a foretaste of the coming uber wars

This is a fascinating buzzfeed article about Uber’s successful encroachment into the Las Vegas market, in the face of massive opposition:

But tonight, for the first time, there were Uber cars among the limos and cabs. One picked up a fare at Caesars Palace and embarked on what would have been one of the first Uber rides in Vegas. But before it could leave the hotel roundabout, the Uber was cut off by two unmarked cars, sirens blaring. Two men burst out, ordered everyone out of the Uber, and told the driver to put his hands on the car’s hood. They were masked and wearing bulletproof vests.

They were officers from the Taxicab Authority and the Nevada Transportation Authority (NTA), and they had been tasked with stopping Uber from doing business in Las Vegas until it acquired the proper approvals from the city and county. The driver was cited and fined. Hours later, the NTA filed an injunction application against Uber in Carson City, Nevada. (In subsequent testimony before The Senate Committee on Transportation, NTA chair Andrew MacKay claimed the agency was not on scene at the sting.)


The Vegas taxi market is massive, accruing $290,354,312 so far this year, as well as heavily protected by local government in a way few, if any, others are. This is what makes it such an interesting case for looking at the playbook uber is likely to bring to future disputes:

During its ascension to ride-hail market supremacy, the company developed and stress-tested an effective playbook for entering even the toughest of markets. A combination of clashing with local governments, grassroots activism, and lobbying, it brought Uber success in cities like Portland, Oregon, which vehemently opposed it. Uber brought that blueprint to bear on Vegas as well. It entered the market without permission; it called on locals to sign a petition to the governor; it hired more than a dozen of the best lobbyists in the state to make its case. 


As on many other occasions, Uber began by unilaterally exempting themselves from existing regulatory structures:

On the morning of Oc. 24, Uber launched its UberX service in Las Vegas — apparently without permission to do so. The company didn’t have the required business license from Clark County, nor had it applied for one.

Uber claims that it didn’t think it needed to. But entering a market before it’s legal and asking for forgiveness rather than permission is a standard marker of the Uber playbook. Asked at a Nov. 25 hearing why it didn’t resolve any regulatory issues before operating, company attorney Don Campbell said to a District Court judge, “Because we don’t believe the statutes apply.” The company has long maintained that it’s a technology platform, not a transportation service; why should it need the common carrier license all taxi and limo companies require?


But this disregard for regulatory structured was actually rather suited to their new environment, characterised as it was by a “a kickback system built over decades and closely tied to the city’s tourism industry” and an obviously questionable degree of proximity between existing firms and the regulators. This goes some way to explaining the ensuing legislative battle, which Buzzfeed helpfully illustrate with this roadmap:

Astonishingly, in under two weeks, Uber and Lyft drivers have been cited 87 times by local police for “taking fares to and from McCarran International Airport without the business licenses to do so”. It’s this wilful disregard for regulatory structures, something which clearly pervades the company from top to bottom, which fascinates me about Uber (and to a lesser extent Lyft). Their emerging playbook for breaking into markets, as well as the sheer aggression they show when doing so, promises fireworks as they continue to enact their planned pivot into a global just-in-time logistics operation.