London anti-Uber taxi protest June 11 2014 035 by David Holt (CC BY-SA 2.0)

London anti-Uber taxi protest June 11 2014 035 by David Holt (CC BY-SA 2.0)


Uber Battle the Latest Chapter in the Internet’s Never-Ending Story

For the past two decades, it has been the Internet’s never-ending story. Established, successful businesses face Internet upstarts who leverage the advantages of a global network and new communications technology to offer better prices, more choice or innovative services.

In the 1990s, it was online retailers such as Amazon, who presented more selection at lower prices than most bookstores could offer. In the 2000s, Wikipedia brought the decades-old encyclopedia business to an end, online music services provided greater convenience than conventional record stores, and Internet telephony technologies used by companies like Skype changed the rules of international voice and video calls. Today, services such as Uber, AirBnB, and Netflix have upended the taxi, hotel, and broadcast worlds.

My weekly technology law column (Toronto Star version, homepage version) notes that in these David vs. Goliath type battles, the established businesses don’t quietly fade away. Using their remaining influence, they often look to laws and regulations that increase costs, prohibit activities, restrict consumers, or regulate pricing to create barriers for the new entrants.

For example, Amazon was initially prohibited from operating in Canada as opponents cited restrictions on the foreign ownership of booksellers. The company proceeded to launch here in 2002 without a physical presence (using Canada Post for order fulfillment) and only formally entered the country over the objection of the Canadian Bookseller Association in 2010.

Similarly, the Canadian Radio-television and Telecommunications Commission tried to regulate the pricing of Internet telephone services in Canada in 2005 before the federal government overruled it on the issue.

Given that history, the current fight against Uber, the popular app-based car service, should come as little surprise. The battle is being waged in city halls around the world as the established businesses lobby for regulations that would either block the service or require price controls to increase costs.

When faced with similar demands, some governments have tried to block the new competitors altogether through website blocking (Quebec plans to block access to online gambling sites in order to protect its licensed service) or restrictions on using new technologies (recent calls from companies to address the use of virtual private networks to stop access to U.S. Netflix). Those efforts are not only destined to fail, but they also create significant restrictions on Charter of Rights protected freedoms.

Governments that resist lobbying pressures remember that the public interest should sit at the heart of any regulatory reform. In many instances, that means getting out of the way as new competition often means better prices and more choice for consumers.

In other cases, governments will need to ensure that established businesses do not wield their existing market power in an anti-competitive manner. For example, net neutrality rules that stop telecom companies from granting themselves undue preferences give new competitors a fighting chance in the market.

Too many times, though, the public interest is cast aside in favour of rules that hamstring new competitors and cost consumers. From copyright reforms that blocked online video retransmitter iCraveTV from operating in Canada nearly 15 years ago to continued calls for Canadian content requirements and fees on online video services such as Netflix, the goal is too often to use law to stop or stall new Internet-enabled competition.

That is the Internet’s never-ending story. As officials across the country face demands to regulate or ban Uber, they should remember that the goal of regulation is not to sustain existing businesses, but rather to act in the public interest. In the case of taxi services, safety-related rules such as mandated insurance, road-appropriate vehicles, and GPS capability meets that criteria.

Regulating pricing, banning services, or requiring costly licenses surely does not.


  1. Andrew Morris says:

    Then isn’t part of the answer to scrap all licensing and regulations for taxis?

    • Austin Williamson says:

      The answer is to expand the licensing process to include any member of the public. Keep companies out of the process and license individuals. Abolish the regional monopolies and make everybody free agents.

  2. We love you Michael!! You’re one of the most important Canadians and your work and words are a value to the nation.

  3. Sean Hunt says:

    Fantastic, thoughtful post. I just hope people don’t use this as an excuse to argue that Uber shouldn’t be regulated at all… for instance, Uber drivers should be required to have commercial insurance, or else a customer in an accident may not have a recourse!

    • Devil's Advocate says:

      ” Uber drivers should be required to have commercial insurance…”

      I keep hearing this, and it doesn’t make sense.

      ALL drivers are required to have insurance that covers its occupants, or they don’t get their plates. Plus, Uber itself pays for an insurance blanket that covers all sorts of needs. Why would these not be enough?!

      Uber is a cooperative effort between voluntary participants. The only thing that differentiates Uber from a social or “car pool” activity is the fact that people pay money for their rides.

      If I drive a friend somewhere, for free, that friend is covered in the event of an accident. I could even let that friend drive it or just borrow the car, if that was workable, and that wouldn’t change the coverage. Maybe, for some, they would need to give their insurance company a heads-up and an extra fee for the additional “driver”, but these things have always been quite workable for everybody in the past.

      So, I don’t get where the need for a “commercial” license comes from.

      It’s like everything else…
      Some legacy industry, who has started to get competition from a newer business model, somehow feels the world should either compensate them for the lost revenue, or outlaw the new competitor… instead of evolving to meet the need to compete.

      It’s not the fault of Uber that the taxi industry has become what it is now – overtaxed, licensed to death and expensive to participate in. It is the result of a history of a greedy middlemen who have been sitting back enjoying a monopoly and being allowed to charge obscene rates for plates and vehicle sharing.

      • “So, I don’t get where the need for a “commercial” license comes from”…
        Because you are now earning an income from your passenger and it’s not just a friend. This is now a business, just as when you have a store and someone comes in and is injured on the premises, your personal insurance does not cover anything but “business” insurance is needed. Just as when I get a roofer for my home, he needs insurance in case he falls off. If he didn’t, my homeowners insurance kicks in and I get screwed. I always want the provider of goods or services to be properly licenced and insured. Only a fool would get into a Uber “cab”. But, like people who cross the road with their eyes closed and don’t get creamed by a bus, they think because nothing bad happened that it’s an “ok” thing to do. Wait till they get hurt and then you’ll see the feathers fly.

        There is nothing wrong with requiring a business (yes, the driver who is now a sub-contractor is a business) to be properly licenced and insured. I mean really, do you want people who are not to do your plumbing, electrical work, mechanical work on your car, any general construction on your home etc., etc.? You would if you were a moron. So why do people get into a car with a stranger and take a chance on being injured? Mostly because those people have never been in an auto accident and experienced the wonderful world of car insurance and how under “usual” circumstances it’s insanely difficult to get them to pay up for what they ought to. Add to the mix an unregulated driver and the insurance companies will have a field day attempting to find anyone but them responsible to pay out. Meanwhile, enjoy your injuries. Cause that’s how they work, by finding an “out” and this Uber nonsense will give them plenty. How cheap will your ride seem then?

        • Devil's Advocate says:

          Uber has a $2M insurance blanket over top of everyone’s individual policies, so I don’t know what you’re going on about.

          As for getting in the car with “strangers”, people taking cabs have been doing that for a very long time. And, there’s certainly been no shortage of bad experiences associated with both those drivers and their passengers. (Taxi drivers, too, are constantly having to let “strangers” into their cabs – it goes both ways.)

          Passengers in these taxis have experienced accidents. Many will tell you the insurance didn’t always get settled as easily as “designed”, often needing court cases.

          I would say the “license”, in this case, does absolutely nothing to ensure any kind of “quality” or “qualification” is being offered the public. You can’t compare a taxi to a store or contracting service. There’s just no analogy there.

          What’s really upsetting the legacy taxi drivers are the huge costs they’ve been extorted into accepting over the years for 3rd-party plates and shared vehicle “rental” fees. We now have drivers who put in 16+ hours a day for 7 days a week, in order to pay the middlemen and leave themselves with enough to live on.

          Personally, I think it’s obscene. It’s a very bad arrangement the government helped develop, and it should’ve been corrected a very long time ago. If anything, it’s an argument AGAINST the current business model, and does nothing to justify duplicating the same scam in a newer business.

          If anything, it should be a call to reevaluate the way they’re being allowed to treat the legacy drivers, and start putting some incentive back into the equation.

  4. I urn for the day when the CRTC goes up against Facebook, Google, and Netflix. CRTC tuck tailed and ran last year when they tried to apply a Netflix tax. Laws that don’t allow the sharing of idea’s or free flow of information/content are obsolete now.

    “Improved new technologies cannot be suppressed simply because they threaten vested industry interests. That would be against the logic of the market and the well known dynamics of technical change and innovation, as analysed by Schumpeter over 40 years ago. It is precisely this feature of innovation-led creative destruction that characterizes capitalist markets; explain their resilience, dynamism and ultimate superiority over other forms of production and consumption.

    Zeljka Kozul-Wright,
    Geneva, November, 20, 2007.

    These views do not necessarily express those of the United Nations.”

    I think the CRTC only needs to be in place right now to ensure that all communications through the internet of things isn’t being impeded by competing broadcasters.

    The CRTC is a failed “experiment” in regards to regulating the broadcast and telecom industries. There is too much of this “us” vs “them” mentality at the CRTC with competing interests with consumer groups being used as pawns in this game of chess rather than actually bringing anything meaningful to the table around public interest. This is why I strong choose NOT to get heavily involved in CRTC policy.

    Most consumers are still dealing with the protectionist billing practices like UBB for our internet. Government made it clear UBB was inhibiting innovation, and made sure the indie providers weren’t forced into this scheme. What happened? Almost all indie providers still use UBB as part of their business model. So what was this UBB fight for then eh?

    This regulator’s time is almost up. Once people start to understand the economics of the day and how outdated regulations are inhibiting economic growth, the regulators or law becomes obsolete. This already happened last year at the CRTC when the regulator introduced the idea of a Netflix tax and quickly retracted. The CRTC is nothing but a name now, and can’t or won’t even enforce it’s will on broadcasters/telecommunications companies who are not playing fair.

    Technology is outpacing the CRTC by at least 10:1 (if we are to count it in years). Too many “special interests” are at play at the CRTC. Not enough time to fix the problem anymore. Can’t wait to see their existence challenged by the very innovators that have become 100x more powerful than Rogers, Bell, Shaw, Telus etc combined. By my calculations the CRTC has less than two years to be completely and utterly in tune with market needs (something it has yet to fully understand) and stop slapping wrists when players are behaving badly. If they can’t start doing this, than it’s time to deregulate and create jobs. This will be the last thing I ever say about the pathetic slimy no good world of Canadian telecom. Pox on all your houses, and trust me that’s coming:

  5. Prof Geist should post a large yellow smiley on entries when he (rarely) decides to write a grinning naive and immature booster piece outside his zone of core competency, to spare me reading them:

    1. All the regulatory concerns here about insurance, driver competency and background screening, vehicle inspection and emergency response connections are unaddressed;

    2. Uber is a demonstrably ugly corporate culture and for a professor concerned about personal privacy there is not a word about the personal geotracking of the app on the phone, so that Uber knows where you are and where you go and saves it, and eventually sells it – what’s to stop them?

    3. Uber is also a phony “social experience” in which you rate your new driver
    “friend”, but didja know your driver rates and sends Uber even more information about you, too.

    There’s nothing good to say about the corrupt and crummy taxi services in most cities, and we can thank Uber, Lyft, etc for “disruption” – but these services are nothing more than the old pirate cabs that hustle passengers me from the airport taxi and limo line-ups. Uber for its snoopy and unpleasant managerment and ulterior data-mining motives is worse than the shady guys who try to lure us to the parking lot at Pearson.

  6. Devil's Advocate says:

    Well, it looks like death by politics is in the works for Uber in Toronto…

  7. taxis
    google robo-cabs.

    taxi patronage systems (a common patronage game is a liscense for handicapped, then pulled offenders off the road)

    uber (hitting pols where it hurts, right in the monpoly patronage game)

    google robo taxis (delicate expensive complicated)

    ottawa’s taxis are the 2d most expensive on the continent.

    ok, NOW complications…