The news that NYC taxi owners are suing NYC because Uber is cutting into their monopoly should make New Yorkers angry (ok, angrier). If owners get their way, convenience and service will decline.

According to the article, Uber picked up 3.82M users since last April while taxis lost 3.83M fares in the same time.  Naturally, customer (revenue) defections of this magnitude make owners concerned in a way that an individual customer defection doesn’t.

The uproar is caused by a triumph in innovation and is the free market economy at work. The fact that over 3 million people voluntarily changed how they moved around the city is proof that Uber’s “product” is more valuable in the marketplace.  Instead of resorting to litigation to mitigate the impact of ignoring customers for so long, taxi owners should adapt their business model to meet new consumer expectations.

Customers expect (and Uber provides) more convenience and a better customer experience.  For example:

  • Simplified method to get a ride when you want it – Uber’s app means my whistling skills just aren’t as valuable anymore.
  • More convenient payment options – have you ever argued with a cab driver about whether they would accept your credit card? Ever believe they were being untruthful? Enough said.
  • Know your driver – the ability to “know” your driver before they arrive and to know how other users rated them provides a feedback loop that encourages high service levels. Deliver bad service, lose a fare.
  • More reasonable costs – this aspect isn’t a driving factor in NY (see chart) which indicates the reasons above are more important. But in many markets Uber is just less expensive.


I suspect owners believe something is being taken away from them. In reality, owners have an enormous opportunity.  By matching their service to the needs of customers (examples above) they can continue to serve the good citizens of NY.

Owners are faced with a pivot point whereby they can adapt to the new marketplace or fight in the courts.  I’m not entirely certain which is most cost-effective (i.e. more lucrative to owners) but based on their decision to sue, one can guess that improving customer service isn’t a top priority. In my mind that course of action is the sign of an industry in transition, or in the taxi driver’s case, a dying industry.



Innovation vs. Regulation (or Uber vs. Taxis)
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