The battle over the future of the taxi

Riding in a yellow taxi used to be a miserable experience, which helps explain why Uber and Lyft were able to swoop in and so thoroughly disrupt the industry. Fed up with unreliable and dirty taxi rides, passengers migrated en masse to ride-hail apps that promised cleaner rides, friendlier drivers, and seamless payments. Taxi operators tried to stave off the bleeding by rolling out their own apps — but most were just pale copies of Uber. Now, the traditional taxi industry is launching a new counter-offensive against the ride-hail menace: gadgets.

Starting this year and ramping up in 2017, Verifone Systems — one of the largest payment processing companies in the world — will install new technology in tens of thousands of cabs nationwide, in a massive effort to improve the cab-riding experience for not only riders, but drivers as well. Verifone owns taxi meters, credit card machines, and entertainment systems in dozens of markets in the US, including New York City, where it controls around half of the city’s fleet of yellow and green cabs.

Flywheel, a Bay Area-based e-hail app company, announced Thursday that its “TaxiOS” technology was approved by New York City regulators for use in the city’s iconic yellow taxis.

Flywheel offers two main products: an e-hail app for riders, and a smartphone-based operating system for taxi drivers that replaces the jumble of meters, dispatch, advertising, navigation systems, and credit card readers currently clogging the interior of the vehicle.

Uber wants you to get into an unfamiliar car with a total stranger. But that may be a price worth paying for a cheaper ride. The company's new UberPool feature will notify users if it discovers a "co-rider" with similar travel plans, and will also provide the other person's first name and information as to who will be collected first. The two passengers can then split the fare.

Ashwini Chhabra, deputy commissioner of policy and planning at the New York City Taxi and Limousine Commission, will be joining Uber as the startup's first head of policy development and community engagement.

The Commission has had an at-times adversarial relationship with Uber, which launched its yellow cab-hailing app in New York City without approval and had to pull it back. Since then, the commission has affirmed its belief that hailing apps are good for New Yorkers, but forced Uber to go through a bureaucratic process that gave its competitors time to catch up. Having lost its first-mover advantage, Uber is now up against similar apps including Hailo and Taxi Magic.

A major protest organized by French taxi drivers turned violent Monday, as demonstrators attacked Uber cars outside Paris' two main airports. As Le Monde reports, the nationwide demonstrations were organized by five major taxi unions, which are protesting the "unfair competition" that Uber and other chauffeur services pose. Kat Borlongan, co-founder of consulting firm Five by Five, was traveling from the Charles de Gaulle airport Monday morning when her Uber car was attacked by protesters. The assailants threw rocks and paint at their van, before smashing a passenger window and slashing one of its tires. Uber confirmed the attack in a statement, and an eyewitness corroborated Borlongan's account to The Verge.

Uber drivers that walk into a Toyota or General Motors dealership will get as much as $7,500 off their next car. According to a report today in the Wall Street Journal, the cab-hailing app is partnering with the two manufacturers to offer Uber drivers on-the-spot discounts and more favorable terms for financing on their next car purchase. The exact terms of the deal are still unclear, but apparently some drivers have already taken Uber up on the offer. The piece highlights one driver, Alexandre Sandor, who purchased a new Cadillac XTS and received both a $7,500 rebate and low-interest financing through the program.

Uber has squirmed its way through a number of obstinate legal blockades to continue offering its on-demand taxi services, and it looks like the effort is paying off: according to a public filing spotted by All Things D, Uber is now valued at around $3.5 billion. And it appears that Google has taken notice in a big way — both ATD and TechCrunch are reporting that Google Ventures, an investment arm of Google, has invested around $250 million into the startup. TechCrunch reports that it's Google Venture's largest investment to date, and it should give Uber plenty of room to grow. Neither company has publicly addressed the rumor yet however, and Uber tells us that it doesn't have anything to announce at this time.

Despite the pushback that mobile taxi hailing services like Uber and Hailo have seen, the space continues to explode. Uber is already in 41 cities across the globe, and it's aggressively pursuing expansion into more countries. But for all of its attention, the company is actually off to a slow start in one of its biggest battlegrounds, New York, where the service is turning out to be most useful during off-peak hours in less served locations, and not as a complete replacement to traditional taxi hailing. That certainly isn't the case everywhere though, and Uber appears to be doing well for it: according to ATD, the company could bring in $125 million in total revenue this year.

Some of the first data on New York City's nascent taxi e-hail program was released earlier this week, and the headline stat painted a grim picture: only 0.25 percent of all taxi trips were e-hails, and just 17 percent of electronic cab requests resulted in an actual ride. New Yorkers should be careful, however, before they write off the program — and apps like Hailo and Uber — as a bad fit for the city.

Taxi and Limousine Commission (TLC) chair David Yassky defended the e-hail program, saying in a statement that "it’s way too soon to draw any meaningful conclusions." And he has a point. The data (provided by the TLC, which oversees the program) ostensibly shows the failure of the program to make an impact during the month of June. But a restraining order banning e-hailed cars from city streets wasn't lifted until June 6th, and the first full day of authorized e-hailing didn't come until the 7th.

For every step of progress made by the ride-sharing industry in metropolitan havens like New York City, companies like Uber, Lyft, and SideCar continue to meet stiff resistance elsewhere. Take the city of Los Angeles for example, which just sided with traditional taxi operators by delivering sharply worded cease and desist letters to all three startups. The orders — signed by LA taxicab administrator Thomas M. Drischler — warn each company that their respective business is "operating an unlicensed commercial transportation service" within city limits. Uber, Lyft, and SideCar are each ordered to suspend all passenger pickups and any dispatches requested through their associated smartphone apps until they can obtain the requisite permits from California's Public Utilities Commission (CPUC).

The Federal Trade Commission is siding with Uber in its struggle to operate legally in Washington, DC. In December, the DC City Council decided to rewrite its taxi laws so that companies like Uber — which use mobile apps to hail cabs, black cars and other transportation — could bring their businesses to the district. And in January, the City Council passed an amendment to essentially legalize Uber's e-hail app. But in May, the DC Taxicab Commission proposed new restrictions on car-booking apps that are now preventing Uber and its rivals from operating there.

Last week, the FTC sent the Taxicab Commission a letter arguing that the new rules are too restrictive and could stifle innovation. The agency also said that it's concerned the rules "may unnecessarily impede competition" and that "address disclosure and data security issues" may arise as well. The FTC's support for Uber and similar apps in DC is notable, but this isn't the first the federal agency has weighed in on behalf of taxi apps. In March, the FTC backed Uber and other taxi apps in a similar dispute taking place in Denver.

Hailo has become the second startup after Uber to offer taxi hailing through an app in New York City, the company announced today. The companies are both part of a year-long pilot program run by the city's Taxi and Limousine Commission that will determine the regulations surrounding the use of smartphone apps in the taxi industry. Such apps were technically illegal at this time last year, so the companies have had a long wait. Hailo even prematurely offered its service to some users before its participation in the pilot had been formally confirmed. The company is still calling the service a beta, but now anyone with an Android device or iPhone can use it.

Less than a week after Uber became the first participant in New York City's e-hail taxi program, it's already facing competition. Hailo's CEO Jay Bregman just confirmed on stage at TechCrunch's Disrupt event that NYC's Taxi and Limousine Commission has given his company the necessary go-ahead to join the pilot. Updates to the Hailo apps for iOS and Android will be released today, according to TechCrunch, enabling New Yorkers to request a yellow cab with their smartphone.

The quick approval suggests the commission isn't holding a grudge even after Hailo jumped the gun earlier this week, alerting NYC users of an invite-based e-hail beta app it was running without the city's blessing. TLC officials have said that other apps are also going through the approval process, so it seems — after waiting far too long for the privilege — New Yorkers will soon have plenty of options for summoning a cab.

Just a few days after Uber got the official go-ahead to operate under a New York City pilot program for taxi-hailing apps, the UberTAXI service has gone live. There are a few limitations at present, however. The app doesn't support automatic payments, so you'll have to remember to pay your driver the regular way, and Uber warns that cabs may be in short supply to begin with. You'll also have to explicitly request a taxi rather than a black car, and you won't be able to use UberTAXI to travel from airports because of regulatory pitfalls. Still, the service's NYC resurrection six months after it shut down is a major milestone in the long-running battle for taxi-hailing apps to gain official acceptance.

Looks like New York City isn't going to hold a grudge against Uber for attempting to launch its taxi-hailing service without permission last summer. The San Francisco startup just became the first company to be approved under New York's new pilot program, which will allow selected companies to offer smartphone apps that let customers hail a cab from their phones.

A court ruling in Manhattan today represents one more incremental step in the drawn-out battle between transit regulators, established interests, and companies that hope to change the way the taxi industry works. Technically, it was the New York City Taxi and Limousine Commission (TLC) that won today. But it's also a triumph for Uber, Hailo, and similar startups that hope to bring hail-by-smartphone taxi service despite fierce opposition from established members of the city's complex transit industry.

Uber just announced it will "aggressively roll out" carpooling, or ridesharing, in the face of increasing competition from startups that offer it as an ultra-cheap transportation option. Uber started as a service for professional taxi and livery drivers, who use the app to find passengers in real time. By contrast, ridesharing essentially lets anyone be a taxi driver: just sign up with an app like Sidecar or Lyft, and anyone with a vehicle and car insurance can start picking up passengers for tips. This practice is potentially illegal across the US; Sidecar is involved in a lawsuit over its legality in Austin.

It seems that the relatively new concept of ridesharing has been nibbling into Uber's business. As a result, the company started experimenting with ridesharing in San Francisco in February. That experiment must have gone well, because now Uber is launching in Seattle and saying it will add ridesharing in any market where regulators have given "tacit" approval — that is to say, expect the notoriously aggressive company to push the envelope anywhere ridesharing hasn't explicitly been banned.

Windows Phone users now have a native app to reserve cabs and black cars using Uber. The new app, released today for Windows Phone 7.8 and Windows Phone 8, allows users in cities where Uber operates to track nearby cars available for hire, set a pickup, and pay using a credit card, just like the Android and iPhone apps that have been out for quite some time. Before today, Windows Phone users had to use a mobile website to take advantage of Uber's services. Beyond Windows Phone, the company also released its first BlackBerry app earlier this month (though it doesn't support BlackBerry 10), and it gave its Android app a complete overhaul last week that brings it up to snuff with Uber's iPhone app.

To launch a taxi or ride-sharing app is to live in constant legal peril. Uber, one of the forerunners in the taxi app business, is slogging through lawsuits in New York, San Francisco, Chicago, and other cities — most recently, Boston Cab Dispatch filed suit and accused Uber of "running roughshod through the city of Boston." While the taxi lobby has been vocal in opposing its new competitor, ride-sharing services like SideCar face different challenges. Unlike Uber, SideCar doesn't rely on licensed cabs, instead letting drivers with extra seats pick up passengers and receive donations in return. Because of this, it's argued that it isn't subject to taxi regulations: "It's not a transportation company, it's a communications platform," CEO Sunil Paul has argued.

That hasn't stopped local governments from asking SideCar and similar apps to case operations. California's Public Utilities Commission issued $20,000 citations to Lyft, SideCar, and Uber for "public safety violations," though Lyft and Uber later had the fine suspended. In response, SideCar has gone on the offensive. Before SXSW, the company announced that it would ignore an order to stop operating in Austin, giving free rides to visitors to promote the brand. Shortly thereafter, it sued the city, asking for a decision that would affirm the right to operate ride-sharing apps. "We believe the Austin Transportation Department has misinterpreted its City Code," wrote Paul, "and that rideshare is legal and protected under Austin transportation law." Now, it's continuing its expansion into three new markets: Boston, Chicago, and Brooklyn.

Organizations representing the black car industry have filed legislation against a New York City pilot program for e-hailing apps just one day before it was due to begin. The program was approved in December, and will allow for hailing cabs within a 1.5 mile-radius, or a half-mile radius in Manhattan below 59th Street. It was the result of a compromise after sustained lobbying by the black car industry; the TLC had intended to conduct a straight vote on permanent rules.

But the Livery Roundtable, Black Car Assistance Corporation, and others argue that the Taxi & Limousine Commission passed the program without the go-ahead from the City Council, rendering it invalid; the filing says that the TLC "simply does not have the authority" to "fundamentally overhaul the City's long-standing transportation policy." In New York City, black cars can only pick up pre-arranged hails, whereas yellow cabs are limited to hails from the street; e-hailing exists in a gray area between the two, however, which has many in the black car industry worried that smartphone apps may erode demand for their service.

Naval Ravikant is the cofounder of the startup network AngelList and a small investor in Uber, the app that lets you order a car service or taxi from your phone. He uses Uber X to get to work, Flywheel for long trips to the outer part of San Francisco, Lyft for short hops, and Uber Black for groups and special occasions. He’s selling his cars, he told The Verge.

Each of these companies has a slightly different take, and not all will survive. But these apps could double or triple the size of the market for taxi and car services, Ravikant estimates. He did the math and found that between gas, garages, insurance, and the cost of the car, he could actually save money by using a combination of the smorgasbord of taxi apps available in San Francisco — and he can sit in the back seat on his phone instead of having to drive.

California's Public Utilities Commission has continued its reconciliation with ride-sharing startups. After suspending a $20,000 citation against Lyft, the CPUC has done the same for Uber, saying that the company can continue to operate and won't have to immediately pay the $20,000 it racked up for "public safety violations." In the meantime, regulators will reexamine California's transportation rules, determining how to fit startups into the existing framework of insurance requirements, background checks, and other consumer protection laws.

This doesn't necessarily mean Uber or Lyft are in the clear: if the CPUC's rulemaking doesn't accommodate them, they could still be asked to stop operating. Uber is in a similar situation in New York, where the Taxi and Limousine Commission has started a pilot program after pushing Uber to shut down in October. Both Uber and Zimride have argued that current regulations simply aren't equipped to deal with new technological developments, especially when drivers are hired from outside the traditional licensed pool.

Last year three ride-sharing services received cease-and-desist orders from the California Public Utilities Commission, but today one of the services — Lyft — announced it has reached an agreement with the state's regulators. Lyft made the announcement in a blog post, stating that the interim agreement allows Lyft to continue operation while the CPUC continues developing new regulations for ride-sharing applications and services.

The CPUC's original concerns had stemmed from the fact that Lyft and similar services weren't adhering to the same standards as taxis and similar pre-existing services — what it terms "charter-party carriers." The argument from the likes of Lyft and Uber has been that their services don't operate under the same business model, and therefore the same rules don't apply. The disagreement led to CPUC issuing $20,000 citations to several of the services last year. In its statement on the interim agreement, CPUC stated that it would be suspending Lyft's citation until final rules and regulations had been reached.

After winning a political battle in Washington, DC last month, controversial taxi startup Uber has announced it will be adding taxi service to its existing livery cars in the city. In a blog post, Uber praised the DC City Council's decision, saying that it would begin offering a pilot program for taxis starting today. For now, black car service will remain the default, and Uber says few taxis will be available at first as the company "curates" existing cabs. Otherwise, it'll operate like other Uber taxis, though pickups will only be available in the District of Columbia itself, not nearby suburbs in Virginia or Maryland — that's something Uber says will be coming in the future.

Uber's convenient but pricey app-based cab service has often struggled with existing regulatory frameworks, which often protect consumers but make using new technology difficult. The company generally has an easier time opening a livery car service than a taxi one (since existing livery companies already require customers to call ahead), but it's managed to launch Uber Taxi previously in cities like San Francisco, Boston, and Chicago. A short-lived New York Uber Taxi service, however, wasn't able to survive local Taxi and Limousine Commission protest, though a pilot program for Uber-like services was later approved.

San Francisco startup Uber has had two advantages in the great battle of the taxi apps: money and notoriety. That may be about to change. Rival startup Hailo has raised $30 million from high profile investors, reports All Things D, which would bring its total funding up to $50 million, narrowly surpassing Uber's reported $49.5 million.

The new money sets the stage for a high stakes showdown. Riders in Boston and Chicago, where both Uber and Hailo already operate, are likely to see huge discounts and heavy marketing (ice cream, anyone?). But the battle will be fiercest in New York City, where regulators just cleared the way for e-hailing apps to start booking rides in mid-February. Several apps are likely to hit the market at that time, including Uber, Hailo, and potentially GetTaxi, Taxi Magic, and other competitors as well. Hailo is also likely to use the fresh funding to launch in new markets. If it follows Uber's lead, Washington D.C. or Seattle could be next.