Uber Wars. The Ban Menace
By Alberto Mingardi
The BBC reports that Uber has been banned in Germany by a Frankfurt court:
A court in Frankfurt ruled that the firm lacked the necessary legal permits to operate under German law.
It has emerged that the firm was told last week that it could no longer take passengers and faced a fine if it did so. The ruling is a temporary injunction, meaning that the situation could change after a follow-up hearing
Before that, Uber had been banned in Berlin. The anti-Uber climate is not a German exclusive, but arguably a Berlin ban would hurt Uber more than banning it in Athens or in Milan, because Germany is currently enjoying the reputation of being a functioning economy, vis-à-vis other European states (Philip Booth disagrees).
Uber may be trying to “appeal to the people”, as Art has argued here. However, to see if this strategy is conducive to a demand for lighter regulation of the taxi industry, I think it’ll be interesting to see whether any major political figure emerges in Europe who sides with Uber as a symbol of new opportunities and the so called “digital economy”. Italian prime minister Matteo Renzi called Uber “an extraordinary service,” and a couple of words by the prime minister have so far successfully slowed down attempts to crack it down. But I haven’t seen any other major political figure coming out on the issue.
There is an exception: European Commissioner Neelie Kroes has reacted to the Berlin ban with a tweet. She remarked that “zero evidence = bad policy” but did not openly mention any competition-related argument (Kroes is now Vice President of the Commission but used to be the Competition Commissioner). The debate that developed on Twitter is interesting. Kroes remarked that she thinks “there should be licenses”, running person transport service, but that she opposes “protectionism” and “bans based on lobbying” (by taxi drivers). She also, however, wrote that “taxi services are a national legal competence”, and so there isn’t much that the Commission could do.
The problem Uber has, in Europe, is the old one: concentrated interests win over dispersed interests. Taxi drivers are homogeneous interest groups that can represent their own positions relatively easily to politicians, who understand the possible electoral gain by agreeing with them. Consumers of taxi or Uber services do not speak with a single voice and typically won’t be heard in the decision making process. Uber is a profit seeking, multinational company, that is a less interesting interlocutor for decision makers than taxi drivers.
But besides the obvious public choice problems, it is a fact that allowing for Uber in most European states would require extensive rewriting of the existing regulations – which means some political entrepreneurship is needed. Concentrated interests, in this case, have the obvious advantage of siding with the status quo.