Surprise! Uber and Lyft don’t like NYC’s new ride-hail rules

Uber CEO Dara Khosrowshahi, who took the helm of the controversial company back in 2017, is known for being pretty unflappable. He was even upbeat during the company’s second quarter earnings call, when he was charged with explaining why Uber posted more than $5 billion in losses in just a few months’ time.

But in response to one analyst’s question, about how the regulations in New York had affected the company’s bottom line, Khosrowshahi got a bit spicy, at least for Khosrowshahi. “I think anyone who tells you that the changes in New York City are good is…” he trailed off for a moment. “It’s malarkey, frankly.”

One person’s malarkey is another’s sensible policy decision. Nearly a decade after ride-hail companies began exploiting the gray areas of decades-old taxi regulations around the country, Uber and Lyft have found themselves subject to increasingly strict rules in the Big Apple.

The city, its Democratic presidential hopeful mayor, Bill De Blasio, and its ride-hail regulator in chief, the Taxi and Limousine Commission, say the rules are aimed at helping drivers and at cutting down on city traffic, which has slowed to a jog’s pace in some parts of Manhattan. The companies say the regulations hurt drivers, riders, and of course, their bottom line. Drivers, meanwhile, say left holding the bag.

The new wave of rule-passing started last summer, when the city instituted the country’s first-ever freeze on for-hire vehicle licenses, barring drivers from registering new cars to drive for the companies. (The freeze exempts wheelchair-accessible and electric vehicles.) In January, Uber and Lyft trips beginning or ending in much of Manhattan got slapped with an extra $2.75 congestion charge. (Taxis got a $2.50 surcharge of their own.) Then, despite a lawsuit from Lyft (and a smaller competitor named Juno), the companies were forced to begin paying drivers $17.22 per hour earlier this year. And a new state law will force the companies to rejigger their fleets to accommodate wheelchair using-passengers more quickly. Phew.

Now, new rules approved by city regulators this month extend the freeze on new Uber and Lyft vehicle licenses in New York indefinitely. (This spring, a judge blocked an Uber lawsuit aimed at stopping it). The rules also cut down on “cruising,” or the time drivers spend waiting for their next rides or driving to their customers, forcing the companies to again rethink how they’re dispatching drivers.

The regulations are particularly less than ideal for the companies—malarkey, some might say—because the city is among their largest markets. In filings with the US Securities and Exchange Commission just before it went public, Uber said New York is one of five metro areas that collectively account for just under a quarter of its gross ride-hail bookings. (The others are Los Angeles, San Francisco, London, and São Paulo.) Though Lyft did not disclose a similar metric in its own public filings, the company is still mostly US-based, suggesting its New York business may be even more important.

The city has symbolic importance, too. Though most other cities don’t have the authority to regulate ride-hail in the way that New York does, many, also sick of traffic, are looking for ways to do so. Some hope to levy fees on the companies, like the kind collected in Chicago, Washington, DC, and, if San Franciscoans decide to pass an upcoming ballot measure, the City by the Bay. Others are attracted to the hard stick of New York’s ride-hail vehicle cap. In the run up to her election, Chicago’s new mayor told a newspaper that she would favor new limits on the number of ride-hail vehicles in the city. (The city’s consumer protection office, which is in charge of regulating ride-hail, did not respond to WIRED’s request for comment.)

Uber and Lyft, for their part, argue they’re unfairly scapegoated for a traffic problem that can mostly be traced back to regular-old Americans driving their regular-old cars to work alone every day. “The TLC’s misguided policies will reduce New Yorkers’ access to affordable and reliable transportation,” Lyft spokesperson Campbell Matthews said in a statement, while an Uber spokesperson said the company worries “that the Mayor’s rules will hurt drivers’ ability to earn a living.”

The ride-hail companies have responded to the rules, which they say have been instituted too quickly for anyone to understand their effect, with cat-and-mouse tactics aimed at keeping riders in cars revenues in pocket. The companies have, for example, raised prices across the city, a move that Uber says has led to stunted ride growth in some low-income neighborhoods.

The ride-hail companies are also changing the way their apps work for New York City drivers, many of whom work full-time because of the city’s more stringent licensing policies. Now, in times of low demand, Lyft limits the number of drivers on the road, giving priority to high-volume drivers who have accepted and completed 90% of their rides, or those who have wheelchair-accessible cars, or those participate in the company’s Express Drive program, which rents vehicles to licensed drivers who don’t own cars. The driver app also now includes a “heat map” showing where rides are in the highest demand, and Lyft has urged drivers searching for rides to go there before turning on their app—urging them, essentially, to drive to where the app needs them without being paid for it, and without Lyft being penalized by both the new driver wage and new cruising rules. Uber sent an email to drivers earlier this month indicating it is also mulling changes to its driver app.

Many drivers are displeased. In a letter sent to the Taxi and Limousine Commission in June, the Independent Drivers Guild, which says it represents 65,000 drivers, urged the city to take action against Lyft for the changes it had made to its app. (The IDG is backed by the International Association of Machinists but funded, in part, by Uber.) “The app companies treat us like disposables,” driver and IDG member Tina Raveneau told the Taxi and Limousine Commission during testimony in June. The IDG also opposes New York’s decision to extend its vehicle license cap, suggesting that, caught in the middle, drivers feel there is plenty of blame to go around.

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