What Uber needs to counter global opposition
Ride-sharing company Uber has faced opposition from regulators and elected officials in the U.S. Now its plans for international expansion are facing headwinds in other countries as a Frankfurt, Germany, court banned Uber's low-cost service option until a later hearing determines whether the service unfairly competes with taxis.
This first nationwide ban is not the first time Uber has been ordered to stop operating in a region. In a blog post, the company said that it will continue its operations while appealing the decision. But despite the rhetoric of phrases like "you can't put the brakes on progress," Uber might ultimately have to adopt the lessons of other technology pioneers and learn to get along with regulations and not just flout them.
With a current total of $1.5 billion in funding, $1.2 billion of which was raised in 2014, Uber faces strong pressure to grow at a frantic pace and produce a return for investors. As part of the growth, international expansion has been a publicly important strategic goal for the company since December 2011, when the company announced it was "going global with big funding." Uber was clear: It wanted to move beyond enabling consumers to get rides from drivers to form a "global transportation and logistics brand."
Uber currently lists 82 foreign cities where it offers services -- including five in Germany. In its blog post, Uber called the country one of its "fastest growing markets in Europe," so a loss of opportunity there would be significant. The Frankfurt court reportedly has said that Uber could be fined $300,000 and its local employees face up to six-months of jail time for violating the temporary injunction. And yet, Uber said that it would "continue its operations -- and will continue to offer its services via its app -- throughout Germany." Uber also claims that signups across Germany at least doubled since yesterday's court ruling.
It's strong rhetoric that may mask the willingness to negotiate. For example, when Virginia banned both Uber and its rival Lyft from operating in the state, both said that they would continue to operate. However, they apparently negotiated with the state, according to a statement from the office of Governor Terry McAuliffe, and reached agreement to "bring the companies into compliance with Virginia law, provide transparency into their operations, and promote a level playing field for transportation providers." There may have been some give on both sides, but demands for unilateral capitulation from a company to a government are rarely effective.
Just last month, Uber hired former Obama campaign manager David Plouffe to head political outreach and strategy. The company may continue to portray itself as the pugilistic contender taking on "Big Taxi," but in truth it's another well-heeled tech company that has to find a way to make innovation politically, not just technically, palatable.