California Continues To Be Anti-Innovation: Tells Ridesharing Services That Carpooling Is Illegal

from the oh-come-on dept

There has been plenty of discussion about ridesharing services lately, and whether they should be subject to the same sorts of regulations as taxis. As we've discussed, while taxi regulations have some historical basis in protecting riders from scammers, most of that was for a time when there was significant information asymmetry between drivers and riders, making it much easier for drivers to scam, rip off or endanger passengers. The wonderful thing that services like Uber, Lyft and Sidecar do is get rid of much of that information asymmetry and risk. The drivers are rated and monitored. The services handle the payment terms. The regulations that once served a purpose are less and less important. And, of course, then the reality starts to become clear. Where those regulations may have once had some benefit for the public, these days, they're much more about limiting competition, keeping prices artificially high and limiting new forms of innovation.

That's become especially clear in the last few days, where the California Public Utilities Commission (CPUC) has alerted Uber, Lyft and Sidecar that their new carpooling offerings are illegal. All three companies recently introduced a rather useful innovation that actually makes it much more accurate to call these services "ridesharing." By enabling "carpooling," the services find multiple people heading in the same general direction, and put them in the same car, allowing all of them to get a cheaper fare. It's the kind of useful innovation that seems like it's better for everyone. But, not the CPUC. In the world of the CPUC, you can't innovate if you haven't first groveled for permission:
Basically, the CPUC says that under California law it's illegal for these ride-sharing services to charge passengers an individual fare when carrying multiple people in one vehicle. If the companies would like to add a carpool feature, they first have to request an adjustment to their existing permits with the CPUC or petition the state legislature to modify the law.
Some people like to mock the idea that these companies like to innovate first and deal with the regulatory issues later -- and there may be something to that. But anyone who's ever worked in a setting where innovation is happening knows that having to ask for permission is a recipe for no innovation. California has a long history of enabling innovation. It would be quite a sad state of affairs for it to go the other way.

Filed Under: california, carpool, carpooling, cpuc, innovation, permission, ride sharing
Companies: lyft, sidecar, uber


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  • icon
    That Anonymous Coward (profile), 15 Sep 2014 @ 4:11am

    So the problems with the roads being packed, pollution, and all of the other ills...but damn it, you gotta come before us so we can get you to do more for us.

    Perhaps it would have made more sense to adjust the permits and make a public statement that you did it in the best interests of the public would have been a better PR move. Because while you claim it is illegal, you suggest there is a way for them to be in compliance with the law currently. Perhaps instead of making the people trying to make things better try and get the legislature do something (without screwing it all up) you take the initiative and try to get the law changed to promote these sorts of services.

    No one is forced to use these services, no one getting a ride from the companies is being blindsided, and it benefits he public by putting fewer cars on the road moving more people...

    Perhaps one should be questioning if the CPUC is actually interested in making things better for the public, or keeping themselves power tripping.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Sep 2014 @ 5:58am

      Re:

      This is what happens when we let government 'decide' what is good for us.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Sep 2014 @ 12:04pm

      Re:

      This is the same California that has CalTrans (DOT) signs blaring about a "Severe Drought" and the Governor threatens state-wide water rationing, while municipalities threaten to fine people for not watering their lawns enough.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2014 @ 4:15am

    'California has a long history of enabling innovation'

    but did that include lining the pockets of certain individuals? if so, i understand why this is failing.
    the strange thing is in other countries this would be applauded as it reduces road congestion and pollution. strange how in the USA, it is illegal to do these things and legal to do the opposite.

    reply to this | link to this | view in chronology ]

  • icon
    lfroen (profile), 15 Sep 2014 @ 4:18am

    What does it have to do with innovation?

    While I'm not a California resident, I don't how does it have anything to do with innovation.
    If I've got it right, they say "you can't charge like a taxi unless you're acting like a taxi". Which is OK in my book.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 15 Sep 2014 @ 4:33am

      Re: What does it have to do with innovation?

      The service being offered here seems to be less 'taxi' and more 'professional carpool service'. If people who work together are allowed to carpool, and pay the one who drives for the gas and convenience, I don't really see the difference here.

      reply to this | link to this | view in chronology ]

    • icon
      That Anonymous Coward (profile), 15 Sep 2014 @ 4:46am

      Re: What does it have to do with innovation?

      Except it looks like they got the permits to act like a taxi, and then decided hey lets group several customers, who are willing, at point A-ish who want to get to point B-ish to share the ride and break the fare up over the group saving money.

      All 3 ride services decided this was an offering customers wanted, because it saves them money and no one else is offering it (innovation in getting people from A to B).

      It seems like there is much public benefit, except the group who is supposed to benefit the public decided they needed to make them stop now (or before they even began) until they all appeased the CPUC.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Sep 2014 @ 11:21pm

      Re: What does it have to do with innovation?

      They promote more efficient logistics for one and allow for a marketplace for their drivers and customers with reviews which hasn't been done with taxis before. How is that not innovation?

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2014 @ 4:30am

    Typical administration pitfall:
    Administration: We only have 2 categories, which one are you? "Taxi" or "not Taxi"?

    Innovator: we offer some services that look a bit like Taxi, but we offer other options as well, such as "carpool".

    Administration: we'll just treat you like a Taxi then. And by the way, as a Taxi you cannot offer carpooling.

    Thinking outside the box is impossible for these organizations.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 15 Sep 2014 @ 4:34am

      Re:

      Bureaucrats don't tend to be the most 'nimble' bunch when it comes to anything new, no.

      reply to this | link to this | view in chronology ]

    • identicon
      fred, 15 Sep 2014 @ 4:36am

      Response to: Anonymous Coward on Sep 15th, 2014 @ 4:30am

      the funny part is that these are the rules set up in part wirh Uber and Lyft. They knew it already and still broke the rules they helped to write .

      reply to this | link to this | view in chronology ]

      • icon
        That One Guy (profile), 15 Sep 2014 @ 4:45am

        Re: Response to: Anonymous Coward on Sep 15th, 2014 @ 4:30am

        Yeah, Uber and Lyft having anything to do with writing the laws impacting them, I think I'm going to have to go with [CITATION NEEDED].

        reply to this | link to this | view in chronology ]

    • icon
      jupiterkansas (profile), 15 Sep 2014 @ 7:39am

      Re:

      That's because building the box is the purpose of these organizations.

      reply to this | link to this | view in chronology ]

  • identicon
    fred, 15 Sep 2014 @ 4:32am

    Response to: custom adayemi paul on Sep 15th, 2014 @ 4:06am

    that gets through and honest posters get censored.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 15 Sep 2014 @ 4:59am

      Re: Response to: custom adayemi paul on Sep 15th, 2014 @ 4:06am

      If people don't like being sent to time-out, then they need to stop acting like unruly children, it's as simple as that.

      reply to this | link to this | view in chronology ]

      • This comment has been flagged by the community. Click here to show it
        identicon
        Anonymous Coward, 15 Sep 2014 @ 11:24am

        Re: Re: Response to: custom adayemi paul on Sep 15th, 2014 @ 4:06am

        Posting facts= getting a "time out" on Techdirt.

        As usual, Masnick tries to inflame first, and then cover his butt at the end with the little note about "regulatory" issues. That issue would happen to be liability car insurance, and it's a big one. But don't expect to learn why on this blog.

        This post will now be censored by Techdirt for being 100% truthful. How innovative.

        reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Sep 2014 @ 5:28am

      Re: Response to: custom adayemi paul on Sep 15th, 2014 @ 4:06am

      "that gets through and honest posters get censored."

      If "honest" means inaccurate information, yes.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2014 @ 4:39am

    The printing press, destroyed the entrenched power of church and aristocracy by making knowledge available to the citizen. However time delays and the requirement to gather and publish information meant that government bureaucracies were needed to sort and act on that information. The Internet with its real time dissemination of information is in its turn making those bureaucracies redundant, along with the role of politicians in setting the rules. I hope that the associated violence can be avoided, but entrenched powers rarely give up their power unless forced to.

    reply to this | link to this | view in chronology ]

  • icon
    Chris ODonnell (profile), 15 Sep 2014 @ 4:51am

    Every morning I drive to a nearby commuter parking lot and stand in line for a few minutes as strangers going to the Pentagon swing by and offer us rides so that they can use the carpool lanes on I-95. Then I repeat the process headed home, catching a ride at the Pentagon to my car, which is parked about 37 miles south. It allows me to commute about 100 miles roundtrip each day for $4.50 in subway fares.

    No cash change hands for the rideshare, but we are still "paying." The driver allows two strangers into his or her car, and I get into cars with strangers, something out parents told us never, ever to do! It's a wonder that this is legal.

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 15 Sep 2014 @ 5:26am

    Penis?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2014 @ 5:43am

    For or against innovation?

    Two quotes from same article:

    "California Continues To Be Anti-Innovation"
    "California has a long history of enabling innovation"

    That seems like a contradiction. Are you saying they are for or against innovation?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Sep 2014 @ 6:10am

      Re: For or against innovation?

      English lesson.

      California has a long history of enabling innovation.
      This sentence means that over a historically significant period of time, the state has been innovative.
      California continues to be anti-innovation.
      This sentence refers to the last few years of bad law creation and or enforcement that has been contrary to the greater history of innovation.

      English is an amazing language that allows tons of differing opinions and thought processes. Please stop imposing your own lack of thought processing into articles you read.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Sep 2014 @ 8:59am

        Re: Re: For or against innovation?

        Ah, the usual I-don't-think-Mike-can-defend-himself reply, with unnecessary rudeness included. What would this site be without it, eh?

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2014 @ 6:59am

    Re:

    Email bomb locked on...

    reply to this | link to this | view in chronology ]

  • identicon
    Owen Thomas, 15 Sep 2014 @ 7:09am

    It is not ridesharing, it is transport for hire

    The thing all you hipsters don't seem to grasp is that these livery car services passing themselves off as ride sharing (they are NOT), is that this is transportation for hire. It is a commercial business. The cars/drivers do not carry commercial insurance (illegal). If you are in an accident using your private vehicle insurance while using your vehicle for commercial business, YOU ARE DRIVING UNINSURED. The drivers are not drug tested nor properly background checked/fingerprinted. The cars are not checked for safety. Professional drivers have to do all these things. Calling a livery car service "ride sharing" just because you use an app to dispatch cars is dishonest. And these are not "little start ups", they are massively funded corporate attempts to drive the little guys that follow the rules out of business. Sorry, I will continue to use Curb. Oh, and one of my friends ordered a ride using uber, the driver took some other guy, and my friend ended up with a $28 charge on his card that was a massive headache for him to get reversed. Please stop the dishonest reporting, TYVM.

    reply to this | link to this | view in chronology ]

    • icon
      nasch (profile), 15 Sep 2014 @ 7:38am

      Re: It is not ridesharing, it is transport for hire

      The cars/drivers do not carry commercial insurance (illegal).

      https://support.uber.com/hc/en-us/articles/202347808-In-the-US-what-insurance-is-available -if-there-s-an-accident-

      From a brief look it does seem Uber has some issues with background checking and safety inspections. I didn't look at any other services. On the other hand, one source I found indicated that less than 2% of car accidents are caused by vehicle defects, so while inadequate safety inspections sound scary, they're probably not really that important. Keeping people from driving around while under the influence would be great and is not something that should be entrusted to user ratings.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Sep 2014 @ 8:28am

        Re: Re: It is not ridesharing, it is transport for hire

        I was going to say, that should be the role of the police, stop anyone whose driving is below par; but given the state of the US police at the moment, that might be hard on passengers, being in a vehicle stopped by highwaymen looking for money to confiscate etc.

        reply to this | link to this | view in chronology ]

    • icon
      Chris Rhodes (profile), 15 Sep 2014 @ 7:44am

      Re: It is not ridesharing, it is transport for hire

      When the term "FUD" was created, they had this comment in mind.

      reply to this | link to this | view in chronology ]

    • icon
      Ed (profile), 15 Sep 2014 @ 9:24am

      Re: It is not ridesharing, it is transport for hire

      Do you lie for a living (elected official, perhaps?) or is this just a hobby for you?

      reply to this | link to this | view in chronology ]

    • identicon
      Just Another Anonymous Troll, 15 Sep 2014 @ 9:31am

      Re: It is not ridesharing, it is transport for hire

      "And these are not "little start ups", they are massively funded corporate attempts to drive the little guys that follow the rules out of business. "
      Whatever you're on, can I have some? The "rule followers" ARE the big guys, genius.

      reply to this | link to this | view in chronology ]

    • icon
      Mike Masnick (profile), 15 Sep 2014 @ 9:54am

      Re: It is not ridesharing, it is transport for hire

      The cars/drivers do not carry commercial insurance (illegal).

      Hmm:
      https://support.uber.com/hc/en-us/articles/202347808-In-the-US-what-insurance-is-avail able-if-there-s-an-accident-

      "there’s a commercial insurance policy for ridesharing with $1 million of coverage per incident. This policy covers drivers’ liability from the time a driver accepts your trip request through the app until the completion of your trip."

      https://www.lyft.com/drivers

      "Lyft provides additional insurance policies, at no cost to the driver. We worked with leading insurance carriers get our drivers: commercial auto liability insurance up to $1M per occurrence, contingent collision insurance for drivers who carry collision coverage on their personal auto policy, and coverage for bodily injury caused by uninsured/underinsured motorists."

      The drivers are not drug tested nor properly background checked/fingerprinted.

      Hmm:
      http://blog.uber.com/driverscreening
      "All Uber ridesharing and livery partners must go through a rigorous background check that leads the industry. The three-step screening we’ve developed across the United States, which includes county, federal and multi-state checks, has set a new standard. These checks go back 7 years, the maximum allowable by California law. We apply this comprehensive and new industry standard consistently across all Uber products, including uberX."

      https://www.lyft.com/safety
      "Every driver is screened for criminal offenses and driving incidents. The criminal background check includes national and county-level databases, as well as national sex offender registries."

      Got any other lies you'd like to spread?

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Sep 2014 @ 10:27am

        Re: Re: It is not ridesharing, it is transport for hire

        What Uber and Lyft claim on their web sites isn't necessarily the truth. Just ask the family of a 6 year old girl killed in San Francisco by an Uber driver.
        Also, most cab and livery drivers are independent contractors or owner/operators. They are most definitely the little guys.
        Further, you can tell the intent of companies like Uber and Lyft by the fact that they offer services without bothering to become legal first. They are currently illegal in Arizona (they must carry $300,000 in commercial vehicle insurance full time, not just when they are on a call). They refuse to do this). Also, I lived 3 doors down from a convicted felon who passed Uber's alleged background check.

        reply to this | link to this | view in chronology ]

        • icon
          John Fenderson (profile), 15 Sep 2014 @ 10:44am

          Re: Re: Re: It is not ridesharing, it is transport for hire

          "Just ask the family of a 6 year old girl killed in San Francisco by an Uber driver."

          You know who else sometimes hits and kills people? Regulated taxi drivers. A single incident means nothing -- what are the incident rates?

          "Also, I lived 3 doors down from a convicted felon who passed Uber's alleged background check."

          This also happens with regular taxi drivers -- many of them are convicted felons as well.

          reply to this | link to this | view in chronology ]

          • icon
            jupiterkansas (profile), 15 Sep 2014 @ 12:19pm

            Re: Re: Re: Re: It is not ridesharing, it is transport for hire

            Apparently convicted felons should never be given a job where they interact with another human being.

            reply to this | link to this | view in chronology ]

            • icon
              John Fenderson (profile), 15 Sep 2014 @ 12:34pm

              Re: Re: Re: Re: Re: It is not ridesharing, it is transport for hire

              I wasn't going to go there because it's tangential to the point, but you're 100% correct. It's truly shocking how many people believe that convicted felons should never be allowed to participate in the workforce (or most other parts of society) again.

              reply to this | link to this | view in chronology ]

              • icon
                nasch (profile), 15 Sep 2014 @ 1:14pm

                Re: Re: Re: Re: Re: Re: It is not ridesharing, it is transport for hire

                It's truly shocking how many people believe that convicted felons should never be allowed to participate in the workforce (or most other parts of society) again.

                And then they wonder why recidivism is so high.

                reply to this | link to this | view in chronology ]

                • identicon
                  Case, 15 Sep 2014 @ 3:51pm

                  Re: Re: Re: Re: Re: Re: Re: It is not ridesharing, it is transport for hire

                  ...unless they are investors in a private prison contractor, where high recidivism is part of the pitch to shareholders.

                  reply to this | link to this | view in chronology ]

              • icon
                Niall (profile), 16 Sep 2014 @ 2:32am

                Re: Re: Re: Re: Re: Re: It is not ridesharing, it is transport for hire

                And then whine because people are needing to live on 'gubmint handouts'...

                reply to this | link to this | view in chronology ]

        • icon
          Gwiz (profile), 15 Sep 2014 @ 10:47am

          Re: Re: Re: It is not ridesharing, it is transport for hire

          What Uber and Lyft claim on their web sites isn't necessarily the truth. Just ask the family of a 6 year old girl killed in San Francisco by an Uber driver.

          What exactly are you claiming is untrue?

          And why bring up a single incident involving Uber? If you are really worried about pedestrian safety then your focus should really include traditional taxicabs too.
          In Manhattan, about 16 percent of pedestrian crashes that led to death or serious injury involved a taxi or livery cab. Taxis account for only 2 percent of vehicles registered in the city, but at some times of day, they can make up nearly half of Manhattan’s traffic, according to some estimates... Source


          Also, I lived 3 doors down from a convicted felon who passed Uber's alleged background check.

          Anecdotal references are meaningless. Got [citation]?

          reply to this | link to this | view in chronology ]

        • icon
          nasch (profile), 15 Sep 2014 @ 10:57am

          Re: Re: Re: It is not ridesharing, it is transport for hire

          Also, I lived 3 doors down from a convicted felon who passed Uber's alleged background check.

          What was he convicted of? It may not even be relevant.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 16 Sep 2014 @ 7:52am

            Re: Re: Re: Re: It is not ridesharing, it is transport for hire

            Probably copyright infringment on the "Taxi business plan"...

            reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2014 @ 7:20am

    Tour Bus.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2014 @ 7:44am

    "California has a long history of enabling innovation."

    Certainly not in the business models of their content producers.

    reply to this | link to this | view in chronology ]

  • identicon
    Fred the fourth, 15 Sep 2014 @ 12:16pm

    Regulation

    This is why I quit being a product development manager and program manager. I was OK with spending 10% of my time dealing with regulations, but when it got to be 80% I decided I could make better use of my skills.

    reply to this | link to this | view in chronology ]

  • identicon
    Case, 15 Sep 2014 @ 3:43pm

    So, UberHeadline is the new product?

    Techdirt logic: Company calls their product $GENERIC_TERM, agency bans said product, ergo make a hysterical headline "ZOMFG, they banned $GENERIC_TERM".

    In other words, the same tactic as a certain "inventor" who called his product "EMAIL" and lead the public on a merry dance...if his service was shut down for violating regulations, I take it Mike would also cry foul over "banning email"? Or does that tactic just apply for companies marketing themselves as the hip alternative to evil "Big X"?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2014 @ 4:19pm

    Having a law on the books is one thing, enforcing it is another. I usually don't pick up hitchhikers, but have on occasion. Is that illegal also, and if it is what is the penalty? I don't believe they have the death penalty in Cali anymore, but I won't be taking any chances.

    reply to this | link to this | view in chronology ]


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