Learn an easy lesson from Uber

Uber doesn’t seem to have done its homework before rolling out all over the country. Boise is just the latest jurisdiction to threaten further legal action against the company should it choose to continue its operations under its current system. Uber is now facing dozens of legal actions all over the country challenging its business practices, including regulatory complaints in Seattle, Houston, Oklahoma City, Chicago, Boston, California, and Illinois. (See this article for more.) One of the main contentions is that, despite the company’s protests to the contrary, it is actually a taxi company and thus is subject to the ordinary regulations that affect taxis. Uber claims it is simply a “ride-sharing” company and thus isn’t subject to the rules applicable to taxis.

I don’t know whether that’s true or not – I’m not up to speed on taxi regulations and ride-sharing laws. What I do see, however, is that Uber jumped into potentially a great idea full steam ahead, apparently without doing its due diligence regarding the applicable laws. I don’t know how much has been invested in Uber and by whom. I do know that Uber is going to be spending a lot of money trying to prove it isn’t a taxi company in a lot of jurisdictions.

Now I agree that regulators can often push things too far, at the risk of stifling innovation. But in this case, Uber appears to many as simply a company who happens to use an app to allow customers to request cabs. That’s a great idea, but it seems a lot like a taxi service to me. We’ll see what the courts decide.

In the meantime, if you have a great idea, do your homework before you take that idea to market. For example, talk to a lawyer about how likely it is that you are going to be sued. Remember that, even if Uber is right and they are not subject to taxi regulations, they are going to spend tons of money to establish that point. And, guess what? As soon as they do, there will be other ride-sharing apps waiting in the wings, who haven’t had to fight nasty bloody legal battles and may well be better-capitalized and ready to enter the more lucrative markets. Uber is going to spend a lot of money to find out if their business model is viable and, even if it is, they are fighting a big battle for their future competitors to profit from.

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