Seattle Restricts Uber and Transportation Innovation

In a major setback for innovation in the urban transportation market, the Seattle City Council voted Monday to cap the number of cars that ride-on-demand services like Uber and Lyft may have on the road at any one time. The mayor of Seattle, Ed Murray, has said he will sign it.

Under a new ordinance, which is the first of its kind in the United States, companies like Uber, Lyft, and Sidecar will be limited to having 150 cars each on the road at a time. This means that ride-on-demand services will collectively have no more than 450 cars on the road at a time, which is significantly less than the 2,000 cars they claim to have on the streets of Seattle right now.

The new law would also require these services to purchase additional commercial insurance and increase the number of taxicab licenses available in the city. There has been a moratorium on new taxicab licenses in Seattle since 1990.

As discussed here and elsewhere, state and local governments and transportation regulators have been targeting car-on-demand services since they have launched. Ride-on-demand services, which offer new features like credit-card payments, GPS tracking, and electronic records, have faced strong opposition from taxicab companies and their regulators who continue to operate under long-standing livery regulations using traditional business models. Taxi companies have been complaining to regulators in various cities. In particular, Uber has faced significant challenges operating in Washington, D.C., New York City, Chicago, California, Maryland, and Colorado.  Uber and Lyft are expressly prohibited in Miami, New Orleans, Houston, Portland, Ore., and Austin.

For their part, Uber, Lyft, and other ride-on-demand services have launched major public relations and educational campaigns for local and transportation officials, and leveraged their users and drivers to push back against anti-competitive regulations in the cities where they operate. The companies also continue to expand globally as their services are in high demand. The companies and their users will likely be busy in the weeks and months ahead as cities attempt to follow Seattle’s lead.

Here at ALEC we believe that public policy regarding technology should remain neutral with respect to existing and emerging business models. This means that local and state governments shouldn’t unfairly punish Uber, Lyft, and other ride-on-demand services simply for experimenting with new ways to connect riders with drivers. Rather than tip the scales towards one model, cities and states should free entrepreneurs to innovate and compete for customers.