Uber Chicago: Driving Competition

Posted on November 28, 2012


It’s cold outside and you’re waiting for a cab. Do you call a cab company? Do you walk to an L stop? Some choose the faster route and use Uber, an Android and iPhone application that allows you to request a taxi or black car from anywhere you are in Chicago.Uber iPhone App

The app has been available for one year in Chicago and was launched in San Francisco three years ago. Though Uber has gained support from consumers, they have faced pushback from competitors and the city of Chicago.

Chicago’s Department of Business Affairs and Consumer Protection released a proposal early this month that would regulate public passenger vehicles. These regulations restrict the use of Uber in Chicago by outlawing electronic meters that would calculate fares as an unlicensed taxicab based on distance and/or time traveled.

Max Crowley, community manager of Uber Chicago, said, “How is this going to be an entrepreneurial friendly Chicago if the city stifles innovation?” He said Uber’s technology is what makes the app efficient for users.

“The taxi industry and limo industry is really old school and the players in that game are very set in their ways,” Crowley said. “The way that you order a taxi has been the same for 50 years: you stick your hand in the air or call one, but neither of those options are productive.”

Joe Schwieterman, professor of transportation at DePaul University, said new mobile apps that create competition for cab companies are a good thing, even though there’s a downside for existing companies. “Let’s face it, the taxi company is stuck in a time warp when it comes to all these possibilities,” he said.

Robbie Schloss uses the Uber taxi service five times a day and black car service on weekends. He spends $1200 per month in transportation costs for work. “It’s making my life more efficient. I’m cutting maybe 15 minutes out of every day out of transportation,” Schloss said.

Uber cabs arrive in 5-10 minutes. The Uber app automatically charges your credit card, which Schloss said has also improved his transportation time because it gets rid of the need to seek an ATM.

In regard to the proposed regulations, Schloss said, “Most people that I’ve talked to are pretty upset about it. The town cars are giving us the ability to use something that is normally a luxury that most people cannot afford and by taking that away from us the city’s not doing us any favors.”

Crowley also said that not only is Uber reliable, but also a safer transportation option. “What we’ve heard from a lot of people is that Uber protects them late at night when they don’t want to be standing alone on the street. When people are drinking, they know they have a safe viable option,” he said.

Crowley said Uber has been able to greatly expand throughout the nation and globally because more people are seeking efficient public transport. “Potentially, I think you’ll have a lot more competition as far as people wanting to build apps and get you a taxi when you need one. I don’t know what effect that will have on the taxi industry itself, but it will open a market for people to get efficient taxi service,” he said.

Schloss said, “I think having something that’s technologically advanced like this puts us above cities that don’t have a market or a population that can sustain a business like that.”

Schwieterman said Uber technology empowers the consumer to have control over transportation because of price competition, faster service, and more information available on better rates. “The taxi industry has been shielded from competition and that’s discouraged innovation – If you think about how electronic technology has changed, can you just imagine if we had these kinds of apps pervasive?” he said.

Uber faces similar pushback from competition in other cities. In San Francisco, Uber faces a class-action lawsuit filed early November claiming that Uber unfairly competes with existing taxis by illegal and unauthorized use of technology, citing that Uber “attempts to spin any criticism as ‘anti-technology’ and is willing to say whatever it needs at any given moment to achieve Uber’s economic goals.”

Uber representatives have been very open about their legal disputes, using social media to communicate with their users and make their stance clear politically. Allen Penn, general manager of Uber Chicago, launched a petition early in November to gain support against the city of Chicago’s proposed restrictions. At the close of the petition, over 5,500 people signed. The Uber Chicago blog reads that they are proud to have “helped thousands of Chicago taxi and limo drivers increase their weekly earnings, expand their businesses and improve their lives.”

Crowley said Uber has been “pretty disruptive” to the “old school” taxi industry, making it more exciting. Crowley said Uber will not hear from the city of Chicago for a few more weeks, but doesn’t feel that the company is at a huge risk of leaving Chicago anytime soon. Until then, our time spent in the cold waiting for a cab will be a little shorter this winter.