NY City Council Poised to Impose Cap on Uber and Lyft

August 7, 2018

By Amanda Weston

As the New York City Council considers new regulation of ride-hailing companies, Council Speaker Corey Johnson said companies such as Uber and Lyft won't derail his effort to protect drivers and manage traffic congestion with "an 11th-hour offer to help the taxi industry."

With the Council set to vote Wednesday, Johnson said Uber, Lyft, and Via offered to pay for a $100 million "hardship fund" for taxi drivers with the aim of blunting legislation the ride-hailing giants fear might curtail their growth.

"We weren't going to change the legislation based off of this $100 million offer," Johnson said in an interview with Cheddar. "We don't do legislation that way. I'm not saying that it was a quid pro quo, but they can still do a $100 million fund. If they think that's the right thing to do, there's nothing stopping them from doing that."

The legislation before the Council calls for a 12-month moratorium on most new for-hire vehicle licenses to give the city time to study how the rapid expansion of ride-hailing services affects the city's traffic, and how the council can ensure drivers of hired cars and yellow cabs earn a living wage. The decision to stop issuing new licenses is a blow to the ride-hailing companies' aggressive model for growth in one of their biggest markets, and could set a precedent in other cities where they're trying to expand.

"There have been fights in other cities across the country and counties over how to regulate this," said Johnson. "I think the disruptive nature of Uber's business model provided some very good things. They got service to people who otherwise were not getting service, and that's a good thing. That doesn't mean they should stay completely unregulated."

This isn't the first time New York has considered regulating the ride-hailing services. The city discussed measures in 2015, but they were scrapped after public outcry and lobbying by the companies. But public sentiment has changed, said Johnson, as the number of hired cars has exploded: there are more than 100,000 Uber, Lyft, Via, and Juno drivers on the road, up from 65,000 there years ago.

"This is an industry that has seen explosive growth over the last three years," said Johnson. "We're trying to create some level of parity, protect all drivers who have seen a diminishment in pay, and try to work on the congestion issue which is plaguing and choking the streets of New York City."

Six drivers have committed suicide in the past few months. Three were taxi drivers reportedly facing financial issues.

Uber launched an aggressive $1 million campaign against council's plans, including emails and app alerts to customers, and it propagated the hashtag #DontStrandNYC. Uber said the Council's legislation would make rides more expensive and less reliable.

Johnson said pricing is up to the companies, not the city.

"If they want to raise their prices or lower their prices, that's up to them," he said. "They have so much investment dollars. They are valued at such a huge amount of money. Right now they're actually subsidizing rides to be cheaper to gain more market share. So this is really within their control, what they want to do moving forward. We don't believe that this is going to harm consumers."

Johnson said the city won't take away existing licenses, and there would be exceptions for issuing new ones. The companies could continue adding wheelchair-accessible cars, and drivers to underserved neighborhoods if they can prove with data there is a need.

"They've met actually a real need in boroughs besides Manhattan, people of color who couldn't get picked up in the past," said Johnson. "So we think that they are a value in some way. But we think they shouldn't be able to grow in an unfettered way, and we think public opinion has shifted as well."

New York is not the only city where ride-hailing apps are facing scrutiny. London cab drivers are planning legal action hoping to receive "millions of pounds in lost earnings." Uber declined to comment to the BBC.

The New York Times reported taxi and Uber drivers believe the New York's proposals will stop the flood of competition and make it easier to earn decent wages.

The Council is expected to vote Wednesday.

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