Last December Legislative Yuan of Taiwan passed article amendment of Public Road law to raise fines on Uber for 700,000USD per violation. Since its enactment on January 1st 2017, Uber has been fined over 10 million USD. With no clear resolution in sight, Uber announced its suspension of service and operation for Taiwan market on February 10th.
It is clear that Uber violates laws in Taiwan on three accounts: sales tax evasion, no insurance for passengers and unlicensed drivers for passenger vehicles. However, the big picture is: is this law helping solve the program and what approach should government and industry take towards disruptive innovation?
Uber has met challenges in several cities around the world. Uber disrupts taxi industry by using algorithm to match its drivers with passengers on a cheaper and often more flexible rates. Overtime it creates a direct transaction model between drivers and consumers by cutting the middleman, which is licensed taxi companies.
In some cities and countries where Uber are legalized, its platform incorporates taxi cars. In Taiwan Uber did not do that in the first place and therefore is seen as threat to taxi fleet companies. Taxi drivers feel their jobs are taken away with Uber’s technology. In a over-saturated market such as Taipei, passengers are tech savvy and opt for better riding experience by siding with Uber.
What is the implication of Uber’s temporary suspension in Taiwan? First, it sends a negative message to international community that Taiwanese government is unfriendly with innovation. With President Tsai yin-wen’s vow to promote innovation, such a strong-handed measure seems inconsistent. This could discourage other innovative companies from entering into Taiwan. Secondly, the heavy fine does not help taxi drivers nor local ride-sharing App startups. Individual taxi drivers are mostly registered with licensed fleet companies. There are approximately 100,000 licensed plates issued by central government and yet only 80,000 are active. Clearly, supply is more than demand. Passengers choose Uber over taxi for user-friendly experience and technological conveniences.
What Uber can do before it reaches impasse is that: proactively negotiate with government by offering concrete plan for improvement and how to deal with tax and insurance, open up its vast transportation data to help government devise better and computer-assisted traffic plan, provide constructive proposal in terms of how other cities work with Uber, and be a good corporate citizen by engaging in conversations with taxi companies.
Uber shouldn’t be seen a threat to local industry and government shouldn’t use astronomical fines to kill off competitions. The so-called platform technology like Uber and Airbnb provides new territory for digital economy opportunities with which disruptive businesses can be created and thrive. De-centralized, individualized and platform-enabled businesses will only become more and more common. The artificial intelligence, big data and robotics behind these platforms will eventually replace many man-handled jobs.
As a technologist and legislator, I am sad to see Uber suspended. I believe consumers deserve freedom of choice and in a free market decisions should be made by consumers not by government’s interference. If a law enables freer competition and regulates bad practice, it is a good law; yet if a law only kills off competition and protects old industry regime, it is destructive for long-term development of economy.
