Uber, Lyft and other members of the sharing economy are onto something.
In a victory for the sharing economy, the California Public Utilities Commission (PUC) voted in September to license online-enabled ridesharing companies. The ruling lets fast-growing Web-based companies like Lyft Inc., Sidecar and Uber Technologies continue operating in California as long as they meet basic safety and insurance requirements.
The PUC’s decision to license the Internet upstarts is a first for the nation — but it certainly won’t be the last. Observers speculate that other states will follow suit now that California has broken the ice. And these pseudo-taxi services are just the tip of the iceberg.
A confluence of mobile technology, eBay-style user ratings and social media sensibility is spinning off disruptive new business models across a wide swath of industries. While taxi companies howl over companies like Sidecar — which connect paying passengers with drivers who use their own vehicles — hotel chains nervously eye Airbnb.com, which helps homeowners rent spare rooms to travelers. And others are bringing the same concept to everything from kenneling pets to parking.
Regulatory agencies — which need to balance safety concerns, fairness to entrenched industries and the potential advantages for consumers — have struggled with the rapid growth of these new companies. Before the California PUC ruled in favor of ridesharing companies in September, it was against them. The commission previously had issued cease-and-desist orders to Lyft, Sidecar and Uber and had fined all three firms.
In the end, however, California got it right. Forbes labeled the sharing economy “unstoppable” earlier this year, and it’s probably right. Disruptive, tech-powered ideas like these have proven extremely hard to stamp out once they start. It’s better to come up with reasonable rules to assure safety and try to be as fair as you can to both newcomers and incumbents.
The ruling, of course, didn’t win the California PUC any friends in the taxi industry. Mark Gruberg of the United Taxicab Workers of San Francisco told the Los Angeles Times, “It’s hard to see how the taxi industry with its rules and regulations and responsibilities can compete with a service that has none of those requirements.” But if governments can get this right, consumers will win in the form of new transportation options and potentially lower fares.
Isn’t it amazing what an innovative idea and a little bit of technology can do?