Leading with Policy: Uber’s Ridesharing Strategy

Over the weekend, Christina pointed me to Uber’s new policy white paper on ridesharing.  In a nutshell, Uber has decided to compete (with Lyft, Sidecar and others) in the ridesharing space, and will use a framework for deciding how and where to do that, based on the perceived regulatory friendliness in each city.  Here’s their rubric:

Uber’s Ridesharing Policy

Uber will roll out ridesharing on its existing platform in any market where the regulators have tacitly approved doing so.

  • If a competitor is operating for 30 days without direct enforcement against transportation providers, then Uber will interpret that as “tacit approval” of ridesharing activity.
  • If clear and consistent enforcement has taken place within 30 days of a competitor rolling out a ridesharing service, then Uber will not roll out its platform for ridesharing in that jurisdiction.

In the absence of regulatory clarity, Uber will implement safeguards in terms of safety and insurance that will go beyond what local regulatory bodies have in place for commercial transportation.

  • At minimum, there will be a $2,000,000 insurance policy applicable to ridesharing trips. This insurance applies to any ridesharing trip requested through the Uber technology platform.
  • Extensive and strict background checks will be performed on any ridesharing transportation provider allowed on the Uber platform. The criteria for which a driver will be disqualified will be stricter than what any existing local regulatory body already has in place for commercial transportation providers.

Conclusion

Innovation and consumer safety are at the core of Uber’s culture. Until this policy shift, Uber hesitated to engage in a market perceiving extreme regulatory risk. Finding the principles for engagement with such risk in this market was crucial. We wanted to set the rules in a place where everyone would agree that safety and welfare of consumers was taken care of while regulators catch up to the innovation they are letting flourish. We look forward to ridesharing spreading across the country but look to do so only after first getting a read from regulators on this new relaxed approach to transportation licensing and enforcement.

I think this is a pretty brilliant move.  Rather than wait for cities to challenge ridesharing and react defensively, Uber is leading with a clear and reasonable policy position.  This puts cities in an interesting position as they consider how to respond — both in terms of allowing ridesharing or not, and also in terms of being consistent and not playing favorites.

It’s also interesting as an example of Uber’s philosophy re: disruptive competition.  As new and disruptive as Uber has been to the traditional taxi market, ridesharing presents a similarly disruptive threat to Uber.  In his post, Travis makes a point of calling this out and highlighting the fact that Uber is choosing to compete in the marketplace rather than fight using legal means:

In the face of this challenge, Uber could have chosen to do nothing. We could have chosen to use regulation to thwart our competitors. Instead, we chose the path that reflects our company’s core: we chose to compete.

This should be a great case study in trying to establish certainty in the face of ambiguity. I’m looking forward to seeing how this plays out.

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