After years of warfare against the taxi industry, Uber succeeds in including the iconic New York “Yello Cabs” in its organization. Other taxi companies are to follow. At Uber, people seem to think: If you can’t eliminate your enemies, bind them as closely as possible. Meanwhile, Uber’s biggest legal problem remains unresolved.
Soon also bookable via Uber: “Yello Cabs” in Manhattan.
New York City’s yellow cabs will soon fly the flag of their arch-rival: Uber has managed to persuade the “Yello Cabs” to integrate their fleet with the app. This marks the end of a year-long phase in which the two companies fought each other bitterly.
It is the first time that Uber has integrated a city-wide taxi fleet into its app, writes the Wall Street Journal, which was the first to report on the cooperation. Although Uber has partnerships with taxi companies in other cities, including Berlin, the collaboration with the “Yello Cabs” goes further than all previous collaborations, says a company representative in the article. Two apps from the New York City Taxi and Limousine Commission, i.e. the supervisory body of the city’s taxi companies, are also integrated. New Yorkers will be able to order “Yellow Cabs” in the Uber app as early as spring.
One of the main reasons for this collaboration is an acute shortage of Uber drivers in New York. During the pandemic, fewer customers booked trips via the app, so drivers gave up their jobs. Today, however, demand for Uber’s services is growing faster than the company is able to recruit new drivers. With the integration of the New York taxis, Uber is also trying to defuse a labor shortage.
striving for monopoly
But Uber does not want to stop at the integration of the “Yello Cabs”. By 2025, the company wants to list “every taxi in the world” in its app, company representatives said on Investor Day in February. These are unfamiliar tones for Uber, after all, the company has been in a conflict with taxi companies for the past seven years, which has been fought on the streets as well as in parliament and the courts.
After entering the market in 2015, Uber was able to compete with local taxi companies in cities around the world. The rapid switch of customers from taxi to Uber caught many taxi drivers unprepared. They saw their incomes melt away within a few months, many quit their jobs, some even slipped into poverty as a result.
But the competition between Uber and the taxi companies also had an important political component. Employee representatives and especially left-wing politicians called for stricter rules for the “gig economy”, in which there are no permanent positions with fixed salaries, but workers are paid for each individual job. As is typical of a gig economy company, Uber takes the position that its drivers are self-employed. With this, the company justifies that drivers should take care of their own health insurance and insure themselves privately against loss of work or unemployment.
Freelance, employed – or somewhere in between?
However, in 2019, the state of California passed legislation disallowing this argument. Uber would therefore have to consider its drivers as employees and insure them accordingly. To prevent this, a lobbying organization funded primarily by Uber, competitor Lyft and food delivery service DoorDash launched a popular initiative in 2020 that wanted to introduce a “third way” of work. This would give Uber drivers limited rights from employees, but without being formally considered employees. Although the initiative was accepted by a majority of the population, it was later found by a court to be unconstitutional.
The companies have now appealed the court’s decision. Therefore, it has not yet been decided in the last instance whether Uber drivers are now considered employees or self-employed under California law.
Uber is becoming the platform of platforms
Now Uber is using the time until the final decision to continue growing as quickly as possible. The fact that the company would like to integrate taxi companies on a large scale in the coming years is surprising in that Uber is now suddenly relying on companies for its growth that were previously considered competitors for years. This fuels the narrative that tech platforms want to dominate their market.
However, with the decision to integrate the “Yello Cabs”, Uber is further opening up its platform to third-party companies. So far, you could already use the app to rent e-scooters and bicycles in inner cities. Other mobility offers could be marketed in the same style.
Investors reacted positively to Uber’s announcement that it would now also sell “Yellow Cabs” in the app. The share price rose by around five percent on Thursday. However, the company’s stock market valuation is still well below the value achieved when it went public in 2019. Because Uber is still making losses with passenger transport.