October 01, 2017
A NYT article on the debate in Europe over regulating Uber and other “gig economy” companies raised the possibility that Uber may stop doing business in the United Kingdom if it was required to treat its workers as employees:
“If the ruling is upheld [that Uber workers are employees], it could hit the business model on which Uber, Deliveroo and similar online platforms rely. That may mean a major recalibration of the gig economy, or it may drive companies out of those countries which choose to impose stiffer regulation.
“Outside Europe, there have been signs of that happening: Uber threatened to leave Quebec this month if the government there pressed ahead with tougher standards for drivers.”
While the article implies that the departure of Uber would be a bad outcome for the people of the United Kingdom and Quebec there is no reason to think this is the case unless they happen to be large holders of Uber stock. There are plenty of other companies that apparently are better able to deal with regulations than Uber. They would presumably fill any gap created by Uber’s departure.
We saw this last year when Austin imposed a law requiring that drivers for services like Uber and Lyft be finger-printed, just like other taxi drivers. The two companies sponsored a ballot initiative in the city and spend a huge amount of money pushing their opposition to fingerprinting. They also threatened to leave if the initiative failed.
The initiative was defeated and both companies stopped serving the city. The gap created was quickly filled by a number of start-ups that apparently were able to deal with the fingerprinting requirement. (Uber then lobbied the Texas legislature to have the Austin rule overturned.) Anyhow, the prospect of Uber ending its operations in an area should be seen an opportunity for local start-ups, not a threat.
Note: An earlier version of this post said that Uber CEO Dara Koshrowshahi was on the board of the NYT. He resigned this position on September 7th.
Comments