by Kai Weiss
Update: Since this article was released in April 2018, Uber has been reinstated in Vienna. So you can use Uber once again. Thankfully, as the article below explains.
Vienna is truly one remarkable city. That’s all I could think as I was heading down the streets of the inner city during my evening walk just before starting to write this very article. The cathedrals, the palaces—really, all the buildings—reminding one of past centuries; the horses strutting through the streets with carriages on their back—not to forget the excellent classical music, arts, museums, and so on which are so visible during the day. And above all, this is the place where it all started: where Mises, Hayek, Menger, Boehm-Bawerk, and many other Austrians lived, worked, and taught at universities. It is way too easy to fall in love with this city, and that is exactly what happened to me when I arrived here for the first time.
But as I was wandering around past the marvelous Rathaus (town hall), I got distracted. A taxi had just stopped in front of me, and with no one around in the area but me, I was thinking for a short moment that he hoped I needed a ride, what with me seemingly looking lost instead of impressed by the same buildings I had seen hundreds of times already.
To say that I got enraged by the sight of this single taxi, at least for a second, would be an understatement. After all, just that afternoon I had opened Uber on my smartphone but was confronted with the message that “the Uber App in Vienna is currently unavailable.”
Not that I was overly-surprised. Just on Wednesday, Uber had announced that it would withdraw from the Austrian capital after having received an injunction from the Commercial Court of Vienna. Every time an Uber driver tries to give someone a ride, he will be hit with a fee of 100,000 euros—yes, that’s one hundred thousand.
The reason for this seems obvious (as it always does): after all, Uber had violated paragraph 36 (3) of the Viennese Taxi-, Mietwagen- und Gästewagenbetriebsordnung, which can be loosely translated as the Taxi, Rental and Guest Vehicle Operation Ordinance—or, more simply, the taxi regulations.
This paragraph states that picking up your customers may only happen at an official place of the rental provider and that after the ride has finished, the car would have to stop at the provider’s place again. Since Uber couldn’t prove to adhere to this rule, the injunction was just a matter of time.
Of course, the events of the last days are only another episode in the long War on Uber all around the world. Just late last year, the ride-hailing service was banned in London. When arriving in Bulgaria and Hungary, one is also surprised to find that no Uber is available, and the app is being threatened with being pulled off the market, too, in Italy, Finland, France, Spain, and the Netherlands. Fights over it have also occurred in the US, Australia, and Germany. And the European Court of Justice ruled in December that Uber would have to be considered as a taxi company in the EU, thereby having to comply with all regulations coming with it.
While all of these rulings are wrapped in supposed “violations of taxi regulations,” the real agenda is clear: the highly protected taxi industry has faced major challenges with new competitors entering the market. These competitors are much cheaper, easier to use, often quicker—and even the drivers themselves are better paid. No wonder, then, that people are dumping the yellow cab for Uber and Lyft.
It is certainly true, by the way, that these ride-hailing apps are violating existing taxi rules—and it is certainly true that it is unfair that Uber drivers don’t have to comply with those regulations while taxi drivers do. The conclusion, however, should be that those taxi regulations should be ditched as quickly as possible. Instead of forbidding new services which improve transportation immensely through their innovations, the end should be called for old and too-rigid regulations holding back taxi drivers who are unable to compete with the newcomers.
At least in Vienna, there is still hope. Uber has promised to fight back and find a solution. They are optimistic enough to write that “our service will be available in a few days,” though it’s not entirely clear how that should be possible, and protests have already taken place in the aftermath of the court ruling, both by Uber drivers themselves as well as young people who rightfully don’t understand why they should be hurt by protectionist policies only in existence because of political favoritism. When you come to think of it, just because Vienna is a city straight out of Medieval ages doesn’t mean that it can’t adjust its laws to new innovations.
Kai Weiss is a Research Fellow at the Austrian Economics Center and a board member of the Hayek Institute.