Is Uber a ground-braking innovation or a dishonest competition?

Arrival of Uber, which provides a cheaper alternative compared to a traditional taxi services, has stirred up a debate in Slovakia. The participants are two camps divided by two completely different points of view regarding the question what Uber represents.

Group of supporters regards Uber to be an innovation, which will not only strike at the heart of taxi service business, but will also change the nature of this business forever. People will have the need to move from point A to point B also in future, but this need will not be fulfilled by the traditional taxi drivers, because they will be replaced by different form, which will be cheaper, such as Uber. The “creative destruction” mechanism has been observed across economy. Look at the development of entertainment industry. If people had wanted to see a movie or a listen to music, they had had to go to a cinema or a concert. Through the use gramophones, cassette recorders and a VCRs, CD and DVD players, MP3 players in the past, we got to streaming of music and movies nowadays. Our need or desire to consume music and movies has not changed, but the form of consumption has. According to Uber’s fans, complaints against Uber by taxi drivers is just an effort to obstruct progress, which opens a cheaper alternative to consumers.

Group of critics of Uber points out that a lower price is not a result of innovation, but of avoiding regulations. If Uber drivers do not have to fulfill many legal duties, they can charge a lower price. Angry taxi drivers point out the long list of duties which they must fulfill, if they want to operate their business legaly. They must have a license, a taximeter, a cash register, parking or garage place, pay tax, insurance contributions, more technical inspections etc. The fact is that a successful business model should not be based on different business conditions. Besides Bratislava, Uber provides service at the more than 300 towns around the world. The rise of Uber was very fast, but it has to base its competitive advantage on something different than a regulatory loophole, unless it wants to face a fast failure.

Everywhere Uber arrived, it made a significant contribution to focus public debate to overregulation in the taxi business and Slovakia is not an exception. Thanks public voting, the taxi driver regulation took honorary third place in our Bureaucratic non-sense of the year survey. It would be a tragedy, if the government and parliament response to justified taxi-drivers’ complain by an amendment of the famous employment paragraph of the Labor Code adding regulation against Uber. Uber should not inspire politicians to set up new legal regulations; on the contrary, it should inspire them to ease taxi drivers of a burden of regulations, which they mindlessly raised on the taxi drivers during the years.

Author: Ján Oravec

Translation: Milan Majtán

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