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Uber's rise threatened to kill taxicabs. Why its New York City deal signals surrender.

USA TODAY logo USA TODAY 3/27/2022 Chris Woodyard, USA TODAY
A passenger gets into a taxi in New York. Uber has reached a deal to include New York City taxi cabs on its app, a move that will help to boost driver availability for passengers and open up a new set of customers for cab drivers. © Mark Lennihan, AP A passenger gets into a taxi in New York. Uber has reached a deal to include New York City taxi cabs on its app, a move that will help to boost driver availability for passengers and open up a new set of customers for cab drivers.

It’s the old saw: If you can’t beat ’em, join ’em. 

In this case, it’s Uber and the taxi industry.

Uber Technologies’ deal to display New York taxis on its app, one that could be repeated in cities across the country, represents a startling change from how the company was envisioned when it burst on the scene as the bitter enemy to taxicab owners and drivers.

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“Everything old is new again,” said Bhairavi Desai, executive director of the New York City Workers Alliance, a group that represents 25,000 taxi drivers and ride-hailing drivers.

The new arrangement could offer wider availability of ground transportation for New Yorkers, though it seems unlikely to do much to cut fares.

Though Uber had been building toward this moment, the metamorphosis is sure to surprise many once-frequent Uber users. 

Remember, this is the company that began as a phenomenon. It grew by loping past regulatory barriers with a technology-driven model that delivered startling low rates and could turn just about anyone into a part-time cabbie.

It was “very clear their goal is to destroy the taxi industry,” Desai said.

But lately, it's been a tougher slog for Uber. Amateurs who flocked to become Uber drivers using their own cars disappeared as the coronavirus pandemic took hold, apparently deciding the risk of catching the virus from a rider didn’t match the extra scratch they’d earn from their time behind the wheel. The surge in gas prices hasn’t helped either.

Now Uber is redesigning itself as more of a full-service provider, whether it is food delivery through Uber Eats or as a one-stop shop for all sorts of ground transportation.

Instead of roots in ride-hailing, Uber talks about being in the “movement” business.

“We’ve gone from connecting rides on 4 wheels to 2 wheels to 18-wheel freight deliveries. From takeout meals to daily essentials to prescription drugs to just about anything you need at any time and earning your way,” it says on its website.

Which brings us back to taxis.

What just happened?

In the nation’s largest taxicab market, Uber struck a deal to list all of the ubiquitous yellow cabs prowling the streets along with its own Uber drivers on its app. That will give riders more choices when they need a lift.

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Video: Uber expands on taxi strategy by adding New York City's yellow cabs to app (Reuters)

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Why is Uber doing this?

As Uber has offered more services, like delivery, it also needs more drivers and vehicles, which have been in short supply.

“As Uber is hemorrhaging drivers and rides across the country, it is turning back to yellow cab drivers to revitalize their numbers,” Desai said.

Uber itself did not respond to a request for comment.

What’s it mean for passengers?

More availability. The arrangement means anyone who needs a ride will be able to request a taxi or an Uber pick-up on the same screen. People will still be able to flag down a yellow taxicab. But it should make finding a ride easier.

It's hard to see how the integration could lower fares, however.

What’s in this for the taxicab drivers?

The New York taxi business had been a disaster for many drivers. Many had taken out loans to buy “medallions,” the official emblem required to operate in the nation’s most lucrative taxi market, only to see their business undercut by ride-hailing services in recent years. Medallions can cost up to $1 million. Also, cabbies had to face rules set up by the city’s taxi commission, including that limited the number of years they could operate their vehicle before having to buy a new one, Desai said. Uber drivers haven’t faced as severe a requirement.

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a person standing in front of a car: Uber is redesigning itself as more of a full-service provider, whether it is food delivery through Uber Eats or as a one-stop shop for all sorts of ground transportation. © Damian Dovarganes, AP Uber is redesigning itself as more of a full-service provider, whether it is food delivery through Uber Eats or as a one-stop shop for all sorts of ground transportation.

Has Uber done this before?

Uber makes no secret of its desire to have closer ties with the taxicab industry in places where it makes sense. It has already happened in Spain, Colombia and other countries. If the New York deal works, expect it to be replicated across the U.S.

What’s the new threat from Uber?

Some fear that it could eventually give Uber the upper hand because of its technology.

Paris Marx, who hosts the “Tech Won’t Save Us” podcast, said Uber will be able to use its access to taxi operations to download mountains of data about taxi operations that it can then use to its own benefit.

“When you look at what Uber has done in the past, it has been very specific about collecting data on transport mobility partners in cities where it operates so it has a leg up on those transportation providers,” said Marx, who expects to publish his book, “Road to Nowhere: What Silicon Valley Gets Wrong About the Future of Transportation” later this year.

Uber will potentially use taxicab movement data to maximize its own business. But for the moment, Marx concedes it’s probably an experiment. If it works, Uber could try to bring the same model to other U.S. cities.

What happens next?

Uber has to perfect the integration of the taxicabs onto its app. It is working with two companies that have the taxicab apps Curb and Arro. 

Will it all work? We'll see.

Contributing: Associated Press

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This article originally appeared on USA TODAY: Uber's rise threatened to kill taxicabs. Why its New York City deal signals surrender.

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