I live in Berlin and this is extremely disappointing. I'm beginning to doubt European cities in general have any clue what makes startups in US work. Here's what pg tweeted when there were protests in London:
Talk all you want about Uber being evil, predatory and not really the One True Sharing Economy - this right here is why Europe won't catch up to US in terms of startups, despite all the nice talk about being friendly to them.
I live in Berlin and this is extremely satisfying. I'm beginning to doubt that Silicon Valley startups have any clue how European cities work. We germans in general are weary of evil, predatory enterprises that start a spiral to the bottom.
Jest aside: This is just not how things work here, for good or bad. I think there's also not that much room for disruption in the Uber case, at least in Germany. The market for cabs is very much unlike the market in the US - there's not a single huge company owning all the cabs in Berlin and a medallion does not cost a million EUR. Service has been pretty ok for me so far and I use a lot of cabs, so I actually don't see much of an upside but I do see a lot of potential downsides, not that much for me who could easily afford a surge pricing but for people that maybe can't and have to rely on regular cabs.
The taxis here in Berlin even have an app that is quite similar to how you order an Uber. Though of course you still have to pay at the end of the ride with cash or card.
They haven't banned Uber, just required that they follow the laws and regulations that everybody else has to follow. Once Uber does that then they're free to operate in Germany.
"A court in Frankfurt has ordered the smartphone application 'Uber' to stop its transportation services in Germany"
Is this not a ban? Are you saying Uber drivers weren't following the regulations every other driver in Germany has to follow - they were not obeying traffic laws, not holding driving licenses, etc.? No, they didn't follow additional regulations that not everybody has to follow.
Ride sharing is completely legal in Germany, the court order makes the difference between ride sharing (which is unregulated) and ride sharing FOR PROFIT, which, in Germany, is a regulated market.
So no, it's not a ban. It's the requirement to make business akin to getting your business registered.
Wait, so it's OK for one person to give a ride to another person, on the same vehicle, on the same road, at the same time, but it's not OK to give the same ride if after the ride one person gives money to another person - and the reason is that is the second case the driver and the vehicle (the same driver and the same vehicle!) is less safe? How that even makes any sense?
This case is not about safety. It's an unfair competition case.
Transporting people for money is heavily regulated in Germany on various grounds, one being safety, others are that Taxis count as public transport in germany and must fulfill certain obligations ranging from mandatory service for anyone at the same rate to transporting disabled people to the doctor (yes, that's done by Taxis as long as those people can still enter a Taxi). Uber is avoiding the regulations in an attempt to save money and be more profitable. This has been judged as an unfair business practice and so Uber faces two options: Stop offering UberPop or comply with the regulations.
The fact that private insurances don't cover commercial rides has a multitude of reasons, one of them is that statistically speaking it's more likely that a commercial driver has an accident since he's more likely to get a significantly higher mileage and more likely to drive at night. But that's a deal between the insurance company and the driver, the law only cares that you own a valid insurance, not about the exact terms.
Giving money is not the same as making profit as there are cost attached to driving a vehicle. It's OK if you reimburse the driver for his cost but once you start making profit things are different, then it becomes a business and as Xylakant said, the insurance doesn't cover that.
Since it's mandatory in Germany to be insured when you drive a car, that becomes Ubers's culprit, that they chose to ignore, potentially at the cost of leaving someone without insurance coverage in case of an accident.
That is unacceptable by the German rules and that's why the decision has been made in an express decision by the court.
That's like saying "we're not banning drugs, we're just banning drugs unless you're a surgeon that needs drugs to sedate a patient". Effectively, that's banning what they're doing, if they wanted to open a taxi company that'd be completely different business.
There is a difference between banning and regulating. If a certain culture finds that certain businesses better be regulated for whatever reason (and your exsmple is actually a good one) that's OK and must be followed.
Take for instance the FDA that heavily heavily regulates the US market. I could argue that I as a customer should be able to choose myself what I eat and drink, yet that's not the case.
You may call that cartel, mafia, whatever you want but it's how administrations work..
It's not a blanket ban – UberBlack can still operate, because UberBlack follows the regulations. UberPool isn't banned either.
It's only UberPop, which tries to operate without a license as a for-profit service.
And imagine a UberPop driver hits you with his car – he would be not insured (regular insurance doesn't cover commercial activity), so you would have to pay your own medical treatment (getting broken bones together, etc) on your own, because the driver had no license.
It sounds more like "we're not banning drugs, just that if you make a business that involves sedating people then you need to follow certain rules. If you do surgery below cost then you are free to use the drugs."
By that argument I could say that the drug market in the US is in dire need of disruption, since otherwise there'd be no need to ban the sale of cocaine at Walmart.
War on Drugs is the worst thing that happened in US politics in 20th century, but discussing this topic would take us too far aside. In this case, the ban was clearly initiated by competitors (while in Walmart's case it has nothing to do with banning drugs) - the article itself says "The preliminary injunction comes in response to a lawsuit by the national association of taxi drivers." Nobody claims driving is bad - they just claim the other guy can't be allowed to do it.
No, the claim is that by skirting the Personenbeförderungsgesetz (Law on transporting people), Uber is violating the the law about unfair competition. Any competitor in germany can sue any competitor on those grounds: If you engage in unfair business practices you'll be fined.
Nobody claimed (at least in this case) that Uber itself should be banned - UberBlack is unaffected by this injunction. Ubers unfair business practices have been banned.
These requirements are not "minimum" - as there are thousands of drivers in Germany that are not required to meet those requirements. I myself was driving in Germany, more than once, without meeting any such requirements. However, somehow the same drivers which were completely safe a minute ago flooding all German roads without any "minimum requirements" become critically unsafe - so unsafe that they must be banned - as soon as they try to earn money. Though the same unsafe drivers are allowed to continue driving freely - as long as they do not take money. The only thing that changes is if the same drivers take money or not - and you're saying it is about safety?
Taxis operate under very different conditions than normal cars.
Most peoples cars are parked at least 20h a day. Taxis on the other hand are often operated in shifts and are in operation 24/7. This has significant effects on how much maintenance is required, how likely an accident is etc. this in turn results in potentially higher costs for insurance, requires more frequent checkups.
In addition a driver's license in Germany never expires, unless you violate any laws you can never lose it. That may or may not be reasonable for people driving a private car, it's a lot less reasonable for people operating a car commercially and potentially with passengers. Passengers who have the reasonable expectation of having a driver who's healthy enough to drive.
Let's assume you drive in Germany and take an Uber passenger and get involved in an accident fatal for the pax, after you fail to reanimate him and your tires are slightly overdue for a change. The family sues you for reckless driving and causing the death of your pax, in the first instance the court finds you guilty.
Now how do you argue that the requirements are not minimum? How do you pay for the damage? Do you expect legal protection from Uber? Do you think they would provide you with that, in Germany?
Do you actually know about the legal system in Germany or how can you make a statement about the level of requirements?
I think there is a misconception in what "startup disruption" means. One thing is to remove entrenched interests and "trimming the fat" of inefficient or predatory practices; another is to race to the bottom.
I could create a "supermarket startup" tomorrow, by using 0-hour contracts for the whole workforce, forcing farmers to earn less, stocking food of dubious safety coming from China etc etc, all thanks to some wonderful app that will calculate and manage all this for me. That's not disruption, that's robber-baron race to the bottom.
On the opposite, if I create a fully-automated supermarket that does not require any workforce but still provides exactly the same level of quality to consumers and producers, that's real disruption.
The startup ecosystem should not take their clues from Walmart and Ryanair. Before Uber can righteously challenge European legislation, they should prove that they have ways to address the issues that generated that legislation in the first place: are all drivers insured? Are their vehicles safe? Etc etc.
0-hour contracts for the whole workforce, forcing farmers to earn less, stocking food of dubious safety
If you can find people freely willing to provide labour services at the price you offer, I see no problem. As far as "forcing" farmers to earn less, how are you going to achieve that? Coercive appropriation of goods is a practise strongly restricted in modern capitalist societies. Finally I highly doubt there is a good market for unsafe food products, though I am sure for some people it would be an acceptable risk - if you are discovered faking the quality of your food products though I imagine you would go out of business pretty quickly through the standard feedback mechanisms of capitalist society (the media, consumer outrage).
Doesn't sound like a very strong business model to me unfortunately.
Before Uber can righteously challenge European legislation, they should prove that they have ways to address the issues that generated that legislation in the first place: are all drivers insured? Are their vehicles safe? Etc etc.
Why can't we simply let people decide for themselves whether they want to ride in insured vehicles or not? Are people too stupid to calculate probable risks and rewards and make their own economic decisions?
> If you can find people freely willing to provide labour services at the price you offer, I see no problem.
That thought right there is straight from the XIX century. There is no such thing as "freely willing", in the real world people provide labour in exchange for money in order to survive in a society that forces them to do it or perish.
> As far as "forcing" farmers to earn less, how are you going to achieve that?
The food supply chain is much more opaque than you would think, even in Europe where regulation is much stricter than anywhere else. A lot of food producers will skimp on everything they can, short of killing tasters on their first sip.
> Are people too stupid to calculate probable risks and rewards
Not everyone has the education (or the inclination) to make such calculations, every minute of every day. This is why we have regulations in place: because predatory behaviour exists and can result in very bad outcomes, up to and including loss of life. I personally don't want to go back to "the XIX century plus iPhones".
People have to work because they have no capital. They are drowning. A job is a life preserver. The solution is to demand a bigger life preserver from he business man (minimum wage) the solution is to remove the pool (citizens divided guaranteed income negative income tax. One helps the poor the other fucks them.
> Why can't we simply let people decide for themselves whether they want to ride in insured vehicles or not?
People don't get to decide for themselves whether vehicles are insured or not anywhere in the world that you'd care to want to live. Liability insurance is mandatory, typically taxis carry passengers so they have mandatory insurance for their passengers as well.
Since you don't exactly get to check the state of the vehicle and/or the insurance situation of the driver before you get in this is something that is - rightly, in my opinion - regulated. It makes sure that as a consumer your rights are somewhat safe, rather than a gamble.
Sorry, what? I actually come from a country where vehicle insurance - even third-party - is completely optional. It's called New Zealand, pretty decent place to live all things considered.
Anyway, why can't we just let Uber drivers state the degree of insurance coverage they offer and explain how often they check their vehicles and who does the checks etc? Then let people decide who they want to ride with. No gambling required. We can even expect Uber drivers to freely offer this information themselves, because it will make their services more attractive.
Remember we are talking about interactions between free individuals here. No one is forced to take an Uber ride.
> I actually come from a country where vehicle insurance - even third-party is completely optional. It's called New Zealand, pretty decent place to live all things considered.
Beautiful country, nice people! I assume you are familiar with the ACC and that that is why you don't need such insurance? Effectively you already have it.
As for why we can't let Uber drivers state the degree of insurance etc, that's not how taxis work, and Uber competes head-on with taxis.
So if you want transportation using a car from point 'a' to point 'b' then there are certain levels of expectation to be met and because people are - surprise - crafty, so in order to make sure these expectations are actually honored the government in Germany chose to license such operators.
Just because 'we're free individuals here' does not give you license to ignore the law.
Thanks Jacques, I do understand that we are talking about laws here. I don't personally endorse Uber's business practise of breaking local laws to force the debate.
I'm arguing about the rationality of these particular laws. In essence, laws which mandate a minimum standard of a given good. I think these laws should be repealed because they restrict individual liberty and do not produce more optimal outcomes than an unhindered free market for transportation services. Just my two cents.
How do you cope with getting injured by a driver who cannot pay for your medical treatment?
I'd be very surprised if there was not some mechanism in place. Maybe taypayer money, the state paying for it and trying to get reimbursed by the driver?
Something else?
In Germany we handle this issue with mandatory insurance.
I'm pretty sure that you're comparing apples and oranges.
To paraphrase: Why can't we just let surgeons state the degree of medical training they have and explain how often they get training and who does the training etc? Then let people decide who they want to have surgery from. No gambling required. We can even expect surgeons to freely offer this information themselves, because it will make their services more attractive.
Remember we are talking about interactions between free individuals here. No one is forced after a critical, life-threatening accident to go to the nearest location such as Bob's Discount Surgery, "Where sterilization is for sissies. Check out our 50% off amputation special."
> Who will pay when those people wind up in hospital, racking up bills of hundreds of thousands Euro, and there's no insurer to cover the cost?
Health insurance. I'm not aware of them not paying for obvious things like accidents, etc. They do avoid paying for things that are not strictly medically necessary, e.g. cosmetic surgery in many cases. But if you get a ride with someone and they get into an accident where you are injured, the question of hospital bills should not arise. At least not for the victim.
The victims insurance will for sure claim damages from the driver. As the driver most probably will not be able to pay the victims insurance has to cover the loss. This on the other hand means that the insurance needs to raise the prices for all their customers in order to cover for those kind of cases. To prevent that it is mandatory that all people are properly insured and pay their fair amount in respect to the risk - so a commercial driver has much higher insurance costs than a private driver.
In Germany health insurance does not cover medical procedures if they were caused by someone else (or at least they try to get their money back with lawsuits).
And the insurance of the driver wouldn't cover commercial activities, so he'd have to pay everything on his own.
Good luck finding a single driver for Uber then, because just one accident could bring a driver 300k$ into debt.
Because insurance typically affects all victims of a potential accident, and this includes people on crosswalks, in other vehicles and riding bicycles along the road.
If the insurance company deems you 'uninsured' this will result in society picking up the bill.
So the rights of individuals to choose to pick a seller who in that case is uninsured can have consequences for parties other than the two involved in the transaction.
jacquesm's comment is correct. Someone operating a taxi on domestic insurance may find that they are not covered if they collide with someone while they have an Uber passenger. The uninsured uber driver is then unable to pay for the damage to the other driver's car. That damage may be covered by their own insurer (increasing everyone's premiums) or they may be left out of pocket.
Because accidents are too violent and too infrequent for post-hoc enforcement to work. By making it illegal to drive without insurance police can do enforcement continuously, creating an incentive for insurance enrollment before you get hit by a car.
If you have to wait for peoples' lives to be ruined for you to have an opportunity to create your incentives, it's already too late.
> Why can't we simply let people decide for themselves whether they want to ride in insured vehicles or not? Are people too stupid to calculate probable risks and rewards and make their own economic decisions?
Yes, they are.
People are hopeless at calculating risk, especially for things like this.
What Uber does has nothing to do with Silicon Valley and startups.
It's the same exploitation through evading labor and safety laws dozens of shady companies have done for decades.
If a transportation company exploits East-European truck drivers, or a building company exploits construction workers it's disgraceful, but because an American company does it by using a phone app it's suddenly cool and "disruptive"?
I'm glad that we have a level of protection in terms of privacy, consumer and worker rights.
Uber is not innovative. Uber is the same old scam all over again. But with an app.
What's traffic safety got to do with being the Silicon Valley of Europe? Uber is outlawed not because of their technology, disruption or innovations, but because of hiring untrained drivers and potentially unsafe cars.
Germany's culture = safety first. So get TÜV certified cars and licensed drivers.
I wonder how Germans tolerate thousands of regular "unlicensed" (I mean beyond regular driving license - I don't think Uber is hiring drivers that don't have regular driving license?) drivers flooding the German streets every day. It is so unsafe. When finally German citizenry understands that and bans private driving by unsafe drivers in potentially unsafe cars? Safety first! So I'm not getting how it is still allowed. If you want to get somewhere - just take a bus or call a taxi or even better, just bike - it's more ecologically friendly. I think private car ownership in Germany should be banned immediately - for the safety, of course.
I take it that you don't think it should be legal for businesses to lie about their products, but you think it should be legal for normal people to tell lies.
There is quite a bit of difference in regulating what businesses are and are not allowed to do, and regulating what people are and are not allowed to do.
It is completely legal for businesses to lie, and they do it every day, just as every other people do, at least in countries where freedom of speech is respected. What is not legal is to enter a contract under false pretenses - i.e. lie to me about the contract I am about to enter, defraud me, misrepresent your offering or details of the goods, etc. Same holds for a person too - if I defraud you, I would break the law, even though I am not a business.
"Business" is just a common name for people (or just one person) doings things in exchange for money, it doesn't change who the people are. So why exactly the difference? Where does it come from?
In the US, commercial free speech has less protection under the First Amendment than noncommerical speech. Eg, Nike v. Kasky established that in California commercial free speech is (at least currently) subordinate to false advertising laws, in that information in Nike press releases is not immediately protected under the First Amendment.
In reading your posting, it appears that you have merged two meanings of "business." The first use is "legal for businesses to lie" as different from "every other people." This implies that you are talking about a specific legal entity, eg, a limited liability corporation, as something different than a human being.
The second is '"Business" is just a common name for people', which implies that don't see a business as anything other than a non-empty set of human beings.
You should be more clear about what you mean, but in this case it doesn't make a difference. The courts haven't made a distinction between a corporation and a human being making the commercial speech, so the point is moot.
You should note that the lesser protection of commercial speech includes the ability of government to prohibit the advertisement of illegal transactions, even if there is no misrepresentation. Eg, it is illegal to advertise cigarettes to children, even though it is legal for you, under free speech, to carry a sign saying "children should smoke Virginia Slims". The distinction is the goal - is it to sell a product, or an expression of your political, religious, or other beliefs? Should this go to court, the court would look at various factors, like if you're being paid to carry the sign.
Similarly, and to get away from a vice-related topic, it's illegal to sell your vote or to offer to buy or sell votes (see http://www.slate.com/articles/news_and_politics/net_election... ), but if you were at an oil industry protest with a sign saying "I'll sell my vote to ExxonMobil for $6 million" (that being the amount they spent on lobbying last year), then that's clearly political speech.
To whom ? To its customers ? no , it's called fraud and it's illegal.Just because some companies get away with it doesnt make it legal. And contractual obligations dont have to be written black and white somewhere or you dont understand what a contract is.
> "Business" is just a common name for people (or just one person) doings things in exchange for money, it doesn't change who the people are. So why exactly the difference? Where does it come from?
You are playing with semantics.You wouldnt put this kind of stupid argument in a real world debate where people would actually know who are. You are stating an opinion not a fact. What people call Business is a legal entity.And legal means regulated by laws ,and laws are issued by states. You are probably right know typing on a computer that has, by law, to respect to power safety measures so you dont get an electrical shock that would kill you when you plug it.
> at least in countries where freedom of speech is respected
At some point there may be problems, but as there's no standard for 'environmentally friendly', the claim is rather vague in the first place. Still, see Kasky v. Nike (http://reclaimdemocracy.org/nike/ ) for the question of if a company's press statements, in this case about Nike's non-use of sweat shop labor, counts a protected free speech.
Compared to the US, Europe has a lot of consumer protection laws. Just, the other day it was highlighted here on HN, how good European laws are, that in Online Retails a company is not allowed to sneak in additional stuff without your consent.
Those consumer protection laws we have also in Germany for transporting passengers. Some details may have to be revised, but in general I consider them as good.
The consumer protection law for German requires, that a people who provide transportation as a service are required to have an according permit (Personenbeförderungsschein). This permit includes, basic checks, that you can drive and that you obey the law in terms of driving, which means you have clean driving record. This permit also includes additional requirements in terms of emergency first respond, before the First Responder arrive.
In addition the company (or you, if you self are employed) has to take care, that the car is in proper condition in terms of car safety (brakes and such). Proper condition for cars used for transportation business has be checked regular, meaning every year. Normal cars have to be checked only every other year.
Also, the company has to have an according insurance for this use case. Regular insurance does not cover it.
Finally, the company has to have also an registered business with the tax office, which is also understandable.
All these requirements are easy to obtain, but of course, have costs associated with.
According to this preliminary judgment, Uber is either required to validate, that all those requirements are fulfilled or they are punished with a 250.000 EUR fine, for every ride that does not follow the rule.
From that sense, Uber is not denied market access. It is only, that they have to follow the rule.
The problem is, that Uber says itself, they don't want to check those details. They just don't care. They explicitly say, they don't care. Because Uber argues, that they provide only "Ride sharing".
But that is wrong. If they would provide only Ride Sharing, than they would only offer UberPool. Uber is contradicting its own arguments, by explicitly having and marketing one service a Ride Sharing, while not offering this one service.
BTW: this ruling is only for UberPop. Because with UberBlack Uber shows, that it is able to follow the rules.
EDIT: Uber is not required to have a Taxi license. A Taxi license would of course give them additional benefits, like they are allowed to park in Taxi zones, drive in bus driveways and such. But there are also other obligations, like the price for the ride is set by the city and alike (no surge pricing). They have to take every ride, it cannot be denied for whatsoever reason, beside personal safety of the driver. The price is calculated by a certified taxameter. And may be other rules, I am not aware of.
Thank you for your elaborate response. Even if some of those requirements seem a bit anachronistic and overly bureaucratic, it does make more sense why Germany thinks it's a good idea. If it is that simple it shouldn't be that difficult for Uber to find a compromise and go legal.
The protests in London were just an amusing summer diversion from vested interests. The thing is we already have a much greater degree of taxi deregulation in most of Europe than the US. Eg in London minicabs just need safety and non criminality checks. While the US has far more restrictive practices. But we do like safety checks. Uber is in a different environment and is not really such a disruption here.
I think in Berlin the problem are the people, not the regulations. The german start-up scene is all about copying US ideas. And this is also what gets funded. Stuff that already has proven itself somewhere else.
There won't come much disruption from Berlin, soon.
Lots of cities say they want to be the Silicon Valley of Europe. Uber tests whether they mean it. (https://twitter.com/paulg/status/477428094530121728)
Talk all you want about Uber being evil, predatory and not really the One True Sharing Economy - this right here is why Europe won't catch up to US in terms of startups, despite all the nice talk about being friendly to them.