New woes may put brakes on Uber, ride-share growth

December 10, 2014
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Uber, the ride-sharing service and Silicon Valley superstar startup, has hit problems around the world which threaten to put the brakes on its spectacular growth.

Uber has long drawn scorn from established taxi operators in many cities, and regulators from New Delhi to Portland, Oregon, have been clamping down on its operations. At the same time, the company has seen its image tarnished by executives’ gaffes and concerns on privacy.

Even as Uber has raised a fresh $1.2 billion — which gives it an eye-popping value of $40 billion — it has run into roadblocks, even in its home state of California.

A judge in Spain banned Uber’s ride-sharing on Tuesday, saying it violated laws on fair competition. A day earlier, the city government in New Delhi banned Uber from operating in the Indian capital after a passenger accused one of its drivers of rape.

Thailand also ruled Uber illegal, and the service has hit regulatory hurdles in locations from Germany and the Netherlands to San Francisco, where a driver has been charged in an accident leading to the death of a six-year-old girl.

On Tuesday, San Francisco and Los Angeles officials sued Uber for misleading consumers about fees and background checks.

“Uber continues to put consumers at risk by misleading the public about the background checks of its drivers and its unwilling ness to ensure that correct fares are charged,” Los Angeles District Attorney Jackie Lacey said, while announcing a settlement with rival ride-sharing service Lyft.

A Dutch court this week also ruled illegal the Uber system in which non-professional drivers offer trips in their own cars at half the price of a regular cab.

“Drivers who transport people for payment without a license are breaking the law,” said the decision from the Hague-based Trade and Industry Appeals Tribunal.

Authorities in Denmark and Norway have also filed complaints against Uber.

Regulatory quandary 

“The so-called sharing platforms like Uber and Lyft are concerning to regulators because they represent something different,” said John Breyault of the National Consumers League.

“They don’t fall neatly into the regulatory buckets we’ve seen in the past century. So it’s difficult to see how to deal with events like in what happened in New Delhi, and to know where liability lies.”

Breyault said Uber is a prime example of a “disruptive” business model which provides a new service by taking advantage of technology.

But he said regulators need to take a close look at issues relating to insurance, liability and criminal background checks for drivers.

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