The 7 worst things in Chicago's proposed Uber ordinance

Jacob Huebert

Last week, Chicago Mayor Rahm Emanuel proposed an ordinance that would regulate popular ride-sharing services such as Uber and Lyft in Chicago.

Emanuel often claims that he wants Chicago to be friendly to new businesses, innovation and technology. Unfortunately, his proposal is anything but friendly to these “transportation network” services, and would force them to either severely change the way they operate or leave the city entirely. Where other cities have changed their laws to accommodate these new services, Chicago appears determined to continue using the law to protect established taxi companies from competition at everyone else’s expense.

Here are seven of the proposal’s worst anticompetitive features. 

1. Ride-share companies can’t own vehicles – or help drivers buy them.

One provision of the ordinance says that the operator of a ride-share service cannot “own, provide financing for the obtaining, leasing, or ownership of, or have a beneficial interest in transportation network vehicles.”

As it stands, neither Uber nor Lyft actually owns any cars or employs any drivers – they just bring drivers and passengers together. But who’s to say some future entrepreneur won’t find a way to make it economical for the “network” to also own vehicles or help its drivers buy them? And how does preemptively banning this help the public? In fact, it doesn’t do anything for the public; it’s just a way to stop ride-sharing companies from finding new ways to outcompete established taxicab companies.

2. No taxis allowed

Currently you can use Uber to summon three types of vehicles: black luxury cars, taxis and budget “UberX” cars. The taxis you can hail with Uber are normal, licensed Chicago cabs, and drivers have signed up to participate; it’s no different from calling for a cab by telephone or flagging one down on the street, except that it’s much more convenient.

The proposed ordinance would eliminate the taxi option for Uber customers by prohibiting taxis from participating in licensed transportation networks. How that could possibly benefit the public is a mystery. If the city adopts this rule, it will be destroying something that makes everyone’s lives easier for no good reason.

3. No advertising

Under the ordinance, advertisements wouldn’t be allowed on the inside or outside of vehicles. In the short term, that might not matter because, as things stand, Uber black cars, UberX cars and Lyft cars don’t have any ads in them or on them; only taxis have ads.

But maybe Uber, Lyft or a future service will want its cars to have ads. And maybe some customers wouldn’t mind seeing ads, especially if it meant cheaper fares.

Apparently the city wants to give taxis a monopoly on the vehicle-advertising business. That not only doesn’t serve a legitimate governmental purpose; but it also violates the First Amendment.

4. No airport drop-offs

Uber and Lyft cars already aren’t allowed to make airport pickups. Under the new ordinance, they wouldn’t be allowed to drop off passengers, either. This, of course, serves no purpose except to protect taxi companies from competition.

5. No time-and-distance pricing

Perhaps the proposal’s worst feature is that it would prohibit Uber and Lyft cars from charging passengers based on “a combination of distance travelled and time elapsed during service,” which is how they charge customers now. Instead, the cars would have to charge a prearranged flat fee or charge customers based on either time or distance – but not both.

That’s nonsensical. It’s only rational to charge customers based both on time and distance, because both affect the driver’s costs, and there’s no way to account for traffic conditions in advance. That’s why taxis charge based on both time and distance – and it’s why taxi companies don’t want Uber and Lyft to be able to use this method for charging customers.

6. Mandatory emblems

The ordinance would also require all cars in a given network to have an “emblem” on the outside of their car to identify which network they’re in. Lyft already does this with its cars’ pink mustaches. Uber, however, doesn’t – and its black cars’ logo-free appearance is part of what gives Uber cars their distinct cool, classy vibe.

Forcing Uber to add a logo serves no legitimate purpose. Customers don’t need a logo to identify their Uber car for several obvious reasons: (1) the Uber app shows them their driver’s name and picture, along with the car’s license plate number; (2) the Uber app lets the customer see where the car is on a map when it’s on its way and when it arrives; and (3) Uber drivers identify themselves upon arrival and confirm that they have the correct passenger.

So the only purpose of this requirement is to make Uber cars a little less special – that is, once again, to hamper competition for the taxi companies’ benefit.

7. Big Brother-style GPS tracking

The ordinance would also require the networks to allow the city to monitor all of their vehicles at all times by GPS. But the city has no legitimate need to know where every Uber or Lyft driver is at all times – let alone where their passengers go. If the city needs particular GPS information for a law-enforcement purpose – if, say, a car was implicated in a crime – it can always get a warrant for that data.

Citizens should be disturbed by this invasion of privacy, which violates the Fourth Amendment’s protection against unreasonable searches and seizures.

Citizens should also be disturbed by a city government that’s more concerned about pleasing a politically connected special-interest group than in letting consumers choose the services they like best. And they should be disturbed that government officials are more interested in continuing cronyism for as long as possible than in letting Chicago thrive in the 21st century.

Chicagoans should demand that city officials either remove these features from the proposed ordinance or, better yet, scrap it entirely and replace it with one that simply declares that these transportation services are legal and may continue operating as they have been. 

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Comments

Reva Minkoff

For those who live in Chicago neighborhoods that do not generally have hailable cabs around, Uber has been an amazing amazing help. I can't tell you how many times, before Uber and UberX, I'd call cabs to have them never show up and be rushing late to the airport. There were one or two occasions where I even got "stuck" at friend's houses for awkward extra hours because the cab I called never showed or the cab dispatchers said they had no cabs available. Uber and uberx have made it possible for me and my friends to travel as easily as we did when we lived in Lakeview. And for 20-something year old women, that makes a big difference. I think it's crazy that Mayor Emanuel would say that he's trying to make Chicago into a tech hub and friendly place for entrepreneurs while trying to get rid of an amazing, important, and safe entrepreneurial development that's improving our city.

Jeff Segal

Without arguing the finer points of this regulation -- or the city's motivations -- most of these rules seem to say, "If you want to be a taxi, you have to be regulated like a taxi." Numbers 1 through 5 are all things that taxis do but Uber mostly doesn't. If Uber starts acting more like a taxi company, why shouldn't it operate under the same regulations?

Now, if you want to condemn the entire taxi medallion racket as archaic, anti-competitive and corrupt, I'd love to hear City Hall's response to that!

Hope Bertram

Well said!! I think all of these ordinances (with the exception of #3) are helpful and hope they pass!

Jeff Segal

I'm not sure I was arguing in favor of passing the regulations. But if I were a taxi driver or owner, I'd sure wonder why these Uber guys get to steal my business without having to follow the same rules I do.

However, I'm more inclined to agree with Jacob that, rather than apply more rules to Uber, the playing field should be leveled by applying fewer rules to everybody.

Jacob Huebert

Uber has always done numbers 2, 4, and 5. And of course the medallion system should be abolished.

Joey Diapers

I just went through the ordinance...where are you getting #2 from?

Also, is surge pricing based on "a combination of of distance traveled and time elapsed?" Or is it simply a higher rate based on distance? If it's the latter, then #5 is also incorrect.

I'm no fan of Rahm but I use Uber primarily for taxis and was looking for support for your #2 specifically.

Jacob Huebert

The proposed 9-115-090(c) says: "No vehicle licensed as a taxi or public transportation vehicle in any jurisdiction shall be operated as a transportation network vehicle. However, nothing provided in this subsection shall be construed to prohibit or limit the provision of prearranged ride services by taxicabs or other prearranged ride services by taxicabs or other public transportation vehicles pursuant to 9-112 and 9-114."

This appears to prohibit taxis from participating the Uber network at all, given the definition of "transportation network service" in 9-115-010 as "a prearranged tansportaion service offered or provided for compensation using an Internet-enabled application or digital platform to connect potential passengers with transportation network drivers."

*Maybe* the "However..." provision could be intended to allow users to use an app to hail a cab but not for payment, etc., but that is not at all clear. In any event, it does not appear that the ordinance intends to allow Uber to continue with taxis as usual. Otherwise, what is the point of this provision? To say that a taxi driver can't use his taxi as an UberX vehicles in his spare time? But surely someone with a medallion isn't going to want to operate as an UberX anyway, so that doesn't make sense.

Joey Diapers

Thanks, somehow I skimmed over that. I just called my alderman (Waguespack) and voiced my opposition to that section.

The rest of this I can kind of see the city's point in trying to get a handle on insurance requirements, etc., but to prohibit taxis from using Uber is ridiculous.

Joanna Zahn

The answer to #2: How that could possibly benefit the public? Is simple.. cabs are supposed to be available for hailing and yet every time I try to get in one on my corner in the loop the driver interrupts me to ask if I'm "david" or whoever reserved the cab. It's annoying. Just hail one if you're in a dense area.

Jacob Huebert

This could also happen if someone called by phone for a cab, which will of course remain legal. And of course "just hail a cab" is not very helpful advice to people in the many parts of the city where they do not drive by frequently -- or people who prefer not to stand outside in the cold.

John Gibson

This is all about Chicago politics keeping revenue. What is the average cost of a city Medallion ?

http://www.chicagobusiness.com/article/20130913/BLOGS02/130919888/city-a...

MINIMUM of $300,000.00. Yeah... read that again... MINIMUM...

Rham isn't interested in making Chicago a hub of innovation, he is interested in lining his pockets just like all the other Chicago Pols. Its all about the money.

Jason Shah

"Chicagoans should demand that city officials either remove these features from the proposed ordinance or, better yet, scrap it entirely." <-- how? Simply reporting on something is half the battle. Where's the specific, easy to follow call to action?

Randy Horton

For those interested in this topic, The Atlantic's Cities blog just posted an analysis of the Chicago taxi drivers' lawsuit against the City of Chicago for failing to properly regulate Uber and Lyft: http://www.theatlanticcities.com/commute/2014/02/taxi-drivers-miffed-ove...

The Atlantic argues that the complaint makes some provocative points about how passengers, and not cab drivers, are the ones hurt by the lack of regulation.

Dane Kantner

I'd not argue against the ban on taxis except for the fact that Uber doesn't seem to have done anything useful in their software to prevent taxis from outside of Chicago from fulfilling taxi orders within Chicago. In fact, where I live (North of Howard, Rogers Park) I see Norshore Taxis sitting outside of various neighbors' houses picking up fares every single morning... they aren't trolling w/ their lights on, they are being ordered and sit waiting for the customer to come out. If you called Norshore they would refer or dispatch you a Flash cab since they are owned by the same company. I didn't think much of it until one morning we used Uber to hail a taxi to the airport and Norshore Taxi 8120 showed up. (He then proceeded to need to stop for gas on the way to the airport, and the car itself was gross/old/dirty; and if it were a Chicago taxi the city would have fined it as they do for drivers with dirty cabs in the staging area at ORD).

These addresses are very clearly in Chicago, and there's a large cemetary to the north and 5 blocks to the west seperating the Chicago/Evanston border--it's not possible there's any confusion over jurisdiction here.

If this is going on here, it's probably going on elsewhere. And it's something Uber could stop with very basic vetting. Or, even more troubling... they probably are doing basic vetting such as asking the driver for a copy of their chauffer's license, but then after that they have no control over if the driver goes out and drives some random non-Chicago-taxi as the actual vehicle. Sure they could get a picture of the medallion too. But so could anyone. It's nearly impossible to vet this in an industry with even a small minority of bad apples who would be willing to break the rules. What do you do, have a video call w/ the driver in front of his car before every shift? Not likely... It's an impossible situation for the operating company to vet. The city could perhaps "cross check" by requiring a copy of all dispatched orders, then also requiring real time GPS data be sent from the Uber app itself for even Uber taxi drivers with the known GPS locations of known actual taxis. They already have the GPS location of known taxis. If the Uber app reported the dispatched call and who was dispatched, even if the driver took his Chauffer's license and signed in to Uber but used a suburban cab, the city would know based off of comparing its known Chicago taxi/medallions' GPS locations at the time and not seeing the Chicago cab there at the time.

This was an Uber taxi not UberX. I would be absolutely amazed if this isn't also a huge violation of their current Chicago taxi dispatch license even if it's unbenownst to them that this is happening.

So, if I were the city... why would I trust them?

Also, another consideration on the airport fares... At O'hare cabs sit in a staging area in a long line that apparently very often takes 2 hours to get through.... But if a driver takes an Uber/XYZapp taxi fare by snatching it up (which then prompts the line monitor to call the staging area for that particular cab), then that driver all of sudden didn't wait 2 hours when everyone else did. Albeit the whole process of that sounds like a cluster. This is a situation where Uber could build in a queue of known drivers sitting at the staging area, but this begins to get very specific and these apps aren't written in Chicago or aware... so will all other apps? What is the city going to do, write an ordinance dictating software design? '...No you can't have the driver just click a map, or be closest in distance, to get the fare!'

On point #7, the city requires the same of taxis, real-time GPS. There are actually a lot of reasons they need this... One reason is to monitor under-served areas, and make sure drivers are meeting the city-mandates that they serve xyz numbers to under-served areas. This might also be a positive of having the data from these other services. It's long been an issue in the city that there are under-served areas. If the city can claim that Uber/Lyft drivers are picking up the slack, someone will look good.

Jacob Huebert

If the city thinks it's important to keep taxis licensed in other jurisdictions from picking up people in Chicago, then it can simply enforce its rule against that. It's not a reason to prevent people in Chicago from using Uber to hail a Chicago taxi.

As for the airport, if I arrange for someone to pick me up -- whether it's a friend or an Uber driver -- it should be no business of the city's. If that means fewer people use cabs, so what? Is that unfair to the drivers who wait in the queue? Not really -- they can choose whether they prefer to work for a cab company or work through Uber. The cab companies are not entitled to keep making the same amount of money in this particular manner forever if consumers prefer something else.

Dane Kantner

Well of course the other real reason is the city is missing out on the $4 MPEA airport tax if the pickups aren't being done by taxis

Adam Calica

Interesting points about outside taxis coming into Chicago, never really considered that. I've found that non Chicago cabs are a bit sketchier than Chicago cabs. I guess #2 does make some sense.

Shirley Richard

I would just stop using the service. I would not call for a Black car to pick me up when there are cabs waiting outside. How unfortunate for us and the cabs participating in Uber as well..

Josh Nelson

#2 and #5 are just dumb. The only reason to use Uber is having the ability to hail a cab.

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