Uber Might Be a German Word, but It’s Now Banned in Deutschland

by John Fund

Uber, the service that allows you to hail a car ride from your smartphone, is at least temporarily verboten in Germany. A court in Frankfurt says Uber is in violation of the country’s “competition “ laws – Uber’s major selling point, remember, is that it provides an alternative to the monopolistic cab business. Uber’s sins include not having all of its drivers equipped with professional licenses and personal insurance and allowing them to skip riders they find inconvenient or sketchy.

Taxi interests applauded the crackdown. Dieter Schlenker, chairman of the trade association Taxi Deutschland, described Uber’s free-market model as a “locust,” which was harmful to “the state, society and employees alike.”

Nonsense, says Frederik Roeder, vice president of the international Students for Liberty and a Berlin resident, told City A.M. the following in an interview as the Uber battle was being fought in Europe: 

The taxi industry should cope with their new competitors by increasing their customer service and lowering their prices. The opposite happened: The Berlin Taxi Guild just recently raised the fixed rates by almost 7 percent. They ask for more protectionism and fight competition at [the] courts.

The Frankfurt court says Uber now faces fines of up to $328,000 if it continues operating. The company promises to proceed as planned while it appeals the case and expands to a half dozen more German cities. It is no doubt betting that by the time the court cases are heard it will be so popular that shutting the service down would provoke a public outcry. It has experienced  mushroom-like growth this year, and now has five times the number of customers that it had at the start of 2014.

I wrote about Uber and the regulatory barriers it has faced in this country back in June. The San Francisco–based company, which had few lobbyists until recently, has now hired David Plouffe, election strategist for President Obama, to help guide it through government gridlock. Plouffe told the Financial Times he was attracted to the Uber “insurgency” because the start-up “won’t take no for an answer.”

If Uber can win or adapt its product to the stringent German bureaucracy, one of the most hidebound in the world, the winners won’t just be consumers but cab drivers, who rarely own their own vehicles and often have little say in their working conditions. As for non-cab drivers, those with an entrepreneurial bent like Uber because they can decide what hours they will work and use the service to earn a supplementary income if they happen to be unemployed.

Uber and its competitor Lyft will continue to face regulatory hurdles, and no doubt will have to accept some restrictions in some of the countries it now operates in. But its soaring popularity will cement consumer loyalty. There is nothing more powerful than the idea of a ride whose time has come. 

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