Ride or Die

And Another Innovation Bites the Dust: Uber Shuts Down Taxi Service In NYC

If you can never find a taxi on a taxi app, is it still a taxi app?
picmonkey collage And Another Innovation Bites the Dust: Uber Shuts Down Taxi Service In NYC

Screenshots from our attempts this morning.

Earlier today, The Verge published a pretty damning report alleging that Uber was essentially shutting down its taxi service in New York City. The worst allegations involved the claim that multiple drivers received messages calling them into headquarters to get paid a cash bonus, only when the cabbies got there, “Uber surprised them by asking for the device back, informing them that taxi service was no longer available in New York.” Another driver told the Verge that Uber offered $1,000 to sign up for its black car service instead. (As earlier screenshots obtained by Betabeat show, Uber has offered cash rewards to drivers in the past.)

Not long after, Uber admitted on its blog that UberTAXI has shut down operations in New York “for now,” emphasizing that no changes have been made to its black car service. With yesterday’s news of Square shutting down its pilot program in New York City, this is the second setback of sorts as technological advances to the taxi-riding experience try to make their way into the market. Square also promised it would try again soon–but unlike Uber, its program had official approval.

“We invested a fair amount of money in the UberTAXI in New York after initially getting a verbal greenlight from the TLC,” CEO Travis Kalanick told Betabeat of the amount Uber spent on its month-long test run, which involved a week of free rides to every New Yorker at $25/piece–for those who actually managed to find a cab on the app.

Mr. Kalanick blamed a competitor for cabbie complaints reported by the Verge. “We originally took phones back from drivers who were inactive or not doing trips and that’s all we’ve done so far,” he said, of the callbacks that happened two or three weeks ago. “We haven’t taken the other phones yet.”

In today’s post announcing the shutdown, Mr. Kalanick said Uber expected its taxi service to be back online next year. But when we asked if Uber was still a contender in Taxi and Limousine Commission’s RFP for a smartphone app, which is slated to make some progress in November, Mr. Kalanick seemed dubious. “I’m generally pretty skeptical that the RFP is actually going to result in anything commercially viable,” he told Betabeat.

Back in September, Betabeat broke the news that Uber decided to approach New York’s taxi market with the same bull-in-a-bureaucratic-china-shop aggression it has employed in other cities, jumping the gun on the RFP. The TLC swatted down the plan with a statement telling drivers it had not yet authorized e-hailing or paying with smartphones (i.e. the service was illegal) and using it to pick up rides could result in fines or suspension.

Anti-innovation bullshit, cried the brash Mr. Kalanick, who continued to offer the taxi service first for free and then under the radar. “They never once cited a driver,” said Mr. Kalanick who said riders had been using their credit cards on file to pay.

In a statement sent to Betabeat, TLC commissioner David Yassky emphasized that the agency wants to move toward rules that will govern how smartphone options for yellow cab riders can function in New York City. However, the TLC is still under contract with Verifone and CMT, who run “TPEP,” the credit card swipers and TVs in the partition of your taxi. Those contracts don’t expire until February 15th and the RFP dictated working with Verifone and CMT. Said Mr. Yassky:

“In recent months, as e-hail apps have emerged, TLC has undertaken serious diligence and is moving toward rule changes that will open the market to app developers and other innovators. Those changes cannot legally take place until our existing exclusive contracts expire in February. We are committed to making it as easy as possible to get a safe, legal ride in a New York City taxi, and are excited to see how emerging technology can improve that process. Our taxis have always been on the cutting edge of technological innovation, from GPS systems to credit card readers.”

The proposal Uber submitted to the RFP took a “partnership style approach,” noting what the company offers in terms of dispatch and saying that Uber would be “happy to partner with any of the other applicants for an RFP-oriented solution with payments.” Of course, he didn’t wait around for the RFP.

It’s worth noting that at a recent (incredibly tense!) City Council hearing, council members scolded the TLC for taking proposals for companies before they ever actually put forth new rules on how these apps should be run. In today’s blog post announcing the temporary end of UberTAXI, Mr. Kalanick also unsurprisingly blamed the TLC for the utter impossibility of actually being able to even test it out.

“Unfortunately, as many of you have noticed, there haven’t been enough available TAXIs. Demand far out-stripped supply, making you feel pretty lucky when you got a yellow from your iPhone. We did the best we could to get more yellows on the road but New York’s TLC (Taxi and Limousine Commission) put up obstacles and roadblocks in order to squash the effort around e-hail, which they privately have said is legal under the rules. We’ll bite our tongues and keep our frustration here to ourselves.”

In the blog post, Mr. Kalanick also offered some insight into how the month-long attempt played out. A total of 160 cabbies participated in the beta run. He said those were the number of cabbies that actually did rides, not just the ones that were onboarded. In September, Uber started out with 105 cabbies pre-registered and said they had hoped to add 500 the week it debuted.

Uber is currently facing pushback from authorities in other cities as well, as well as lawsuit for consumer fraud in Chicago. In the post, Uber pointed out that you can still use its taxi service in Boston and Toronto. Uber is currently offering free rides in Boston. And Hailo, whose potential entry into New York has been credited with inspiring Uber’s rush to market in the first place, recently announced that it is a fully licensed taxi company in Toronto.

Alfred LaGasse, CEO of the Taxicab, Limousine & Paratransit Association who has decried Uber as a rogue app offered the following statement upon hearing the news: “If you willfully disregard regulations, it’s going to cost you. The regulations aren’t there as suggestions. Yet in almost every market where Uber operates, it acts as if rules don’t apply to them. That’s bad for public safety, it’s a poor business model, and I believe that elected officials across North America are beginning to understand this.”

Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com