Taxis all over

Uber, the app-based service for car transportation, has started operations in Macau. That is possibly one of the most interesting bits of news of the week, which raises broader issues. Those less familiar with the subject may need a short explanation. Using the Uber app on your phone or tablet, you can request transportation from one place to another. Registered drivers – basically, anyone willing to do that –will answer the request and pick up and drive you, at prices usually lower than taxis. Uber will charge payments to your credit card, and the company will pay the driver.
Of course, the service increases (in many cases, creates) competition to traditional taxi services. It is a new approach that is being resisted by taxi drivers all over the world. As a new business model, it is essentially unregulated and, in many cases, is likely to violate rules made under different social, operational and technical conditions. As is the case with many new technologies, it has the potential to disrupt older methods of doing things and to challenge installed interests.
In Macau, it certainly touches on the taxi sector. It is a sector involved in various kinds of controversy, which compounds the sensitiveness of the issue. It is a sector that has a terrible reputation for quality of service and has been the object of several complaints over the years. It is known to disregard rules on picking up customers, and there are well-documented cases of illegal overcharging. Bar the occasional fine without visible effects on the overall situation, residents and visitors keep complaining and seem to have good grounds for those complaints. Moreover, competition seems artificially limited to shielding owners of the licences from would-be competitors thereby forcing a scarcity of the services.
What should government do when faced with such circumstances? Rationally, they should carefully assess the advantages and disadvantages of the new technology, and its economic impact, including its benefits and costs, for all segments of the population. And then define an appropriate regulatory framework, one able to protect the wider interests of society and to increase the transparency of the economic agents involved.
Almost as soon as the operation of the service was announced the government went public declaring it illegal and threatening a strict application of the law. The verdict could not be stronger. Three public departments, no less, were publicly instructed to go after the service providers. It even invoked that this new application will make fare abuses more common and argued that users’ interests will be less protected. No cogent explanation is provided for these assertions. Curiously, the press release comes directly from the press office of the Chief Executive and not, as might be expected, the department of traffic affairs, whence only silence emanated.
Regardless, one thing is now clear. In the balancing between the interests of more competition and consumer choice, and the protection of established operators and interests, it seems clear where the weight of the government will be.