NEW YORK—After clashing with taxi regulators, tech company Uber announced Tuesday it will shut down its yellow taxi hailing service, for now.
The service allows taxi riders to hail taxis through smartphones, making for easier connections and expanding taxi service outside of the Manhattan Central Business District—which most drivers stay within—because drivers could be guaranteed a return fare through the application (app), according to Uber.
But existing contracts that the Taxi and Limousine Commission, which governs the city’s taxi industry, has with payment system providers prohibit taxi app hailing technology, according to the commission.
Officials have said they want to open the market to app developers and are working on changing the rules with a draft plan available as soon as November (the contracts expire in February).
“We are committed to making it as easy as possible to get a safe, legal ride in a New York City taxi, and are excited to see how emerging technology can improve that process,” said David Yassky, commissioner of the entity, in an emailed statement.
Travis Kalanick, co-founder and CEO of Uber, said in a blog post on the company’s website that in a beta test of the yellow taxi service 160 participating drivers made more money than usual, with one driver making $168 extra in one day.
But “demand far out-stripped supply,” he said. “We did the best we could to get more yellows on the road but New York’s TLC (Taxi and Limousine Commission) put up obstacles and roadblocks in order to squash the effort around e-hail, which they privately have said is legal under the rules. We'll bite our tongues and keep our frustration here to ourselves.”
Other taxi app companies such as Hailo and GetTaxi have worked with the commission in developing new laws but Uber has not, instead criticizing the commission. Yet Kalanick said they hope to come back into the city next year after the regulations are changed.
Uber operates legally in other cities such as San Francisco but has run into similar trouble in Washington, D.C.
Uber still operates a similar application for the city’s black cabs, which are only legally allowed to pick up customers through dispatch.
Alfred LaGasse, CEO of the Taxicab, Limousine & Paratransit Association, who has been critical of Uber and other “rogue apps,” said in a statement that Uber should obey regulations.
“The regulations aren’t there as suggestions,” LaGasse said. “Yet in almost every market where Uber operates, it acts as if rules don’t apply to them. That’s bad for public safety, it’s a poor business model, and I believe that elected officials across North America are beginning to understand this.”
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