Bloomberg News

Uber Under U.K. Protest Joins Tesla, Aereo Disrupting Status Quo

May 10, 2014

Tesla Model S

Tesla Motors Inc. has roiled car dealerships with plans to sell its electric cars directly to consumers. Photographer: Tomohiro Ohsumi/Bloomberg

Like many disruptive upstarts, Uber Technologies Inc. has a knack for getting up in the grill of entrenched players.

Next month, London cabbies plan to idle 10,000 taxis in protest, claiming the company has an unfair advantage because its drivers are allowed to carry passengers without following the same rules governing regular cabs.

Uber has a lot of company these days. Airbnb Inc., Aereo Inc. and Tesla Motors Inc. (TSLA:US) have also drawn the wrath of established rivals. They’re battling in court, fighting legislation seeking to place curbs on their plans and facing down opposition from Berlin to Seattle.

“It’s the same thing we’ve always seen, back to the days when the people who weaved clothing by hand tried to storm the textile mills,” said Roger Entner, an analyst at Recon Analytics LLC. “When there’s a technical innovation, there are winners and losers, and the established parties that are usually losing out are going to protest.”

Uber, which helps private drivers and professionals charge for rides, is fighting opposition worldwide. Cars in Brussels that use the app will be subject to a 10,000-euro ($13,752) fine after a local court ruled against Uber earlier this year. The company is facing opposition in Germany as well. In France, President Francois Hollande attempted to impose a 15-minute pickup delay on Uber and other private car services, which was struck down in February by the constitutional court.

Alleged Violations

Airbnb, which lets homeowners rent out their pads to tourists, has attracted the attention of New York state Attorney General Eric Schneiderman, who is looking into allegations its users are violating housing and occupancy tax laws. San Francisco sued five property owners for allegedly evicting long-term tenants so they could rent apartments to tourists through Airbnb and other online home rental services.

The television industry deems Aereo’s streaming-video service such a clear and present danger that broadcasters including CBS Corp. took their battle all the way to the U.S. Supreme Court. The justices are considering whether the startup violates copyright law by recording over-the-air programming from an offsite antenna and delivering it to customers via the Internet. Aereo aims to upend the broadcast industry’s decades-old business model by letting customers in 11 cities watch live and recorded shows for as little as $8 a month.

Uber and its peers are just the latest wave of upstarts to make life difficult for established players. For decades, Apple Inc. has rankled industries as varied as music, computing and mobile phones. New software companies such as Box Inc., which specialize in applications delivered over the Web, are stealing share from the likes of Microsoft Corp. (MSFT:US) and Google Inc.

Multiple Fronts

The difference is on how many fronts Uber, Airbnb, Aereo and Tesla are being opposed.

Tesla has roiled car dealerships with plans to sell its electric cars directly to consumers. In the U.S. dealers have long been protected by state laws requiring drivers to buy from franchised stores. Tesla has sidestepped the rules by setting up showrooms that let consumers place orders online. Dealers, fearing larger players will do the same, have been lobbying politicians to maintain the status quo.

Missouri’s legislature is considering a measure to bar Tesla’s company-owned stores. The upstart carmaker says the “anti-Tesla” language was added to a state House bill at the request of car dealers. Tesla is appealing New Jersey’s March decision to ban direct auto sales by manufacturers and fighting to keep selling Model S sedans at its Massachusetts stores. While Texas and Arizona also bar direct sales of Teslas, the Palo Alto, California-based company worked out arrangements in Ohio and New York this year to keep selling in those states.

‘Not Cricket’

Back in London, Steve McNamara, chief of the local taxi drivers’ association, says protesting drivers will meet at a yet-to-be-named landmark in early June.

“All we’re saying is if you want to come to London and operate the business model you’re operating, you should operate within our laws,” he said. “This is about a good old British sense of fair play. It’s not cricket.”

Uber said it holds the necessary license for private hire cars in London and adheres to all of Transport for London’s regulations. A TfL spokesman said that while it’s investigating Uber’s operating model, “we have seen no evidence to suggest” that Uber isn’t fit to hold a license.

History shows that the most efficient players usually win out “at the expense of the incumbents, who either adapt or leave the market,” said Roger Kay, president of Endpoint Technologies Associates Inc. “But none goes willingly.”

To contact the reporters on this story: Olga Kharif in Portland at okharif@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net

To contact the editors responsible for this story: Robin Ajello at rajello@bloomberg.net; Sarah Rabil at srabil@bloomberg.net James Callan


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