Sharing Economy

Chicago Is Developing Its Own Taxi App to Compete With Uber, Lyft

Chicago Is Developing Its Own Taxi App to Compete With Uber, Lyft
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Chicago opened a new front in the war on ridesharing services like Uber on Wednesday, approving a plan to sponsor an app for riders to hail local cabs.

The measure was part of a package including financial supports for taxis, such as fee breaks, passed by the city council on Wednesday.

A union that has expanded into cab drivers and organized Chicago this year pushed hard for the package, which had the support of Mayor Rahm Emanuel.

"We have found a way to level the playing field,” between cabs and ridesharing services, said City Councilman Emma Mitts, a co-sponsor of the ordinance.

Uber's app to let mobile phone users summon drivers is growing fast around the world, but concerns over fair competition with cabs, the safety of Uber drivers and Uber's use of data about riders, recently has led to questions and government measures, including bans on Uber service, in parts of India, Thailand and some U.S. cities.

Uber declined to comment directly on the Chicago plans, while saying that its efficiency and safety were superior to those of the taxi industry.

The Chicago ordinance commits the city to developing a mobile app that will serve as a dispatch for all the city's taxicab companies. Rideshare companies including Uber and smaller rival Lyft offer dispatch of a variety of cars, and in some markets the Uber app can call taxis.

It is not yet determined how the Chicago mobile app will be administered, who will pay for it, and whether rideshare services would be able to bid for the contract to develop or run it.

Chicago appears to be the only major city to agree to develop its own app, although New York City Council Member Ben Kallos this week proposed a similar app. The Chicago move also represents a political push from the American Federation of State, County, and Municipal Employees (AFSCME), a union which has organized drivers in two cities so far.

More than half of Chicago's 7,000 active cabbies have joined AFSCME since June. In New Orleans, the second U.S. city where AFSCME has organized taxi drivers, more than 800 drivers have signed up, which represents more than half of the city's fleet.

Cheryl Miller, a Chicago taxi driver for 20 years, says the rideshare issue was key to making drivers organize this year. She says the app might serve to increase her customer base, but she says the more pressing issue is increased regulation and accountability of Uber drivers.

"I see this as a first step. I'm excited about that," she says.

Labor groups say that the taxi industry suffers from identical issues of low-wage workers in the fast-food and other industries, namely stagnant wages and limited bargaining rights.

The taxi industry says the Chicago measures, which include reducing the fees drivers pay to lease their car or medallion, lowering amounts they can be fined, and giving taxi drivers a share of in-car advertising revenue, will collectively raise income for drivers up to $8,000 annually.

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) has formed alliances with taxi worker groups in New York and other cities.

The Chicago measure does not increase regulation of rideshare services. Taxi and rideshare proponents vigorously disagree about whether rideshare companies are adequately controlled. Regulations vary considerably between cities and countries.

Taxi groups say rideshare drivers, and their vehicles, do not have to go through the same rigorous security checks or training as licensed taxi drivers.

"They operate with impunity and are invisible to city oversight. That's not just unfair but can be dangerous," said AFSCME spokesman Anders Lindall.

Uber says its background checks and insurance requirements are equal to or better than those of city drivers.

"Uber has more insurance and we perform more thorough background checks than the taxi industry, which is why the city of Chicago has validated our approach," Chris Taylor, general manager of Uber in Chicago, told Reuters by email.

"The regulations created for taxis and rideshare services are appropriate for how each industry has proven itself capable of protecting riders and drivers."

Mayor Emanuel, who has had strained relations with unions and whose brother is an Uber investor, also supported the measure.

The "reforms represent what is necessary to further modernize this growing industry" Emanuel said in a statement.

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