Passengers search for a car in their area and request it like a cab. The advantage is the price, it is only half as much as a normal taxi ride. This became a problem for the taxi companies through the low-budget competition – as a aconsequence they recently sued the private taxi drivers.
Uber is a ride-sharing service, that was founded originally in 2009 in San Francisco as a company offering limousine-services. In 2013 the company made a revenue of 213 billion Dollars. The start-up was financed by investors like Benchmark Capital, Menlo Ventures and Lowercase Capital at first and then supported with another 1.2 billion Dollars of venture capital by Google and Goldman Sachs. Until now the value of the company has risen to about 18.2 billion Dollars. It was then established in Europe, too.
Private individuals offer their driving-services with their own private car online (Uber pop) or passengers are picked up by skilled drivers with rental limousines wearing classy suites (Uber black). The customers can comfortably book drivers directly via smartphone app and, after entering the car, automatically pay with their credit card. Tipping is possible, but not desired by Uber. From the price for the ride, Uber keeps 20 percent of that cost plus an additional 4.2 percent of taxes that go to the Uber headquarters in Amsterdam.
Uber is already established in 45 countries and 200 cities worldwide – in German speaking countries mainly in the big urban areas like Munich, Hamburg, Berlin, Frankfurt and Zurich. In Vienna, only rides from the Uber-black-category are offered so far. Furthermore, Uber started the Corner-Store-Service in Washington D.C. recently, a local delivery service for commodities.
The legal situation
A lot of the costs that commercial taxi-drivers have, for example for a calibrated taximeter, radio-unit or an emergency alarm, do not apply for Uber-pop-drivers. At the moment there is an ongoing debate in Germany wether the safety of the passengers is properly ensured and if the driver has an adequate insurance. As Uber also connects customers to private drivers without a licence for passenger transportation, it is not yet clear if this system is in line with the corresponding German laws. Uber does on the one hand request a proof of good conduct and further information about the driver’s history in traffic. On the other hand though they don’t demand the possible drivers to prove their adequate health situation (e.g. eye-test) as it is statutory for taxi and rental-car drivers once every five years in the German Passenger Transportation Act.
In June, the starting protests of the major taxi-companies against Uber did actually lead to a converse effect. Only then, the app caught more attention from a lot of people and the number of registrations was rising quickly. Uber-driver Erkan from Hamburg is happy: “I just heard about the app a couple of weeks ago. As a very good driver, I turned my hobby into my profession. In this way, I get to know a lot of friendly, mostly young people, that’s a lot of fun.”
In the beginning of September, Uber got sued by the leading German taxi-company, Taxi Deutschland. As a consequence, the district court of Frankfurt issued a restraining order against Uber, which said, that the drivers need a passenger carrying vehicle license and that the price for the rides cannot be higher than the operating costs. Uber however, announced that they would not comply with the issued restraining order. There is also resistance in other cities worldwide. In Paris Uber-drivers were attacked by taxi-drivers, in Seattle they were blocked, in Brussels and New York the ride arrangements were already prohibited by law.
Pro and contra Uber
It is obvious at a first glance, that customers who want to save money will rather use the Uber app instead of calling a taxi and paying double. But do the private drivers take away the customers from the taxi companies? Or does the range of carsharing projects simply becomes wider? The German Federal Ministry of Justice seems to be taking a stand for Uber: “More competition can lead to more offers, higher quality and better prices”, said Gerd Billen, state-secretary for consumer protection.
The Minister of Transport in Germany, Michael Groschek (SPD) has a different opinion on this issue: “Uber is a thread for our social and democratic state. They ignore laws and court decisions, undermine social standards and create a market for half-illegal work. We have to freeze this development, before it is able to irrevocably destroy whole areas of the service sector, such as the taxi business.
At the moment, not only the private drivers are being criticized, also the American delivery service Corner-Store is in the mix.
That Uber seems to ignore laws on a regular basis and that driving bans are imposed doesn’t seem to bother the boss – he wants more.
Promotions and special offers are not only a current trend but also boost the recognition value of Uber. With 616.000 likes and 166.000 followers the success of Uber can easily be realized, especially with the young target audience.