Despite efforts, uberX still not allowed in St. Louis market

| Contributing Reporter

Ride-sharing company Uber has proven to be one of the fastest-growing businesses in the country with a valuation over $50 billion just five years after its inception—but you won’t see its usual fleet in St. Louis.

Despite becoming one of the most dominant transportation services in most of the nation, and in international hubs, it has been largely barred from operating in St. Louis, a landmark American city.

Most notably, uberX, the company’s cheapest riding option, is entirely shut out of the St. Louis market, and Washington University students have taken notice.

“I love the idea of bringing uberX here. Uber BLACK is already here but it’s too expensive. [uber]X is much more accessible, allowing many more people to use it,” junior Neil Stein said.

UberX seeks to connect people looking for a ride with drivers who are available in real time via an app on their smartphone.

St. Louis County and Yellow Cab, a local taxi giant, has tried to replicate the app’s success by creating its own application for ordering cabs. The reviews have been mixed.

Freshman Eva Fine used the app to call a taxi just last week.

“I used the app, and it worked fine. I got a taxi within a reasonable amount of time and made it to my destination, but it was not nearly as streamlined, and it lacked the helpful features I can usually find when I use uberX,” Fine said.

A majority of uberX drivers are either working part-time or using the money they earn as a means to pursue another career, whereas in more traditional taxi companies, drivers tend to be full-time, career cab drivers.

In accordance with their 21st century approach to transportation, uberX is much less heavily regulated than typical cab companies and is much more interactive on the part of the consumer, allowing riders to instantly rate their drivers.

Olin Business School professor of economics and strategy Glenn MacDonald noted the effectiveness of the company’s business model.

“Uber is literally saying, ‘Let’s let the customers rate this driver in real time, on their actual performance, which is what we actually care about,’” MacDonald said.

The pause on Uber’s growth in St. Louis is largely due to the existing taxi companies’ insistence that uberX must comply with all the same regulations ordinary cab companies follow.

In a recent blog post preceding a vote by the Metropolitan Taxi Commission (MTC) on whether or not to allow uberX to enter the market, St. Louis County and Yellow Cab Company pleaded with the commission to make sure no company enters the taxi market without being subject to certain regulations.

In the blog, the president of St. Louis County and Yellow Cab writes, “In my opinion, transportation network companies (TNC’s) should be subjected to the same rules that we have followed to the letter since the inception of the MTC.”

The company then goes on to lay out which rules they believe need to be in place in order to regulate any cab company in St. Louis, including FBI background checks and random drug testing.

In response, Uber has created an online Web page outlining the numerous ways it combats the claims of the traditional cab companies. It insists that the uberX business model is, in fact, a safer and more efficient alternative to a regular taxi ride.

In its rebuttal, Uber states one of its many safety features to be “24/7 feedback loop and customer support ensuring that riders and drivers are constantly rated based on quality and service.”

Many, however, are not convinced that local cab companies are reacting purely in the name of the public good.

“The cab companies here in St. Louis are a regulated monopoly, so they act like one. Cabs are expensive; there isn’t much competition to discipline things like poor driving, or grumpy cab drivers or even dangerous behaviors. They’re protected by their monopoly status,” MacDonald said.

Freshman Hannah Cohen recognized the inability of such companies to regulate drivers in real time when she took a cab ride via St. Louis County and Yellow Cab earlier in the year.

“It was pretty clear that the driver overcharged us with no explanation, and I had work to do, so I didn’t feel like arguing it out or filling out the necessary paperwork, so I had no means by which to alert anyone else of the problems with my experience,” Cohen said.

MacDonald added, “The reaction you’re getting [from the cab companies] is precisely what you would expect. Of course when somebody comes in and says, ‘We can do a better job, and take all your customers’…they’re not happy about it.”

Whatever the motives are behind their effort to stop the growth of uberX in St. Louis, local taxicab companies are using public policy to try to maintain the status quo.

MacDonald, however, sees this use of regulatory power by a monopoly as a typical approach by an incumbent to hold on to its power.

“[The rise of uberX] is a perfect example of a market regulating itself far better than a regulator can,” MacDonald said, arguing that better technology lowers the need for government regulation.

As uberX continues to outpace the growth of traditional cab companies by huge margins, the future of transportation in the St. Louis area is uncertain.

The most recent vote on the entrance of uberX into the St. Louis market was postponed from July 29, 2015, to a later date to be determined—a setback for the young business.

Editor’s note: Both Uber and St. Louis County and Yellow Cab did not respond to requests for comment before the time of publication.

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