Uber Draws Teslas, Therapy Out of Taxi Rivals in Sweden

Need a trained therapist to go over marital woes during your taxi trip to work? Or maybe you’d like to get there in a Tesla?

The services are optional extras being offered by Taxi Stockholm as a way to stay competitive as Uber Technologies Inc. enters the Swedish market.

After facing bans, protests and regulatory backlash from China to Germany, the $40 billion San Francisco-based startup has eased its way into Scandinavia’s biggest city with next to no friction. Even Stockholm’s biggest taxi company says Uber represents an opportunity to improve its industry.

“Uber is giving the taxi market a chance to develop by coming at it from a lifestyle point of view,” said Carina Herly, head of marketing at Taxi Stockholm, which has 1,600 cars in Sweden’s capital. “Uber is good for the market by pushing the industry to use a different technique, a new platform.”

The Swedish government isn’t planning to block Uber and wants to invite all forms of “healthy competition,” so long as existing laws and regulations are upheld, Infrastructure Minister Anna Johansson said in an e-mailed statement.

According to Robin Teigland, an associate professor and researcher at the Stockholm School of Economics, any other response would be hard to defend in a modern economy.

“It’s short-sighted to resist innovation,” she said by phone. “Countries and companies that embrace this will clearly benefit over time, with more jobs and economic growth.”

Silicon Valley

Though it’s a bastion of big government and tight regulation, Sweden has a history of welcoming new ways of doing commerce. It’s on its way to becoming the world’s first cashless society, with bills and coins accounting for just 2.7 percent of the economy in 2012, compared with 9.8 percent in the euro area and 7.2 percent in the U.S., according to the Bank for International Settlements.

Home to music-streaming service Spotify Ltd., Stockholm is also the second-biggest technology hub outside Silicon Valley, according to data from Atomico, the venture capital group led by Skype co-founder Niklas Zennstrom, another Swede.

At Taxi Stockholm, the view is: adapt or fall behind. “Change is good,” Herly said. “We want the market to grow.”

Elsewhere in Europe, Uber has rankled taxi drivers and regulators. In France, Uber faces threats to ban its UberPop service, which lets users get rides with private cars, and has initiated a myriad of legal procedures to fight back. The same service faces similar hurdles in the Netherlands.

Raising Billions

Uber was banned in Spain last month and some of its services have been suspended amid legal challenges in Germany. The latest setback came this month, when the European Union’s top court denied non-traditional cabs the use of bus lanes in London. Outside Europe, Uber faces legal challenges in parts of the U.S. and India.

Yet after raising $1.6 billion in convertible debt this month, Uber is looking for expansion in European cities. The company even says its presence will support the labor market, helping to generate 50,000 jobs in Europe this year.

“We want to make 2015 the year where we establish partnerships with new European cities,” Chief Executive Officer Travis Kalanick said at the Digital Life Design Conference in Munich Jan. 18. “If we can find a regulatory framework that makes this a reality, we can promise jobs and less congestion. The impact we can bring to cities is huge.”

Uber is also stepping up its efforts to cement its presence in the U.S. The company said yesterday it would limit price surges in a storm that may dump as much as two feet of snow from New York to Boston.

Power Balance

As part of its charm offensive, Kalanick met with representatives of the European Commission on Jan. 22 to answer questions about its business model.

Uber has responded to concerns voiced by regulators and governments by adjusting its services and setting up new ones, in some cases sacrificing its main business model. For instance, its software now also allows customers to find taxis in several countries, even though that’s a far less profitable business.

“Innovation can upset the balance of power and some people may feel threatened,” Teigland at Stockholm School of Economics said. “But it’s better to open up and learn from the technology.”

Before it's here, it's on the Bloomberg Terminal.