Regulatory Capture In Action: Uber and LeCab To Wait +15 Minutes Says French Government

By James Santagata
Principal Consultant, SiliconEdge

One of the frequent topics we discuss besides the myth and meme that "Necessity Is the Mother of All Invention" is the fact many of Silicon Valley's most vaunted startups are all post-tech businesses. 

Yes, you read that right. Post-tech.

They surely use technology in their day-to-day operations just as UPS does, the Hilton hotel chain or even Walmart. However, many of these startups may actually use even less tech than these brick and mortar firms. Examples of such startups and ventures include Airbnb, Uber and Zappos which is analogous to an online Nordstrom in terms of the customer service experience.

What does all this mean?

As we've discussed many times before, this means that what many of these startups will face (are facing) as their primary challenge is human in nature not technical.

Specifically, the markets that post-tech startups will want or tend to target or those which are massively inefficient (and have huge profit potential with tepid or ossified competition) due to the use of regulatory capture by rent-seeking incumbents.

The transportation industry is a perfect example of this as seen in the TechCrunch article below (although the writer seems oblivious to what this term or concept) whereby these rent seeking incumbents are using regulatory capture to have the French government force more efficient and consumer desired transportation services to artificially extend customer wait times by 15 minutes (apparently the average wait time for some of these alternative car services is only 7 minutes).

You can't make this up. But it is should be expected, not just in the tech world but especially the post-tech world.


Uber, LeCab And Others Now Have To Wait 15 Minutes Before Picking You Up In France
Posted by Romain Dillet (@romaindillet)

At first, it was just an idea, but this bill is now very real — urban transportation services like Uber and LeCab will now have to wait 15 minutes in France before letting a customer in the car. Back in October, the French government mentioned this piece of legislation as these new services would hurt traditional cab drivers. But nothing was set in stone until the AFP spotted the new bill today — and this news comes as a surprise.

In France, you have to pay a hefty price to get your taxi license. As a payback, the taxi industry is very regulated in this country, and drivers can expect to get a healthy influx of clients.

Yet, when the young and fearless startups appeared, many taxi drivers protested against LeCab, Chauffeur-privé, SnapCar, Allocab, Voitures Jaunes and Uber. While the French law calls these companies “VTC” services (car services), taxi drivers think that they are direct competitors — and smartphones certainly make Uber and others act like taxi services. That’s why the government sided with taxi drivers and talked about creating the 15-minute rule.

Shortly after that, Allocab, Chauffeur-privé, LeCab and SnapCar put together an online petition against the project. Then, nothing happened. It was like the government had forgotten about this idea.

In November, French heavyweight LeCab raised $6.8 million (€5 million) in Series B funding. At the time, I wrote that it was “a good time for it to raise” with the impending changes.

Last week, the Competition Authority (Autorité de la concurrence) even wrote that the 15-minute delay was a bad idea.

“This competitive imbalance is not necessary to protect the taxi monopoly on this market. Moreover, it potentially contradicts the objective to improve free traffic flow,” the report says.

[more] Uber Faces Regulatory Capture In France >>