California Continues To Be Anti-Innovation: Tells Ridesharing Services That Carpooling Is Illegal

Failures

from the oh-come-on dept

There has been plenty of discussion about ridesharing services lately, and whether they should be subject to the same sorts of regulations as taxis. As we’ve discussed, while taxi regulations have some historical basis in protecting riders from scammers, most of that was for a time when there was significant information asymmetry between drivers and riders, making it much easier for drivers to scam, rip off or endanger passengers. The wonderful thing that services like Uber, Lyft and Sidecar do is get rid of much of that information asymmetry and risk. The drivers are rated and monitored. The services handle the payment terms. The regulations that once served a purpose are less and less important. And, of course, then the reality starts to become clear. Where those regulations may have once had some benefit for the public, these days, they’re much more about limiting competition, keeping prices artificially high and limiting new forms of innovation.

That’s become especially clear in the last few days, where the California Public Utilities Commission (CPUC) has alerted Uber, Lyft and Sidecar that their new carpooling offerings are illegal. All three companies recently introduced a rather useful innovation that actually makes it much more accurate to call these services “ridesharing.” By enabling “carpooling,” the services find multiple people heading in the same general direction, and put them in the same car, allowing all of them to get a cheaper fare. It’s the kind of useful innovation that seems like it’s better for everyone. But, not the CPUC. In the world of the CPUC, you can’t innovate if you haven’t first groveled for permission:

Basically, the CPUC says that under California law it’s illegal for these ride-sharing services to charge passengers an individual fare when carrying multiple people in one vehicle. If the companies would like to add a carpool feature, they first have to request an adjustment to their existing permits with the CPUC or petition the state legislature to modify the law.

Some people like to mock the idea that these companies like to innovate first and deal with the regulatory issues later — and there may be something to that. But anyone who’s ever worked in a setting where innovation is happening knows that having to ask for permission is a recipe for no innovation. California has a long history of enabling innovation. It would be quite a sad state of affairs for it to go the other way.

Filed Under: california, carpool, carpooling, cpuc, innovation, permission, ride sharing
Companies: lyft, sidecar, uber