Regulating Ride Sharing Platforms:

Policy and Regulatory Challenges

Turin School of Local Regulation
International Summer School
8 September 2021

Meltem BAĞIŞ AKKAYA, LLM

Turkish Competition Authority
University of Atilim
Something Interesting is Happening!
(Tom Goodwin)
 Disruptive Technologies

• Artificial intelligence
• Internet of things
• Blockchain
• Autonomous cars
• Smart cities
• Sharing economy platforms (UBERISATION)
• Etc.
• Enter first; license/fight in due process
10 Ideas That Are Changing The World (March
2011, Time Magazine)
 Sharing Economy
• The sharing economy’s disruptive innovation has had the greatest
economic impact to date!
• Because data is the new currency in the modern data-driven
economy which provides us with free Access to many online services
and products and an advanced Internet environment (Prof Ezrachi)
The Sharing Economy Lacks a Shared Definition!
• What is sharing?
• Many platforms advertise their
services as ″sharing”
• Airbnb says its service lets hosts
″share their homes with guests ”
• Lyft says it offers ″ridesharing ”
• The term “sharing” is an odd fit for
giant companies making multi billion
dollar profits.
• Sharing is a form of social exchange
that takes place among people known
to each other without any profit.
• Access over ownership
• When sharing takes place in a market
and has a value, it is no longer
sharing at all.
• Sharing economy?
• Collaborative economy? (European
Commission)
• Matchmakers?
• Peer-to-peer economy?P2P
• Peer production economy?
• Two-sided platforms?
• Gig-economy?
 The Sharing Economy
• Involves 3 principal players: The platform; the suppliers (who own the
goods or services), and the buyers (consumers).
• Most of the times both sides of the platform users are amateurs who
employ their existing personal assets, dramatically reducing their need
to incur fixed costs.
• The sharing economy allows underutilised resources to be monetised.
• Empty rooms can be rented out, empty vehicle space can be used up.
• Amateurs work as Uber drivers, TaskRabbit runners, Airbnb hosts…
• Much of what drives the popular demand for the services in the
sharing economy is “trust”.
• Trust replaces the old style regulations!
 How Do People Share?
2 broad categories of entities:
1- Asset Hubs: A single hub entity that sells access to physical assets that it directly
owns.
• Car sharing firms like ZipCar, Enjoy, Car2Go, Autolib, bike sharing, e-scooters
• micro-rentals. possible to rent by minutes + one-way rental (you do not need to
bring the car to its initial parking space, you can leave it wherever you like) + you
do not need to go to the rental agency to sign documents etc. Everything is done
with your smart phone.
• smart phones, GPS tracking, remote locking and online booking have made this
system user-friendly and could very likely replace car ownership in cities where
there is a parking problem. (think of Italian cities with historic centres, narrow
streets … Rome, Milan etc.)
2- Peer To Peer Sharing: this is the structure that has been the target of global
protets and an amazing amount of popularity! Peer to peer networks connect
workers (car owners/drivers) with riders. UBER
Car sharing (fleets): Car2Go, enjoy
Ride-sharing(hailing): Uber (69%) and Lyft (31%)
– multi-homing
 Definition
• A ridesharing company (transportation network company, ride-hailing service) is a
company that, via websites and mobile apps, matches passengers with drivers of vehicles
for hire that, unlike taxicabs, cannot legally be hailed from the street.
• For the pupose of this seminar, we would use ride-sharing and ride-hailing
interchangeably
• Uber: Launched in 2009 in San Francisco. P2P marketplace where riders and drivers meet
• Lyft: Launched in 2012
• Mum’s Taxi (Australia): female drivers- female passengers & kids
• Femi Taxi (Sao Paolo, Brazil): female drivers- female passengers & kids
• Lady Driver (Sao Paolo, Brazil): female drivers- female passengers & kids
• And hunderds of Uber clones worldwide
 Definition
• Transport platforms are digital platforms which in essence are multi-
sided markets. In a multi-sided market, there are distinct user groups
which use the platform as an intermediary and depend on each other
to create value
• Network effects:
Direct network effects: a platform becomes more attractive for users
as the total number of users on the same side of that platform grows
(e.g. Facebook)
Indirect network effects: a platform becomes more attractive for one
group of users (drivers) as the other group of platform users (riders)
grows
The Most Well-known Ride Sharing Platform:
UBER
 UBERISATION
• Travis Kalanick and Garrett Camp, had started an app(lication) to hail private luxury cars after they
were unable to catch cabs in the city.
• UberCab started its service in San Francisco in 2009. By the end of the year, the company had
changed its name to Uber in order to dodge legal complaints that it was advertising itself as a taxi
firm, the first of many squabbles with regulators.
• Uber was aggressive. Because taxi companies held monopolies in many cities, Uber used the big-
guys-vs.-good-guy game. The big (taxis) were heavily regulated. The good young guy, Uber, ignored
these rules in order to bring consumers a better service–like rides that actually showed up when it
was raining or that showed up at all. Bypassing the regulations allowed almost anyone to make
money by working as Uber drivers. That was attractive to many workers, but caused several cities to
ban or suspend the service.
• Despite angry taxi drivers, unresolved questions of legal liability–Uber expanded fast. Smartphones
had become common, and consumers, getting used to the new world of apps. Using UBER meant
revolutionary technology: open the app, press a button, and in a few minutes a driver appears.
• Customers were also getting familiar with the so-called peer-to-peer economy, renting out people’s
private homes on sites like Airbnb. The idea of getting in a car with an unprofessional stranger didn’t
sound as crazy as it once would have.
 How Does Uber Work?
• Uber is a marketplace connecting drivers offering rides and passengers
seeking them through its mobile application.
• A prospective passenger who has downloaded the software on his
smartphone and set up a user account (along with a credit card ) can, when
clicking on the application, see Uber drivers near his location and on that
basis submit a trip request which is then routed to the drivers.
• The passenger is given an estimation on how long his car will take to show up
at his location (along with the name of the driver, his rating and the type of
car he is driving).
• Uber charges are based on a combination of time and distance parameters
and all payments are handled automatically by the Uber service, which will
charge the passenger’s business card on file.
• Once destination is reached, a receipt is sent automatically to the
passenger’s email address.
• On average 80% of the fares will go to the driver, the rest being kept by Uber
 Strengths of Uber’s Business Model
• Uber model is that it considerably reduces search costs for drivers and passengers.
• No fixed price! When available cars are scarce (e.g., Friday and Saturday nights), Uber
incentivizes drivers to take the road by increasing their fees (a process referred to as
“dynamic” or “surge” pricing).
• Prices increase will at same time increase supply as drivers will be incentivized to take
the road to earn higher fees, but also reduce demand as price-sensitive users are
incentivized to consider alternatives, such as take their car or public means of
transport.
• No cash! No credit cards! All you need is a smartphone.
• Uber does not directly employ its drivers.
• No taxi license payment. It costs €230,000 for a taxi license in Paris, €430,000 in Nice,
A$500,000 in Melbourne, US$200,000 in New York (from US$1,000,000 ).
• Passengers can rate drivers, which gives them an incentive to perform. Below 4.5 out
of 5 stops working. Drivers also rate customers!
• The downside: no hailing or queueing on the streets
 Why and How Have Ride-sharing Companies
Become So Popular?
• The rapid growth of the Internet; smartphones; (GPS) paved the way to
platforms.
• The scarcity of taxis, quality and high prices, inconvenient methods of
reserving a service
• opportunity to use others’ cars
• brings together drivers and customers easily over Internet (smartphone)
• lowers the cost of searching, making commerce; cuts transaction costs
and are available without booking in advance (on-demand): efficiency
• By making reviews of past customers available, diminishes the problem
of asymmetric information between customers and producers
• As a result, consumer welfare is enhanced by offering new innovations,
more service differentiation, better prices, higher-quality services
 UBER
• 60 countries, more than 785 metropolitan areas mainly in the U.S.
• Flexible company structure to match changing demands and trends of the
customers
• UberX (lowcost, non-professional) /UberPop (non-professional drivers);
both are unlicensed drivers
• Uber Taxi (regular service/proffessional drivers usually)
• Uber Black (Stylish)
• UberSUV (6 ppl)
• Uber Lux (luxurious)
• UberEats (food delivery) app can be used to order food from restaurants in
6,000 cities
• UberFreight
• UberScooter/Bike (acquired Jump)
 UBERCOPTER (New York, Dubai…)
trips between Manhattan and JFK International
Airport
 The Next Big Thing: Autonomous (self-driving)
Cars
Uber’s autonomous car was designed in Lyft launched its self-driving ride
collaboration with Volvo. Currently, only
being tested on public roads in Pittsburgh. service in Las Vegas in 2018.
Taxi Market: Under-supply
Over-supply
 Why is Taxi Market Regulated?
• in the absence of control of entry, there would be too many taxis in the
streets, this would create congestion.
• If taxis were in excessive numbers, they would engage in ruinous
competition, which would lead to low quality of service.
• To correct market failures such as extrenalities
• To correct information asymmetries (Akerlof- Lemon’s problem), as in the
absence of rate control, consumers would have no guarantee the fares they
pay are fair and reasonable.
• users have no means to know whether they will be driven in a safe vehicle.
• health and safety concerns.
 Regulation of Taxi Services Typically Involves:
• Control of entry (with local authorities, for instance, setting the
maximum number of vehicles that can be used to provide taxi
services)→entry barriers
• Licensing (medallions creating rents for license holders) and
performance requirements (for the drivers and the taxi companies)
designed, for instance, to ensure safety standards for both drivers (who
need to receive proper training) and vehicles (which must be inspected
on a regular basis)
• Financial responsibility standards (such as compulsory insurance)
• The setting of maximum rates based on various methodologies
 Why is Uber Illegal/Strictly Regulated in Many Cities?
• Taxi services are subject to fairly intrusive regulation:
- Limitation on the number of taxis (e.g., there is a maximum of 15,000 taxis in Paris,
13,600 yellow cabs in NYC, 18,000 in Istanbul);medallions worth of thousands
- Price and route control.
- Safety and quality regulations.
• In some cities, even the colour of taxis are regulated (usually yellow) which makes it
impossible for companies to differ their services- everything in a taxi is regulated!
• Uber drivers do not comply with these requirements, which are usually incompatible
with Uber’s business model.
• Uber often pays no tax. No social security for Uber drivers
• Taxi drivers would like Uber to be subject to the same regulatory requirements or be
declared illegal.
• While some of these requirements are designed to protect users, others amount to
barriers to entry.
 Why Do We Regulate ?
• Interests of market players, consumers, government in a platform can
be the justification for the intervention of governments in markets.
• Public interest theory: market failure is the justification for
government intervention
• External effects are examples of a market failure: market power,
asymmetric information, economies of scale, costs and benefits
consumer is unaware but has an effect on others
• Transport platforms have positive effects (increasing competition in
markets, bringing innovation, increasing consumer choice etc)
• Negative effects (congestion, safety, security, labour rights, abuse of
personal data etc)
 How to Overcome Challenges? Which Policies?
• The first policy option is to remove existing regulation:
• The emergence of transport platforms may remove the need for current
regulations as the original rationale for such regulations may no longer apply. A
good example is taximeters. Platforms use surge/dynamic pricing algorithms
which replaces taximeters.
• The second policy option is to develop/introduce new instruments:
Self-Regulation: adopting codes of practice among platform users 8it may lack
enforcement. This point needs to be crafted well)
Co-Regulation: designing a legislation in which all objectives, basic rights,
enforcement and appeal mechanisms, monitoring compliance are included
Behavioural change remedies
 Taxi Market: Monopoly
• Taxi market typical monopoly protected by (licensing/medallion) regulations
• Entry barriers
• Istanbul population (1960) : 1,9 million
• Istanbul number of taxis (1960) : 18,000
…
• Istanbul population (2021) : 16 million (has increased eightfold)
• Istanbul number of taxis (2021) : 18,000 (constant in the last 60 years)
• Istanbul medallion: 2 Million TL
 Taxi Licensing is a Thing of the Past; Uber
Represents Future?
• Paris number of taxis (1937) : 14,000
• Paris number of taxis (2021) : 17,7000
…
• NYC number of taxis (1937) : 16,900
• NYC population (1937) : 7,4 million
• NYC number of taxis (2021) : 13,587
• NYC population (2021) : 8,4 million
Is Ride Sharing Bad News for NYC Taxi Drivers?
 Regulatory Challenges
• Over the last 10 years, disruptive innovation radically changed the regulatory and
competitive landscape, raising new questions for regulators, policy makers and
competition law enforcers: If, how, and when to intervene
• The economic and social impact of digital (transport) platforms raises a number
of questions for policymakers, including whether existing regulatory approaches
and instruments are sufficient to promote and safeguard public interests
• The emergence of ride-sharing platforms put under competitive pressure the
activity of traditional taxis.
• While these new services provide clear benefits to consumers, they largely
operated outside regulatory framework (lately have been subject to detailed
regulations).
 Challenges
• While some changes to the regulation of traditional taxis would help to establish a
level playing field and increase competition in the market, some rules might need
to applied to new providers as well.

• But the crucial problem is since these services heavily rely on innovation and their
dynamics are quite diferent from traditional services, any extra regulation could
chill innovation and does end up with decreasing or sometimes no new services at
all.

• Striking a balance between a sound regulatory approach and a blooming

innovative services should be the ultimate goal. It is important that regulations
allow consumers to benefit from increased competition while still addressing
potential market failures.
 Challenges
• Policy questions on the table:
What opportunities (efficiencies and benefits) these platforms present for
innovation?
How can they promote transparency of markets?
How may they impact freedom of choice for consumers?
How do they treat the personal data of users?
Congestion?
What are the labour implications?
The most important: how to level the playing field with tradiitnal taxis?
 Challenges Ride Sharing Pose
• Main regulatory attention areas:
• Traditional taxi drivers vs Uber (unfair competition?)
• Data Access to set and maintain public service standards
• Fees to generate local revenue for public transit, infrastructure and
accessibility
• Policies to limit environmental effects of more cars on the streets
• Regulatory (safety and security) protection for passengers
• Labour rights of drivers
Phase 1: Incumbent (Taxi) Protests, Brazil
Protests - Torino
Protests - Paris
Anti-Uber Protests – Paris June 2015
• Rocker Courtney Love (the widow of
the Nirvana frontman Kurt Cobain) got
caught in the violent anti-Uber taxi
protests at the airport. She and her
driver were held hostage on her way
from the airport until she was rescued
by passing motorcyclists.
• Love wrote on Twitter protesters were
whacking vehicles with metal bats.
“ambushed our car and are holding
our driver hostage,” “Is this France?
I’m safer in Baghdad.” “François
Hollande where are the f..police??? is
it legal for your people to attack
visitors?
Anti-Uber Protests -Taxi Drivers Block Roads in
Central London
Anti-Uber Protests - Argentina
Anti-Uber Protests -Jakarta, Indonesia, 2016
Protests – Istanbul (We don’t want the global
monster)
Protests - Barcelona
Protests - Barcelona
Protests – Athens, Greece
Supporters - Istanbul Airport (Mr. President the
public wants UBER)
 Phase 2: Uber Drivers Protesting Uber (NYC)
Wanting to be Classified as Employees Instead of
Independent Contractors
Uber Drivers Protesting Uber (London)
Uber Drivers Protesting Uber San Francisco
Uber Drivers Protesting Uber San Francisco
Uber Drivers Protesting Uber Chicago
 Areas of Regulatory Concern
• Security and Safety Concerns (frequent checks of cars, criminal background
checks (fingerprinting?), fire and health standards etc.)
• Insurance
• Collection of Applicable Taxes
• Service to Disabled or Disadvantaged
• Data Protection Issues
• Labour Issues (independent contractors vs. employees; dependent
contractors)
• (Negative) Network Externalities (damages to 3rd parties)
• Environmental Issues 8strict future vehicle emissions requirements)
 The Tension Between Old Industries
(Incumbents) and New Innovative Companies
• New platforms simply ignore legal requirements; claiming that they
offer an alternative, cheaper, superior service
• Old regulations designed for old type of industries.
• Taxi industry is a classical example of a heavily-regulated old-style
market. Uber-type firms are technologically loaded companies. But
are they taxi firms? Uber defends itself as being a platform, an
intermediary between drivers and consumers….it says it is not a taxi
company. thus, taxi regulations (commercial insurance, tax, safety
checks, price and route limitations, limitations on the number of cars
etc.) should not apply to it.
• Taxi companies claim Uber is a taxi company, it engages in unfair
competition
 Uber in the EU
• June 2014, taxi drivers across Europe went on strike to protest lack of
regulation.
• Courts in France, Germany, Italy, Spain, Belgium and the Netherlands have
banned Uber’s low-cost UberPop service, which allowed drivers without a
taxi licence to pick up passengers
• French authorities passed the law in 2014, after finding that the service
would provide unfair competition to licensed cab drivers.
• A court in Lille later asked the European Court of Justice whether the
Uber was a taxi company or an IT company.
• ECJ (April 2018) “Member States may prohibit and punish, as a matter of
criminal law, the illegal exercise of transport activities in the context of
the UberPop service, without notifying the Commission in advance of any
laws penalising such services.”
 If It Walks Like a Duck and It Talks Like a duck,
Then It is a Duck
• (is it? Should Uber be treated like a duck? Is it a taxi company?)
• The main question (and the rhetoric the sharing economy platforms
are using) is whether these platforms are merely platforms which
provide the infrastructure for supply-side users and consumers to
transact or are they taxi, hotel, restaurant companies?
• The answer is crucial in designing and crafting regulations for the
industries they operate in
• According to ECJ, Uber is not an IT company, instead a transportation
company thus it could be regulated as such
 Ride-hailing (France)
• Uber’s growth brought demonstrations and violence in October 2014, the
French government passed the Loi-Thevenoud law: it prohibits transport
vehicles with drivers (Uber and alikes) from being geo-localised by users
before reservation through a smartphone.
• The law requires each driver to return to his base between rides if he doesn’t
have a reservation booked after dropping a customer preventing drivers
from travelling to areas where they expect demand. The law requires
informing a passenger of the price of a ride when the passenger makes a
reservation.
• Uber challenged these provisions before the French constitutional court
which confirmed the first 2 provisions. Thus it allows transportation
platforms to charge fees based on time and distance just as taxis do.
 Ride-hailing (France)
• Current situation is: Uber is legal in France, and it is very active in Paris. However, in
2016, Uber was fined €800,000 for unning an illegal taxi service with non-professional
drivers with UberPOP between 2014 and 2015. Uber has since suspended UberPOP.
• Currently, here are the available and legal services that Uber is operating in Paris: UberX,
UberPOOL, Berline (French version of UberBLACK), UberGREEN, UberVAN, and
UberACCESS.
• First of all, to become an Uber driver, one must be recognized as a VTC (Voiture de
Tourisme avec chauffeur = private chauffeur services that are not affiliated with taxi
companies) professional driver; Obtain the professional VTC card and a registration in
the VTC register; Create a company and register it with the Chamber of Trades
 Uber Paris
• 2021 the French Court of Appeal: Uber has lost an appeal brought by a former
driver who wanted his terms of employment recognised as a fully-fledged work
contract. The Paris court: contract between Uber and its former driver was “an
employment contract” because the driver was dependent for his work on the ride-
hailing app.
• The court found that Uber had control over the driver by his connection to the app
which directs him to clients, and thus should not be considered an independent
contractor but an employee.
• The ruling did not force Uber to automatically sign contracts, and drivers were
forced to go to court to obtain requalification as employees.
• But for the estimated 150 Uber drivers who had already filed cases, have
benefitted from this ruling
• France recently fined Uber to pay 1,2 million euros to the National Taxi Cab
Union because of failure to communicate the norms and regulations to their
drivers.
 Uber: See You Later Barcelona
• Uber argued that it provided technical framework, that it was not a taxi company, didn’t
own 1 single taxi in response to taxi-drivers’ unfair competition claims. Uber as a
company didn’t hold the (national) license to operate taxi services nor did the owners
and drivers of the cars have the licenses or permits to become a taxi driver. Taxi drivers’
association In Barcelona argued Uber was enjoying an unfair advantage and it was
unlawful.
• Is uber providing a transport service?
• Is it just providing an “information society service” (Information Society Directive 98/34)
• A “service in the internal market” Directive 2006/123? The services within the
boundaries of these 2 Directives have an advantage of not being subject to prior
authorization and are immune to restrictions.
• ECJ (20 December 2017) concluded that a service employing smart phone apps to
connect non-professional drivers using their own vehicle with people making urban
journeys was a transportation service and thus it needs to be classified as a service in
the field of transport. Such a service falls outside the Directives and states are free to
regulate the transport services.
 Uber: See You Later Barcelona
• Decree (2018): there should be a minimum of 15 minutes wait between a
booking made and a passenger being picked up
• Bans on vehicles for hire circulating in the streets between jobs, they need to go
back to a base such a garage or a parking lot to wait for the next pick-up
• Any driver infringing the Regulation to be fined up to €1400
• Uber pulled out of Barcelona
• Uber currently isn’t fully-operating in Barcelona: possible to rent a short-term car
rental via the Uber app. It’s a ride-share feature where you rent a car and drive it
to another part of the city and then parks it and you’re done
• despite bans in Spain that were administered in 2014, Uber is back on the streets
of Barcelona, just to deliver food through its UberEats
 Uber (Italy)
• To drive customers around Rome or any other Italian city, drivers
need to be a registered NCC driver with a NCC medallion. It takes
about six months to get it, an exam and a few hundred euros to get
the drivers license. Upon getting the license, a NCC medallion needs
to be purchased (which costs from € 20,000 in Calabria to €90,000 in
Rome. Only NCC drivers can sign up for Uber in Italy)
• In 2013, Uber started to offer services (Milan, Rome and Florence) via
3 services: UberBlack and UberVan which involve professional drivers
with the latter offering 6-passenger vehicles; and UberPop which
allowed private non-professional drivers to offer a ride. In 2015, Uber
was active with 100 drivers in Florence and around 1,000 drivers in
each of the cities of Rome and Milan.
 Uber (Italy) cont.
• In 2017, upon a complaint by taxi unions that the firm represented unfair
competition for traditional taxis, a Rome court banned UberBlack services
(services offered by Uber professional drivers). Uber (appealed the ruling) was
given 10 days to suspend its services after which it would have been subject to a
fine for every day of non-compliance. According to the court, UberBlack services
constitute ‘unfair competition’ against taxi drivers and professional drivers who
are required to return to a garage in between rides; in addition it ruled that Uber
is not a mere platform or intermediary between passengers and drivers but a
truly transport operator which is not authorized by the taxi regulation; Uber was
found to disrespect privacy laws by allowing users to track their drivers through
the app.
• By assimilating UberBlack services to the regulatory category of private hire car,
the Rome court found that they were not complying with the existing regulations
and in particular with the restrictions introduced in 2008.
 Uber (Italy) cont.
• Since 2015, Uber and its services have attracted the protests of taxi
drivers who filed lawsuits, in particular in Milan and Rome.
• In May 2015, a Milan court banned UberPop services all over the
Italian territory on the basis that UberPop drivers were holders of
neither a taxi license nor an authorization for driving private hire
cars. The Court argued that Uber, had not received any authorization
according to the taxi regulation and was in breach of the privacy law
by allowing users to track their drivers through the app.
• Thus UberPop is banned; Uber continues its operations through
Uber Black with professional licensed drivers.
 Ride-Sharing in London
• Transport for London (TfL) regulates ride-sharing; conducts criminal
background and driving history checks on drivers.
• All drivers are required to submit medical clearence every 3 years;
vehicles are inspected upon licensing; all vehicles must have
commercial insurance, have to complete simple geographical test
• Ride-sharing cars pay a Daily congestion charge of £11,50
• Cars cannot be older than 10 years
 Ride-Sharing in London
• Transport for London ruled 2017 that it was not “fit and proper” to
hold a private hire vehicles operator license. Uber agreed to introduce
changes include proactive reporting of serious incidents and ensuring
drivers only operate in areas where they are licensed. Uber has also
offered some improved conditions for UK drivers, including limited
insurance, limits on working hours and a 24-hour phone line for
support.
• Uber is able to continue operating in London, after a court in June
2018 decided the ride-hailing firm should be awarded a new 15-
month probationary license, after being told of sweeping changes to
its practices. The license is extended for 1,5 years in Sept 2020 again
 Ride-Sharing in London
• Uber drivers sued Uber to be classified as "workers" which would
place them at a level of work protection between independent
contractors and employees. Worker classification would guarantee
minimum wage and holiday pay but necessarily all benefits of
employees. (workers are not employees nor self-employed)
• The drivers won the case. UK labour court: Uber drivers are workers;
not independent third-party contractors; they are entitled to basic
employment protections including minimum wage; holiday and sick
pays and free insurance in case of injury.
• Following Uber drivers’ victory other gig economy workers are suing
platforms
 Uber (Denmark)
• Uber shut down its operation in Denmark in 2017 following the
introduction of new taxi laws.
• Danish prosecutors (2016) accused the company of operating an
illegal taxi service, indicting it on charges of assisting its drivers – two
of whom have also been fined – in breaking applicable national taxi
laws. In April 2017, fare meters and seat occupancy sensors became
mandatory for all taxi services. Uber pulled out.
 Uber Estonia, Lithuania, India
• Estonia: Flexible Regulation. Taxis and Uber are treated equally.
occasional drivers register with the municipality; Show criminal
background
• Lithuania: drivers’ cars are inspected; declare income to tax inspector
• India: while there are too many Uber-clones; India banned the use of
surge pricing
 Uber in Hungary
• Uber suspended operations in the Hungarian capital two years ago
after the government passed legislation blocking the ride-sharing app.
• Uber Hungary had more than 1,000 drivers and 150,000 regular
customers in Budapest.
 Uber in Australia
• Uber operates across all of Australia except for the Northern Territory
after the app refused to pay the proposed licence fee of $300 per
vehicle.
• In May 2019, a law firm filed a class action on behalf of thousands of
taxi and chartered drivers, accusing the company of operating illegally
and harming them financially.
 Uber in Japan
• Uber is illegal in Japan, it started other services like food delivery as
UberEats.
• Regulations outlaw non-professional drivers from transporting paying
customers, but it does already operate its UberEats service in four
Japanese cities.
• Uber just got approved for its first taxi-hailing pilot service in the country. It
wasn’t allowed to set up its own fleet of drivers and it must continue to
obey local rules (May 2018). For years, Uber has been very careful and
hasn’t applied its aggressive strategy.
• A different approach: Uber started connecting passengers with local taxi
drivers in Awaji, a remote island of 120,000 people and a dozen taxi
companies. Uber will begin its expansion in Japan as a taxi dispatcher.
 Ride-sharing Regulations in NYC
• New York City has the toughest ride-sharing regulations
• The value of a yellow taxi medallion fluctuates between $1 million to $200,00.
• NYC is unique because it issues licenses to ride-sharing companies. Even UberX
drivers have to obtain special licenses. As a result New York’s Uber and Lyft
drivers tend to be professionals many of whom used to drive yellow cabs. In
other cities just about anyone with access to a vehicle who passes a background
check can drive for Uber/Lyft.
• Along with social security card, government issued photo ID etc. drivers must pay
a new application fee of $550, an inspection fee of $75 and a commercial motor
tax of $800.
• New York City requires taxi drivers take a defensive driving course, undergo a
medical exam and a yearly drug test.
 Ride-Sharing Regulations New York City
• NYC Taxi and Limousine Commission (TLC) collects data related to:
the date, time, location of both pick-ups and drop-offs
Trip route
The driver’s logged hours
Whether the vehicle is in the congestion zone
The duration between when a passenger requests a car and when the car arrives
How much the driver is paid
Whether the ride is shared or pooled ride
Whether the vehicle is wheelchaair accessible
 Ride-Sharing Regulations New York City
• NYC requires ride-sharing drivers be licensed by the TLC, take a 24 hr training
course, be fingerprinted, pass a criminal background check, have a clean driving
record, pass an annual drug test
• All vehicles must be registered with the TLC, have TLC license plates, carry
commercial insurance
• Drivers are prohibited from driving max 10 hrs in 24 hrs; weekly 60 hrs
• NYC first city to cap the number of ride-sharing vehicles (86,000)
• $2,75 fee per trip to be paid in congestion zone
• 8,875% sales tax and 2,5% fee for state workers’ fund
• Additional $2,50 for airport rides
• Questions: IS IT WORTH TAKING A RIDE-SHARING? COMPATIBLE WITH PLATFORM
RATIONALE?
 Ride-Sharing Regulations New York City
• NYC first city to pass legislation protecting drivers’ pay.
• Drivers are to be paid a minimum fare per minute (to adjust to
minimum wage) and per mile (to ensure drivers can cover weekly
vehicle expenses)
• Sets a minimum hourly wage for ride-hail drivers. The companies
would be required to fill the gap if drivers don’t meet the threshold.
• Driver minimum wage depends on how much of the time a driver
cruises with an empty car. The more cruising a driver does, the more
fare revenue the app-based company needs to share to ensure the
driver makes at least $17 an hour after expenses.
 Ride-Sharing (California)
• California was the first state to legalize and regulate the ride-sharing companies
(Transportation Network Companies (TNCs). Public Utilities Commission, which
originally defined TNCs in 2013 as an, "online-enabled app or platform to
connect passengers with drivers using their personal vehicles".
• This definition stopped online platform companies claims "that they were
merely platforms not transportation companies." Previously, companies like
Uber and Lyft were categorized with limousines.
• Initially, Lyft, SideCar, Uber and Tickengo needed to be licensed, but later reached
interim agreements that allowed the startups to operate. Under terms of the
ruling, first, TNC services are required to obtain a license from the CPUC, have a
minimum of $1 million in insurance, vehicle inspections, driver training
programs, a "zero tolerance" policy on drugs and alcohol, and criminal
background checks
 Ride-Sharing Regulations California
• California Public Utilities Commission (CPUC) requires ride-sharing
companies to submit
Accessible service volumes
Service volume by zip code
Problems reported about drivers
Hours logged by drivers
Miles logged by drivers
Identities of drivers completed driver training course
 Ride-Sharing Regulations California
• Relevant to public safety and service ride-sharing companies
Must complete criminal background checks for all rivers
Drivers must be 21 years older and have at least 1 year of driving experience
Vehicles must undergo an inspection before service and after every year or
50.000 miles
Drivers must have commercial insurance (which can be purchased by the driver,
the ride-sharing company, or a combination of two)
All companies pay a per trip fee of $0.10 for every trip for accessibility fund
 Ride-Sharing Regulations California
• 3,25% tax to be paid
• A one-time $1000 registration fee and a $100 annual renewal fee s to
be paid by the companies
• 0,33% of each company’s gross revenue is paid into the CPUC fund
 Ride-Sharing Regulations California
• California has one of the toughest battles against ride-sharing companies (due to the
fact that it is where the notion had started and spread. Traffic resulting from ride-
sharing comprises 25% of congestion)
• 2019 state law defined Uber and Lyft drivers as employees.
• November 2019 Ballot (voting) ride-sharing companies’ drivers are classified as
″independent contractors ″ with a limited set of benefits such as minimum earnings
guarantee, vehicle insurance and a health care stipend, but not the typical
protections of employment under state law
• August 2021, the ballot measure which treated drivers as independent drivers
rather than employees was found to be unconstitutional. Drivers argued they should
be entitled to a minimum wage and benefits such as health insurance, sick leave and
job protections.
• Uber has appealed the decision…yet to be decided
 Ride-sharing (Las Vegas)
• For many years authorities were trying to keep taxis from scamming
tourists of Las Vegas by taking them the wrong way from the Las
Vegas airport to the Vegas strip. They imposed regulations from
roadside checkpoints to giant signs to creating systems for passengers
to submit reports when they are taken by the wrong route…nothing
worked.
• Ride-hailing platforms have sorted out this…
• But ride-sharing was banned initially.
• With some new legislation (drivers obtain a business license to
operate ($1000/year), passing a fingerprint and background check
every couple of years) Uber and Lyft were allowed to operate
 Ride-hailing (Virginia)
The new regulations require companies:
• Pay $100,000 for a license to operate in the state.
• Drivers must be at least 21 years old and properly licensed to drive.
• Drivers must undergo a background check, including a comprehensive
review of history of crimes, sex offences and crimes against minors
registry.
• The company or the driver must have insurance that covers up to $1
million in accident damage and they must abide by a zero-tolerance
policy regarding the use of drugs and alcohol.
 Ride-sharing Regulations (Canada)
Toronto : Uber pays $20,000 one-time fee; a $15 per driver
annual fee and 30 cents per trip.
Niagara & Ottawa : Uber pays $7,200 annual licensing fee, plus 11
cents per trip
Edmonton : Uber pays $50,000 a year plus 11 cents per trip
 An Example of Deregulation for Both Sides: The
Finnish Reform
• The Act creates a favourable operating environment for digital services
• Taxi license requirement remains for all Professional transport services
but no need for training.
• A taxi defined as vehicle used with taxi licences.
• The limit on the number of taxi licences is removed.
• The geographical restriction on taxi licences is abolished
• Maximum prices were removed but operators are obliged to inform the
passenger about the fare in advance
• Consumer protection and safety regulations remain
 Current Regulatory Problems
• The current regulatory problems that prevent effective regulation of the
sharing economy are outdated and sticky regulations
• Outdated regulations allow new entrants within the sharing economy to
exploit gaps and loopholes which leave governments with many
unanswered questions on the rights of and safety for workers and
consumers.
• Regulatory bodies seek to regulate the sharing economy because the
danger of inaction may result in endangering the health and/or the safety
of the public.
• Incumbents lobby governments for fair rules and new regulations on ride
sharing companies which would constitute further barriers to entry for new
competitors. Thus, misguided government regulation can be the barrier to
innovation that never falls.
• But innovation cannot be stopped it can only be slowed down
 Taxi Drivers Are Being Replaced by Driverless
Cars…Who and How to Regulate?
• How to or any need to regulate the
ride-sourcing platforms when the next
step is the autonomous car
• Product portfolio enlarging in surprising
directions
• Auto manufacturer General Motors
invests in Lyft
• Lyft Works with Waymo to produce
• Uber works with Toyota autonomous cars…
• Lyft Works with General Motors • Best way could be to design flexible
pop-up or flash regulatory regimes
suitable for rapid developments
 How to Regulate Ride-sharing?
• Confidence in Transacting/The problem of Trust
• Taxi regulation is based on the idea that individual passenger
transport sector has 2 market failures: asymmetric information and
negative externalities.
• Trust mechanisms are designed to solve the asymmetric information
problem.
• The problematic is the negative externalities…
 Trust Mechanisms
• Asymmetric Information, Adverse Selection, and the Market for
Lemons (Akerlof)
• Markets tend to function better in terms of matching buyers and
sellers at competitive prices when both groups have sufficient
relevant information. In real life, sellers have more information about
the goods and services offered for sale than buyers do. This kind of
information asymmetry can result in a «market for lemons» where
supply may be limited to low quality goods, because sellers of high
quality goods cannot convince buyers to pay enough for a profitable
transaction.
 Why Regulate? Lemons Problem
• When information asymmetry persists, markets are inefficient and fail.
(markets fail to realize full gains from trade through efficient production).
• Correcting market failures is the «standard theory» behind public
Regulation. In an attempt to correct market failures policymakers have
used information asymmetry as the major justification for consumer
protection regulations to put both parties in equal bargaining positions.
Regulations helped cure the problem of information asymmetry for
centuries.
• Does information asymmetry still exist in the technological era?
• If yes, is it as severe as it used to be?
• Have regulations been successful to correct/cure market failures?
• Are consumers ready to pay less for (a theoretically low probability)
problems?
 Self-Regulation Mechanisms to Correct
Information Asymmetry (in Sharing Economy)
Self-Regulation requires no administrative oversight. Reward good
behaviour, punish bad behaviour:
1. Reputation rating systems:
A. Cold start problem
B. Reputation Milking Problem
2. Trust mechanisms (Platform direct interventions)
A. Curate entry (by background checks)
B. Provide certain platform guarantees in the event of dissatisfied
users
 Self-Regulation Mechanisms
• Online reputation systems: Developing a reputation rating system
(either by the platform or the 3rd party). e.g. Uber two-way star-
ratings, any driver below 4,6 out of 5 is delisted. Transactions that
would not otherwise occur due to lack of trust are facilitated by
reputational mechanisms.
• Platform Direct interventions: 1- curated access: To promote trust by
buyers and sellers to shift the risk from buyers and sellers to the
platform itself. e.g. Background checks (of criminal background),
matching social media profiles with official IDs. 2- Platform
guarantee: to guarantee reimbursement of dissatisfied buyers or
sellers in the event of a negative experience. Airbnb offers guarantees
up to USD 1,000,000
 Specific Areas of Regulatory Concern
• Too big to ban…enter first, fight • Service to disabled or
with regulations policy disadvantaged
• Incumbent protectionism or… • Network externalities
• Consumer Protection concerns • Data privacy and security
and Public Safety regulations • Labour law issues (independent
are flouted: contractors vs employees)
• security
• Insurance
• Taxation
• Data protection/Privacy
 Solutions
• Innovation and growth shouldn’t be punished because the incumbent is
threatened.
• But there shouldn’t be legal void as well
• Level the playing field (relaxing the outdated?? Regulations across the
entire industry)
• Fair Regulation
• If a Regulation is needed, then de-regulate down nor re-regulate up
• Smart Regulation
• Instead of top-down regulations; enact bottom-up solutions
• The importance of Self Regulation
• Uber works with insurance companies to solve the commercial insurance
problem (especially for rides where the app is on but no customer in the
car. With a fee of USD 8 a month, the insurance is custom-made for Uber
drivers)
 THANK YOU VERY MUCH
I would appreciate it if you could update me on your
own city’s sharing economy battles
mbagis@rekabet.gov.tr