Ride-sharing service Uber has taken its battle against the taxi industry to Philadelphia, where regulators over the weekend confiscated six cars and fined their drivers $1,000 each.
Officials at the Philadelphia Parking Authority (PPA) argue that Uber, which is based in San Francisco, has gone rogue by deciding to operate its Uber-X service in the City of Brotherly Love even though it lacked the legal authority to do so. State law requires taxis to be inspected by the PPA and be issued a medallion, which can fetch $500,000.
"It's not a matter of being for or against it," said PPA spokesman Martin O'Rourke, adding that Uber tried and failed to get Pennsylvania legislators to change state law so Uber-X could be legally registered in Pennsylvania. "Uber-X is an illegal operation."
Another service, Uber Black, which operates an on-demand limousine service, has legally operated in Philadelphia for about a year, he said.
Uber, which allows customers to contract for rides using a smartphone app, rejects these arguments.
"There's a transportation crisis in Philadelphia, with a serious lack of safe, reliable option," wrote Uber spokesman Taylor Bennett in an email. "Nearly a third of the taxis on the road aren't adequately insured, and that's a public safety hazard. Consumers demand and deserve access to safe rides, and that's exactly what we're providing."
The PPA refuted Uber's claims about the safety of Philadelphia's taxis, noting that the insurance issues the company refers to have been "resolved," according to O'Rourke. Uber also is paying the affected drivers' legal costs.
Philadelphia Mayor Michael Nutter is sympathetic to Uber's plight, though he has noted that the PPA is a state agency where his influence is limited. Nutter is a Democrat in a city that hasn't elected a Republican mayor since the 1950s. But the Pennsylvania legislature is controlled by Republicans and the state has a GOP governor in Tom Corbet, who is in a tough reelection battle.
Nutter "has urged the company to sit down with PPA and try to work out a way forward because he thinks innovative, technology-based companies like Uber would provide a useful service to Philadelphia consumers," wrote Mark McDonald, a spokesman for the mayor, in an email.
Uber has often battled the taxi industry and its drivers. They argue that ride-sharing services have an unfair advantage because they aren't subject to the same rules as traditional cabs.
Battles pitting Uber and the taxi industry have been waged in the Washington, D.C., San Francisco and Boston, where a new group was recently formed to fight the growth of ride-sharing businesses. A court hearing is scheduled for Tuesday to determine if Uber can continue operating in the Las Vegas area.
Fighting Uber, though, isn't easy. It has some deep-pocketed investors, including Google (GOOG) Ventures and Goldman Sachs (GS). Earlier this summer, Uber raised $1.2 billion from investors, which valued the company at an eye-popping $17 billion. It now operates in 200 cities worldwide and has plenty of fans.
"It's tremendous value for consumers in the long run," said Sunil Wattal, an associate professor of management and information systems at Temple University's Fox School of Business in Philadelphia, who has used Uber in Boston and San Francisco. "Regulators should exist to facilitate new and innovative services not to kill."
Officials in Philadelphia are going to discover what others around world have learned, he said, that Uber's economic benefits are too powerful to ignore.