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Technology & Innovation

Uber Beats Regulatory Concern with Food Delivery

Uber drivers don’t have taxi licenses and do not pay taxes on the income earned.

Uber continues to operate “alegally,” if not illegally, in many cities across the globe; its drivers do not have taxi licenses and do not pay taxes on the income they earn.

Some governments are more bothered by this than others, and the city government of Barcelona falls into the “more bothered” category (as do some counties in Pennsylvania). But rather than leave town, Uber drivers will make food deliveries for a meager few dollars, keeping them on the road and integrating them into a larger, and more legal, economic network. 

The delivery scheme, which is operating in Barcelona as well as Los Angeles, may eventually help Uber persuade regulators to allow its drivers to carry people from point to point, explains business professor Juan Pablo Vazquez Sampere:

“Uber’s ability to transform itself by finding a new application for its existing business structure leads me to suspect this is just the tip of the iceberg in terms of its growth. Today, Uber is either illegal or ‘alegal’ in most countries. But tomorrow Uber may learn to manage an even larger number of licenses in the ‘other forms of transportation’ category than the entire taxi industry for any given country.”

Without Uber bothering the taxi industry, the new delivery service seems like a win for everyone: restaurants can expand their customer base without hiring an extra employee to make the occasional delivery; customers will get their food faster with an expanded network of deliverers; and an established business no longer feels the intrusion of an unregulated industry. 

Vazquez Sampere says that once Uber is an established and legitimate business in the delivery sector, it can use its clout to influence regulatory bodies, either to sanction its car-sharing service outright or re-regulate the taxi industry to allow for more competition. 

Read more at the Harvard Business Review.


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