How Uber learned to stop fighting and play nice with taxis

For more than a decade, Uber and taxis have been locked in a desperate battle for control of cities around the world. On one corner, the centuries-old practice of raising your hand to ask for a ride. In the other, press a button on your smartphone to call a car.

But while Uber has managed to decimate the taxi industry in many cities, it has not managed to eliminate it completely. In fact, the taxi business is thriving, with The number of drivers in the US has almost tripled in recent years.. And now, there are signs that the long, bitter fight between Uber and taxis is fading as more and more taxi fleets choose to embrace Uber’s cold, technological embrace.

The latest is Los Angeles Yellow Cab, which today announced its plan, along with its partner fleets, to include approximately 1,200 taxis on the Uber app as part of a pilot program. The pilot received approval from the Los Angeles Department of Transportation, allowing taxi driver onboarding to begin this week in Los Angeles, San Diego and Orange counties. Drivers will begin receiving ride referrals from Uber in the coming weeks.

Los Angeles joins New York City, San Francisco and many other major cities around the world that list their taxis on the Uber transportation app. It also represents the emergence of a new and unexpected alliance between taxi owners and the technology company that promised to revolutionize their business.

“I firmly believe that Uber and taxi are better together,” Uber CEO Dara Khosrowshahi said in a statement to The edge. “We look forward to providing all taxi drivers around the world with access to Uber rides while continuing to earn the trust of our taxi partners and drivers globally.”

Uber’s legacy of playing fast and loose with the rules has irritated taxi owners, who have accused the company of ignoring local regulations when entering new markets. Uber notes that the taxi business had many flaws before its arrival, including predatory lending.

Still, fleet owners and driver associations have largely felt helpless as they watched their customers flock to the new platform that promised easy electronic calling and seamless payments. Medallion prices in New York and elsewhere plummeted, and lenders who made their living financing the taxi industry went bankrupt.

Uber was happy to fuel the vitriol. “We’re in a political campaign, and the candidate is Uber and the opponent is a jerk named Taxi,” said Uber co-founder and former CEO Travis Kalanick. said in 2014. “No one likes him, he is not a pleasant character, but he is so integrated into the political machinery and fabric that many people owe him favors.”

But something curious has happened. After failing to completely eliminate and replace the taxi business, Uber turned to taxis to help fuel its next stage of growth. The company has said that by 2025, it hopes to include all the world’s taxis in its app. And for once, taxi owners are eager to participate.

“We make what we do really great,” said Ron Sherman, president and CEO of Creative Mobile Technologies, or CMT, one of Uber’s partners in New York City. “Okay, and I hate to say it, but what they do is great too.”

Uber is a bit vague in describing the breadth of its growing taxi business and declines to discuss the exact number of cities and drivers. Taxis appear on the Uber app in 33 countries around the world, and “hundreds of thousands” of taxi drivers receive travel recommendations from the company. Some of the largest markets by volume include Hong Kong, Poland, South Korea, Sweden and Turkey. Last year, Uber reached a deal to include about 14,000 of New York City’s iconic yellow taxis on its app.

What Uber likes to talk about is the possibility of taxi drivers making a lot more money by accepting ride requests through their app. Taxi drivers are “on track to make more than $1 billion in profits this year,” the company said.

When a taxi is hailed through Uber, the company receives a cut, although it declined to say how much. Uber’s average global acceptance rate for rides the third quarter This year it was 28.9 percent, compared to 23.5 percent in the third quarter of 2022.

In San Francisco, where taxi drivers have been accepting fares through the Uber app since November 2022 under an ongoing pilot program, drivers were found to earn an average of $1,767 per month from Uber rides alone. That’s almost 24 percent more on average than drivers who don’t accept Uber rides. according to second quarter data compiled by the San Francisco Municipal Transportation Agency. For taxi drivers who participated in the pilot program, almost a quarter of their income each month came from referrals from third parties like Uber.

The association has taken many different forms. In South Korea, Uber created a joint venture with SK Telecom to compete in the country’s high-value mobility market. In Hong Kong, one of the world’s largest taxi markets, Uber acquired the city’s leading e-hailing app, HKTaxi, to include more taxi drivers on its app.

Uber is using its technological know-how to drive expansion. The company’s engineering team wrote an API to help taxi technology providers seamlessly connect with Uber customers. That way, someone requesting a ride with the Uber app can be connected to a taxi if it’s the closest vehicle. Fares are presented upfront, just like they would be for an Uber ride. And taxi drivers who receive ride requests will receive the same rate as an Uber driver.

“The majority of our business is the Uber rider app talking to the Uber driver app,” Sachin Kansal, Uber’s vice president of product, said in an interview. “But since we wanted to have some other driver application in our system, we needed to provide this API.”

The API was created specifically to allow taxis that are connected to Curb or Arro, the two smartphone apps owned by New York City-licensed technology providers, to receive ride requests through Uber. But it is now being used globally, Kansal said, and taxi owners around the world use it to connect their drivers with Uber customers.

Depending on the city, passengers will see different things in your app when requesting a ride. Some passengers will see a separate feature to request a metered taxi. In other markets, taxis are included among the vehicles that passengers can get when using UberX, its main transportation product.

“There is enough demand for everyone,” Kansal said. “We actually want to continue developing our core technology… so that we can bring all the taxis in the world to the Uber platform.”

Kansal, a former executive at Flywheel, an app-based taxi operator in San Francisco, has leveraged his knowledge of the taxi industry to spearhead this effort for a variety of fleets and proprietary technology on the Uber platform.

“Sachin’s experience in the taxi industry combined with our team’s passion for solving problems with technology has delivered a cutting-edge integration that is a win-win,” Khosrowshahi said.

Before the pandemic, Uber was struggling to become profitable, but there was no doubt that its model of using venture capital funds and other investments to subsidize fares and undermine the taxi industry was having the desired effect. The impact on New York City was particularly acute. Nearly a thousand drivers declared bankruptcy and at least six drivers died by suicide.

Still, despite these efforts, taxis continued to thrive in American and foreign markets. Uber began making offers to include taxis in its app in the hope that the increase in supply would help attract new customers while saving its business in key markets.

When Covid hit, transportation and taxi businesses dried up. And when lockdowns were eased, Uber struggled to find enough drivers for its customers, forcing it to spend hundreds of millions of dollars on driver bonuses and incentives aimed at tackling the shortage.

Taxi operators say those efforts are starting to bear fruit, with drivers in multiple markets reporting an increase in profits after they began accepting ride recommendations from Uber. Some even go so far as to predict that the new partnerships will lead to a resurgence of the taxi industry, which has struggled with low wages, expensive loans and increased competition.

“We’re seeing many experienced rideshare drivers now considering driving a taxi and getting a professional taxi driver’s license,” said Hansu Kim, president of Flywheel Technologies, which partners with Uber in San Francisco, “because they’re realizing “Through this partnership, they can get that ride-sharing business and also the taxi business.”

But why work with Uber when the company has shown its willingness to do so? Fight efforts to increase driver wages. while preventing them from organizing and refusing to reclassify them as employees? The answer, in short, is money.

Some of Uber’s biggest costs are related to insurance and liability. By transferring a certain percentage of your trips to taxi drivers, you can reduce those costs while increasing revenue. The company recently reported an operating profit for the first time in nearly 14 years of service. Maintaining those profits while increasing its supply is a victory for Uber. And the owners say it’s a victory for taxi drivers, many of whom have struggled for years to match the company’s technological prowess.

“By the time people can make money,” said CMT’s Sherman, “no one cares who the ride is coming from.”