Is Uber Really Disruptive Technology?

I attended a technology awards event a few nights ago. The speaker extolled technology as the engine of change and economic development, while attendees posted pictures of each other for the Pinterest feed on the screens to either side of the stage . He referred several times to Uber, saying that it was disrupting a business that had remained unchanged for a hundred years.

Is it really? Is the ability to book a ride on your cell phone all that different from when taxi companies installed telephone lines, or from advertising on the doors of cabs that they were “radio dispatched?” Both represented the implementation of technology to increase productivity and convenience to the customer.

NY TaxisTech advocates, however, defend Uber’s right to operate outside of the common carrier regulatory structure as the moral equivalent of Internet neutrality. Its opponents (admittedly led by the traditional taxi industry) characterize it as merely a way to allow unlicensed gypsy drivers to operate illegally.

I’m not a fan of increased government regulation by any stretch of the imagination, but citizens have a reasonable expectation that their elected officials will oversee public safety. When they hail a cab on the street, or call for pick-up, they do so with the understanding that there are certain regulatory standards that apply to the driver and vehicle they will use.

Uber says that they assume that oversight role for those who utilize their service. Many industries, including airlines and trucking, are largely self-policing, but they don’t make up their own standards for regulation. I doubt that I would be comfortable booking on an airline that advertised “We will decide just how safe our planes need to be.”

Amazon was disruptive, as was Wal-mart, by using technology to revamp logistics. Ebay and social media created new marketplaces, but that was no guarantee of success (e.g. MySpace). Uber is simply the use of a technology in the interests of efficiency. Touching a screen isn’t all that different from dialing a seven-digit number.

Uber is shaking up an industry. It increases competition, provides opportunities for part-time income, and (at least theoretically) makes more efficient use of resources. All those things are desirable, and should be encouraged. That doesn’t mean Uber should be exempted from the same public safety oversight as its competitors. It’s a traditional taxi service utilizing current technology.

Many business owners make a similar mistake when implementing new technology. A business website has clearly replaced the telephone book for prospective customers. Facebook, Twitter and Pinterest are effective marketing tools for certain products to specific demographics. Merely spreading your company name around the Internet, however, is neither disruptive nor differentiating.


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2 Responses to Is Uber Really Disruptive Technology?

  1. David Basri says:

    I am generally in agreement with Awake at 2 O’clock articles, but respectfully disagree with this one. What Uber has done is clearly disruptive to the traditional taxi industry. Previously the only phone number that would connect someone who wants a ride with someone who could provide one, was to a taxi company. Taxi company are a silo or vertical business model. Uber, and the other ride-share companies, have made it much more horizontal. The barrier to becoming part of a ride-share fleet is very low.

    John correctly identifies that as a serious issue that will need to be dealt with. The barrier is very low and government is largely out of the dynamic (which is both good news and bad news). Of course one could argue that it is a classic case of a consumer accepting increased risk in return for decreased cost. The industry will have to evolve to deal with the issues, but it has pretty clearly been a disruptive shift in a long’standing business model.

    • John F. Dini says:

      Thanks David, but I still don’t see how Uber inherently does more than a taxi company (match people wanting a ride with affiliated drivers who are willing to do so for pay.) Some folks read my article as an argument against Uber. Not at all. I’ve used the service, will again, and think it is terrific. The artificial market constraints of medallions that cost hundreds of thousands of dollars in return for a middle-class wage should be removed. Uber is shaking up the industry, and I applaud them. Like you, I worry about the impact of claiming a right to work outside the public safety system. Working outside other regulations that exists merely to stifle competition? Go for it!

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