app summoning independent cabs, or maybe cab companies competing against each other on it too.

  23. “then all TFL have to do is host it ” – there’s an awful lot of commercial organisations, let alone public sector, that will come out in hives at the thought of running customer facing services on open source solutions. Particularly if that service processes payments. Their main problem is with wanting someone to beat mercilessly with a shitty stick when things go wrong, and they really don’t want to build up the necessary skills in-house.

    That said, back when I was involved with private hire firms, I did build the backend and the web front-end for such a system. It had a rather nice analysis tool built with d3 which I was rather chuffed with at the time. So no, it’s not hard, though the problem domain does have some interesting little kinks in it.

    “maybe cab companies competing against each other on it too.”

    It’s possible to build the thing in such a way such that passengers could publish a price they’re willing to pay for a journey, or invite drivers to bid for each journey, or both. What you end up with is pretty much eBay.

    Do not be tempted to build it this way. Don’t. Build an order book instead.

  24. Sean O’Connor,

    “Say a load of open source geeks get together and knock something out that works well, then all TFL have to do is host it and you could have the convenience of one app summoning independent cabs, or maybe cab companies competing against each other on it too.”

    Why would a load of open source geeks build it? What’s in it for them?

  25. @ Hallowed/Bic/TMB

    “Bic – the Entertainer is weird. How do they manage to stay in business with all that competition, on the high street and not open on Sundays?”

    I suspect it’s that they have many smaller sites and are hovering up the toy sales that aren’t covered by the Smyth’s/ToysRUS out of town stores.

  26. @Why would a load of open source geeks build it? What’s in it for them?

    Nothing! That’s kinda the way open source works!

    Here’s an open source taxi service I found after Googling:

    http://libretaxi.org/

    Without a decent back-end though it looks like it can’t take credit cards and is cash only, and doesn’t do GPS tracking, but it’s a start.

  27. Bloke on M4,

    The other example of a company in this position is eBay and after they felt secure enough, they raised prices.

    eBay’s position isn’t as secure as it looks. In my experience, eBay has been clunky and awkward to use for a while now. They tried to choke off competition by buying up Gumtree, but they still face competition on several fronts. There are sector-specific competitors (you mention Game, there’s also CeX, Autotrader for cars, Viagogo for tickets, etc.); there’s also competition for local vendors via Facebook Marketplace; and I keep seeing ads for something called Shpock. The latter two are particularly good at reducing the friction for occasional sellers.

  28. ‘All licensed private hire drivers must work for a licensed private hire operator.’

    Not true, at least outside London. You can be a sole private hire operator/driver. Naturally, operating efficiencies tend to gather PHDs into groups to minimise the search needed by customers, but it not a licence requirement.

  29. Jgh; actually, sole operators are required to hold both the driver’s licence and the operators licence. Drivers who do not hold the operators licence are required to only accept journeys/bookings from someone holding the operators licence.

    “must work for” is true, but can be read in a way that obscures the fact that they could well be, and quite often are, the same person.

  30. jgh,

    ‘Not true, at least outside London’

    You are correct but the article was specifically about London.

  31. I sneeze in threes

    PHDs, I love that. If we see Murphy mini-cabbing we know it will be because he wants to add PHD to his list of credentials, though maybe he just needs the.

  32. I have a hearing tomorrow morning where the guy has a Private Hire Car licence and a Private Hire Operators licence, but officers revoked his Private Hire Drivers licence when he got too many points.

    You need all three to trade, but it can be one guy and one car.

  33. So Much For Subtlety

    Andrew M – “I happen to think that Uber’s market position isn’t unassailable. The barriers to entry are fairly low. Plenty of other companies appeared to have devastating monopolies (Tesco, Microsoft), only to come unstuck either by more nimble competitors or by the progress of technology.”

    Are barriers to entry low? They look like it. They may well be. But I don’t think that companies with devastating monopolies in software do come unstuck all that often. Everyone I know is still using Microsoft Office. They lost the browser monopoly but they never really had that to start with.

    For Uber, once they get that public awareness, once their brand is dominant, what would it take to shake it? Part of the problem for Uber, of course, is that their drivers can drive for the other apps too. That would make competition so much easier.

  34. SMFS,
    The big opportunity for competing apps is that if they’re better for drivers (better pay or better conditions) then the drivers themselves will advertise the app to their passengers.

    Uber will still remain popular for travellers arriving at an unfamiliar airport; but locals may well prefer a local app.

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