Chaos Erupts in Uber v. Taxi Drivers Turf War in Barcelona

The competitive advantage rideshare giants have over local taxi firms is their ability to burn cash, as investors eagerly subsidize each ride.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

A fresh flash point has broken out between Uber and the highly mobilized taxi drivers of one of its most febrile markets, Barcelona, the capital of Catalonia. A two-day taxi driver strike this week, called to protest against the number of rideshare vehicles on the streets and failure to enforce national regulations that are supposed to limit private hire vehicle numbers, turned ugly on Wednesday as protesters attacked rideshare vehicles.

It’s the latest escalation in a turf war that dates back to 2015, when Uber first arrived in Barcelona. The message from the 2,000 protesting taxi drivers, some of whom had converged on Barcelona from other Spanish cities, was clear: Uber and other app-based rideshare companies such as the Spanish firm Cabify are destroying the taxi industry with impunity. And these taxi drivers will not surrender without a fight.

In Spain the central government and market regulators are largely lined up in the rideshare firms’ favor. The spark for the latest round of protests was a decision by Spain’s Ministry of Public Works to block attempts by Barcelona’s City Council to ensure a previously agreed ratio of 30 taxi licenses for every authorized ride-hailing car is honored. The current ratio in Catalonia stands at 6.7 to 1.

Many Spanish taxi drivers are incensed at how the established national ratio, designed to limit the number of rideshare vehicles, is not being upheld. The rideshare giants have been buying up licenses from other operators to ramp up their presence. There’s also frustration at how rideshare firms are able to operate more cheaply and under less onerous regulations, while also paying little, if anything, in taxes.

Uber and Cabify vehicles — endearingly termed “cockroaches” by local taxi drivers for their black color — were the main target of yesterday’s violence, which eventually led to a temporary suspension of all rideshare services in the city, including Cabify and Uber.

Uber has been back on the streets of Barcelona for just four months following three years of absence due to regulatory issues as well as the hostile welcome it received from local taxi associations. If events in the last 48 hours are any indication, that reception is likely to grow even less friendly in the months to come.

Besides vandalizing Uber and Cabify cars, the protesting taxi drivers also brought traffic on Barcelona’s main orbital road to a standstill. They even threatened to block key city infrastructure controlled by the Ministry of Public Works, such as the port or airport, if the government refused to unblock Barcelona City Council’s anti-Uber legislation.

“We demand an immediate commitment that translates into real action in the next few days. Otherwise, we will bring the country to a standstill,” Alberto Alvarez, spokesperson for Barcelona’s biggest taxi driver association Elite Taxi, said on Wednesday. On Thursday afternoon, the Ministry of Public Works appeared to blink by announcing that it would lift its suspension, although the final decision now rests with Spanish courts.

Elite Taxi has been a thorn in Uber’s side for some time. Last year, the taxi drivers’ association took Uber to the European Court of Justice (ECJ) over its Peer-to-Peer service UberPop, which hooked up nonprofessional, unlicensed drivers with riders. It was a David versus Goliath case, and it was David who came out on top. Not only did the ECJ rule in the taxi firm’s favor but it also declared that Uber was a transportation business, not just a technology platform.

Uber has faced legal challenges in myriad locations across Europe. It was temporarily banned from operating in London last year after being accused of a string of failures over passenger safety. It was also banned from operating in Denmark, Hungary, and Buglaria. France, the Netherlands, and Finland have also banned UberPop at some point over the last five years.

In 2017 Uber was banned in Italy after a Rome court ruled that it represents unfair competition for traditional taxis. Taxi drivers complained that it has an unfair advantage because, unlike normal taxi drivers, its drivers can purchase licenses in small towns where they cost less, and use them to work in cities.

The biggest competitive advantage rideshare giants like Uber and Lyft have over the local taxi firms resides in their ability to burn cash at a blistering rate, where investors eagerly subsidize each ride. Taxi companies have a hard time competing with these investor-subsidized prices because they cannot afford those kinds of losses if they want to stay in business.

Many local authorities are still not sold on the benefits of letting a handful of cash-guzzling Silicon Valley giants wipe out taxi firms that pay through their nose for licenses, taxes, social security, and insurance, and by and large follow domestic laws and regulations, only to replace them with a global oligopoly that pays virtually no taxes and only follows regulations when it suits them.

As recent events in Barcelona and other cities have shown, many taxi drivers are prepared to fight tooth and nail to keep their livelihood in tact. But in doing so, they risk alienating the very people they need on their side — their customers. By Don Quijones.

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  27 comments for “Chaos Erupts in Uber v. Taxi Drivers Turf War in Barcelona

  1. William Smith
    Jul 27, 2018 at 1:53 am

    I think the whole world needs to take “dumping” more seriously. This is a clear case where a good or service is being subsidized so it can be sold at below realistic cost. Such dumping causes untold misery and can be used to decimate local businesses. Then when the local businesses die, the overseas parasite jacks up the prices and everyone loses. It is a well known and disgusting tactic which governments all over the world need to actively fight against ( yes: with tariffs!). Whether a foreign government or “investors” fund this despicable practice doesn’t matter. I also note that they use [modern day] slave labor to help further “fund” the dumping practices. The buck stops with the local governments to stop this type of behavior.

    • annette
      Jul 27, 2018 at 8:51 pm

      just like what what was allowed to happen between China and the rest of the world.

  2. L Lavery
    Jul 27, 2018 at 1:53 am

    Perhaps it’s time governments and such rethought what they tax. At present they tax work, investment and trade (via income, corporation and sales tax (= VAT on this side of the pond)). Whatever it is you tax the less of it there will be once tax is imposed, unless it’s something like land, which no one is making any more, nor has anyone found a way to off shore it. Perhaps they ought consider Land Value Tax (or Georgism).

    BTW. Land means nature, so includes stuff like the electromagnetic spectrum. We wouldn’t tolerate someone claiming ownership of some bandwidth in perpetuity just because they were the first to use it, would we?

  3. Jaco
    Jul 27, 2018 at 2:14 am

    Was Just in the Castelldefels a week ago and this article is hugely accurate. There’s seething anger in the eyes of local taxi drivers anytime Uber is mentioned. I saw it for myself without being aware of the current struggle.

    • annette
      Jul 27, 2018 at 8:54 pm

      Same in Costa Rica. The candidate for governor promised to eliminate the threat of Uber and then when he was elected, promises broken. I was sojourning there while the protests were going on.

  4. Jon
    Jul 27, 2018 at 3:37 am

    In my personal experience, the undercutting price thing is a red herring. I would not use a local taxi now unless my phone battery was dead and the buses weren’t working. Not because they cost more, but because I’m tired of having to be so on guard when you take one to make sure you’re not getting scammed.

    Even in London, where the black cabs are the better of the lot, I have had drivers try to take me through choke points at rush hour when I know (being a local) more direct routes. Oh, and how their card machine is always broken if you have a foreign accent (they prefer cash…).

    Or in Bologna, where you cannot hail one of the numerous cabs driving around the city. You must call a taxi company. One of the numerous cabs then promptly stops to pick you up and charges you a phone booking surcharge.

    And let’s not even start on Kuala Lumpur. Uber/Grab have been transformational there.

    I’m sure there are some honest hardworking local taxi drivers out there who are really suffering through this disruption, but from this customer’s perspective, much of the noise being made by the taxi industry appears to be anger that their cosy tourist scamming cartel is being broken up.

  5. Tim
    Jul 27, 2018 at 4:13 am

    In Spain, as in most countries, taxi firms have to comply with some pretty stringent regulations to protect the public.

    In general, regulations fall into three categories:

    – Vehicles must have roadworthiness tested to standards higher than those applying to private cars

    – Drivers must have licences at public service level, often including criminal records checks

    – Insurance has to be more comprehensive.

    On the latter, most private motorists’ insurance policies exclude ‘plying for hire’. So if you carry a paying passenger, it’s likely that you invalidate your insurance cover.

    The objection to Uber – or, technically, its drivers – is that they evade these regulations. If all Uber drivers were required to comply with all of the same rules that apply to taxi businesses, that would be fair competition.

    That’s what the authorities need to do. In other words, prosecute any driver taking fare-paying passengers without complying with public service vehicle regulations.

    Unless and until that happens, the taxi drivers’ objections to ‘ride-sharing’ are valid.

    Finally, the term ‘ride-sharing’ is typical corporate euphemism. ‘Sharing’ implies generosity, not profit. If you ‘share’ a journey with a friend, you don’t seek to profit from it.

    • phathalo
      Jul 27, 2018 at 10:57 am

      Many municipalities have successfully enforced regulations on Uber drivers and cars without much fanfare.
      This situation is 90% taxi companies fault. Riders choose uber et al not because they are that much cheaper but they are more convenient and predictable than a taxi.
      No rider would care that much would shows at their door (taxi or uber) if they can book one from their phone, pick a time, know in advance how long and how much it will cost them and choose if they want to share the ride with other riders or not and not having to worry about fare scams, no cash, or dangerous driving by a hurried taxi driver.

  6. Nicko
    Jul 27, 2018 at 4:56 am

    In ten years (or less) we’ll have automated taxis. Those taxi drivers are only delaying the inevitable.

    For example….Tokyo is deploying automated taxi fleets for the 2020 Olympics. The AI revolution is afoot.

    • Prairies
      Jul 27, 2018 at 10:27 am

      There isn’t a single AI unit on the road today, and the taxi industry is being under cut TODAY, not 10 years from now. They are complaining about today’s problem. They could deregulate the taxi industry completely, if Uber is allowed to skirt the rules then everyone else should be able to.

      Otherwise apply the rules evenly to all taxi/ride share services, why are tariffs seen as a good thing when applied to “others” but you can’t apply rules to your California Cancers in the tech bubble.

    • Rates
      Jul 27, 2018 at 12:54 pm

      I will be surprised if it works. My guess is the complexities and possibility of losing face will cause the government to rethink.

      Self driving cars are still very far away despite what the boosters say.

  7. MC01
    Jul 27, 2018 at 5:38 am

    The European Parliament has issued several reports about Uber and what they call Transportation Network Companies (TNCs). There are some interesting conclusions.

    The first is that meither the EU nor the individual member States have made any provisions for TNCs in their existing legal framework and are operating on a case-by-case basis. The European Parliament has called for this issue to be addressed since 2015 but it’s like talking to a pair of stones, the two stones being Uber and the taxi companies.
    The second is that the main insurance problem is not that Uber drivers are uninsured to carry paying customers, but that they are usually seriously underinsured. As most European countries have little financial provision for underinsurance, this is yet again another case of an issue left open by legislators which both sides exploit to their ends.
    The third is a “challenge to taxation”. As my father used to say after paying his tax bills “The State struggles even to take my money”. It’s hard to tax Uber rides because no provisions have been made yet under each State’s tax codes.
    Finally there’s a very interesting passage accusing taxi companies and cartels to seek “substantial monopoly rents” through the “exploitation of scarce taxi licenses”.

    The way I see it Uber is merely a symptom and not the cause. They are exploiting massive loopholes left by legislators and regulators who then scramble to patch them up when pressured by lobbyists and their allies in the media. Street protests are merely an unpleasant corollary.
    But there’s zero political will to address this situation: banning TNCs outright may invoke the ire of the EU as TNCs are considered providers of services in the Digital Single Market and as such legally protected. Regulating them may cause taxi companies, their media allies and the voters they command to react angrily as they know very well they’ll sink if confronted with anything similar to competition.
    So you go after TNC drivers and customers, a classic case of hoping for the problem to become untractable when somebody else will be in charge. I’ve seen this many times in local politics and it works until it doesn’t, or the mayor wants to run for yet another term and the problem blows right in his face.

  8. Mike T.
    Jul 27, 2018 at 7:38 am

    I have little sympathy for the Taxi/Cab companies in the US. My worst Taxi/Cab experiences have all been here…cabs that don’t have working air conditioners when picked up from Reagan and it’s 95f and humid as hell in DC. Virginia cabs that are cash only at Reagan and the airport only allows you to go in the ranked airport cab even if it is a jalopy with +300,000 miles and a shot suspension that would make just about anyone car sick with its wallowing motion. Don’t even ask about the condition of the interior of these cabs, the back seat of your local police or state trooper car is far superior.

    Sorry but most of these Taxi/Cab companies need to become customer focused or go out of business.

  9. Mean Chicken
    Jul 27, 2018 at 7:49 am

    “In Spain the central government and market regulators are largely lined up in the rideshare firms’ favor.”

    “paying little, if anything, in taxes.”

    Begs the question if Germans are financing the Spanish government then why not let them (germans) chip in a little to help the investors?

    And BREXIT is a bad thing, eh….? Not sure exactly what “London”, from an offshore entity perspective, contributes to the British economy but my 1st guess is debt.

  10. Surf@jm
    Jul 27, 2018 at 8:03 am

    Welcome to capitalism boys…….

    You buggy whip manufacturers never learn, do you?……

  11. Steve O.
    Jul 27, 2018 at 8:33 am

    What always surprises me is the taxi companies claiming they have superior vehicles and drivers. I have to take a taxi or Uber every Monday and Friday since I travel for my work. In almost every case the taxi is dirty, old and has mechanical problems (loud worn rear differential, or exhaust system leaking). At least 50% of the time I have to request that the driver turn on the air conditioning (I’m in Tampa and Miami) since they are trying to economize and don’t care that I’m sweating in the back. They drive way too fast and are very careless. Almost every Uber driver has a new or near-new car, they are friendly and the a/c is on since they know it’s hot out. Taxi companies need to realize they provide a lousy service.

  12. Augusto
    Jul 27, 2018 at 9:20 am

    Uber and the like are simply blowing away a cartel that conspires with government to extract hidden taxes (license fees, inspection fees, etc…) in return for monopoly profits. Their model is fat, inefficient, and ripe for the picking, that’s why investors put money in. As to social good, the average rider has been pressured for years to tip or make up for poor taxi wages while owners and bureaucrats rake it in. A lot less tip pressure with Uber. I don’t mormally use Uber, but it has sure made taxis more competitive here. I’ve noticed cabs are cleaner and the drivers better turned out, than the frequent dirty, ill-Kempt, surly rides of the past. Taxi companies can shape up or join wagon drivers and blacksmiths as far as I’m concerned.

    • Frederick
      Jul 27, 2018 at 10:30 am

      I’ve never used Uber but I stayed with a bunch of Duke University engineering students a couple years ago and they were all singing the praises of it They told me that they never use taxis at all

  13. Chester Hazelwood
    Jul 27, 2018 at 10:11 am

    Can Uber really keep losing around 5 billion a year? I’m sure their expenses are going up. I’m noticing more of their avertisments begging for drivers. I’m thinking they’re spending around $1000 per new driver. Seems like a scam to me. Shouldn’t they have a whole fleet of happy drivers by now?

    I remember a time when capitalism was about making a profit.

    This is a story about sucker investors, sucker drivers, and spoiled customers that want Santa Claus to come give them a ride in his slay. A collection a pitiful human beings.

    I’m tired of hearing about this company myself.

  14. wkevinw
    Jul 27, 2018 at 11:30 am

    The Taxi organizations, like many similar ones, e.g. unions, are a mixed bag. These organizations (at their best) self-police quality and safety issues, that the companies might not. However, they also form artificial barriers to entry that are destructive.

    The taxi industry needs reform, and ride sharing is a good disruption to do that, but Uber and Lyft should not be allowed to come in and break all kinds of laws- even if many of the laws are bad.

    The government, again, is failing at its duty to “sensible regulation”. That’s the issue.

  15. Insta
    Jul 27, 2018 at 12:08 pm

    Don,

    I really enjoy your writing and wanted to say thank you for teaching me a new word, ‘febrile’.

  16. R Davis
    Jul 27, 2018 at 12:11 pm

    Australia:
    Link Community Transport – is a charitable organisation that supports the aging population, people of all abilities & their carers, by providing life enriching services & offering effective, accessible & flexible social & home support.
    Link has been a trusted service provider for 40 years & has helped thousands of Melbournians live a better life & remain independent.

    Wow !! :-) … is this TRUE ?? :-) … COMPANIES DONATE MONEY to provide this service for the need in the community – yes they do.

    But isn’t this – donated money TAX DEDUCTIBLE ??
    ( Okay, who cares if it is tax deductible as long as it is doing good … !!)
    And these are the operative words right – DOING GOOD –
    NO – we need to ask – DOING GOOD FOR WHOM – ??

    I am in a wheelchair & I need transport for my power wheelchair & myself & sometimes a carer – to attend healthcare appointments.
    So far I have booked 7 appointments with LINK –
    * the first 3 they lost & accused me of not booking them.

    I HAD TO RESCHEDULED which means months into the future.

    * the 4th booking a driver turned up 1/2 an hour late – it was a very important appointment – lucky I feared being late & booked the ride early – I was only 10 minutes late & made the appointment – just.
    * the next 3 bookings were cancelled by LINK citing a shortage of drivers & I had to rescheduled – again – months more to wait.
    * a recorded message answers the phone & they never return your calls.

    Is LINK actually a tax evasion scheme & maybe even a money laundering facility for black money ??

    So I should call a private cab company – OKAY.
    Only that I require a 1/2 price taxi card to use this service – a GP needs to apply for me & most GP’s are recetent to do so & the recipient of the card needs to be severely disabled to be eligible – according to the Transport Services Commission – albeit there are plenty of able bodied seniors with 1/2 price taxi cards jumping in & out of taxis – a case corruption no doubt – hey.

    So I ask you this – are we not in the throws of a PRIVATISED SERVICES SYSTEM ??
    There are many persons who would be delighted to utilize a private & full pay taxi service to get them & their wheelchair & mobility scooter about.
    ATTENTION PEOPLE THERE IS BIG MONEY TO BE MADE HERE !!
    Government need not concern themselves here.

    Or are the governments, State & Federal protecting TAX EVASION SCHEMES & MONEY LAUNDERING ??

    BIG QUESTION HERE :

    Why can I not just ring a for a cab with disabilities capacity & PAY
    Yes , absolutely, FULL PRICE.
    if the bloody thing will get me to my appointments & back why not ??
    But also –
    In fact there are tens of thousands of disabled people in Victoria alone who have no means of transport – ZIT – ZERO – DIDDLY SQUAT

    • R Davis
      Jul 27, 2018 at 12:16 pm

      Now – I wonder exactly what this UBER sting is about ??
      Nothing legit I bet.

  17. R Davis
    Jul 27, 2018 at 12:21 pm

    I almost forgot –
    There are much better & more costefective ways to AVOID PAYING TAXES in today’s world.
    There are also much better & more lucrative ways to launder black money.
    Than to screw up the lives of disabled members of society.

  18. normansdog
    Jul 28, 2018 at 6:15 am

    Many of the comments here praising Über’s quality of service forget that (as one commentator pointed out) Über is loosing shed loads of money – it has or had a policy of financing new cars for its drivers at loss making rates, and charging loss making fees. When the local taxis are put out of business then Über will raise prices massively OR also go out of business thus rendering the taxi business obsolete.
    I really can not understand why anyone thinks that Über is in any way a sustainable business – total madness.

  19. sierra7
    Jul 28, 2018 at 9:50 am

    So, is the ordinary insured driver subsidizing Uber/Lyft et al in their drivers not carrying the required coverage for operating their automobiles as a commercial enterprise; ie, transporting paying passengers?
    As we are for the increasing accidents caused by drivers faces implanted in their smart phones while driving?
    As a real old guy watching my children/grandchildren turning easily towards Uber/Lyft et al to get the to and fro on weekends I’m amazed how easily they just get in the “strangers'” cars to whisk them to their destinations.
    I also have an older relative who lives in SF, never driven, depended on SF taxis to get from here to there and when discovered the “new way of transport” will never use the taxi service again. Time an time again in the attempt to get taxi service to that part of town (a very good quiet part) promises were broken and broken again or a, “no show”. Now all that individual does is call and has no problem getting that ride from Uber/Lyft et al.
    As long as there is “free” money for these new services to burn as they tear old notions of society apart the situation with the taxi/Uber et al will continue. If money becomes “tight” again don’t bet on their total success.
    Old fashioned taxi services are a local or regional monopoly. Sometimes those “monopolies” get too greedy or complacent. Disruption in the business world is more or less, “good for business”.

  20. David
    Jul 28, 2018 at 1:41 pm

    Interesting about cab companies and local drivers. There are no local drivers. At least in Canadian cities.

    Every cab company is exclusively ethnic. Generally Arab or Indian/Pakistani. Local Canadians have been completely pushed out of the business in the last two decades.

    These rackets can burn for all I care.

    Uber is far superior.

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