Uber

Uber, headquartered in San Francisco, is internationally known for its ride-booking and ride-sharing application (or app) for smartphones. Uber forms part of what is called the disruptive, sharing economy because it permits people to "bypass traditional businesses"in this case, the taxicab industryand "to rent or buy from one another instead."

Canada's taxi industry regulations, generally set by municipalities across the country, are strict and costly to fulfill. The commendable goal of these regulations is to protect the public interest and, as part of that mandate, regulators enact rules which impose insurance requirements (so as to protect the customer and others should the cab be in an accident) as well as taxi price levels, vehicle safety standards, and minimum service requirements.There are also limits on the number of cabs permitted on the road through taxi licenses (also known as plates or medallions), which a cab must have to legally operate. While prices have dropped recently, plates at their peak in Toronto could run up to $360 000.

Uber's business model is constructed on Uber's claim that taxi regulations do not apply to it because it is not a cab company but a transportation service company that simply connects passengers to drivers.This helps to drive down costs since, for example, Uber operators do not incur the significant costs of a taxi plate.And lower costs have, of course, contributed to Uber's phenomenal popularitythe company claims 40 million active users a month worldwide.

When Uber began operating in Toronto, the City pushed back against Uber's position that it was not bound by rules governing the cab industry. Tracey Cook, executive director of Municipal Licensing and Standards for Toronto, stated at a 2014 press conference that Uber was operating "without lawful authority" and that its unregulated status potentially endangered the public.In this regard, she referenced allegations of lack of driver training, inadequate insurance, and price gouging due to its unregulated fare structure.

Uber's approach to the Toronto market was seemingly brash: enter the market and then openly operate "outside the law" while hoping to force a regulatory change.This is called regulatory arbitrage and is described by law professor Brishen Rogers in this way:

You follow some rules and try to skirt around some others and you break some others. And you know, Uber's calculation, and I have to sort of admire their chutzpah in some ways, is simply that their product is good enough that sometimes if they break the rules they'll be able to change the rules because the consumers will want them to be in the city so badly. And that has happened.

It would appear that Uber's gambit is producing results. This is because the City of Toronto has rolled out Uber-friendly regulations. According to Sunil Johal,

UberX drivers will now be required to file documentation, such as criminal record checks and insurance certificates, directly with the city rather than with Uber as had been the case previously, and obtain a city license. But Uber drivers won't be required to have cameras in their car, undertake training courses or have rates regulated by the city (other than a small change to the base fare).

There are also new rules that have relaxed somewhat the regulation of taxis.

Though other cities will likely follow suit and permit Uber to operate according to a restructured set of rules, Uber's problems are not behind it. According to Chris Mills, "Despite a $60 billion valuation, Uber has yet to turn a cent of profit, it's lacking any senior leadership, [and] cash is being burned through at an alarming rate ...."As well, Uber has been accused of fostering a toxic work environment, including sexual harassment and discrimination,homophobia, as well as threats of violence and sexual assault in the workplace.In June of 2017, Uber released the results of an internal investigation into such allegations led by former U.S. Attorney General Eric Holder. The report was critical of Uber's corporate culture and included a recommendation that Uber "reformulate its written cultural values because it is vital that they reflect more positive and inclusive behaviors."Under this recommendation, the report included a statement that Uber "eliminate those values which have . . . been used to justify poor behavior" including values represented by the following slogans: "Let Builders Build, Always Be Hustlin', Meritocracy and Toe-Stepping, and Principled Confrontation . . . ."On a related front, a European commentator has observed Uber's failure to present itself "in a stable and socially responsible way."In light of these and other serious matters, Uber's founder and CEO, Travis Kalanick, was replaced in August of 2017.

Critical Analysis: Uber's business model of refusing to follow rules governing the taxi industry has been described as either "disruptive or illegal, depending whom you ask."Which view do you hold and why? Is it an acceptable business practice to break the law? What are the ethical considerations of doing so and how might this impact or reflect corporate culture?