More than just drivers wanted.

Photographer: Andrew Harrer/Bloomberg

Asia Doesn't Need Uber

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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The alleged rape of a passenger by an Uber driver in New Delhi highlights one of the web-based car service's biggest problems: In some places, there is little to distinguish it from the anarchic system it seeks to replace.

Those who live in the U.S. and other rich countries find it hard to understand the near-irrelevance of Uber's ride-sharing model in Eastern Europe, Asia and Latin America. Many countries in these regions have time-honored unregulated gypsy cab traditions. In Argentina and Uruguay, people call or text for a trucho. In Russian cities, if you raise your arm by the roadside, a car -- almost never a licensed taxi -- typically pulls up within minutes, unless it's the dead of night.

Long before Uber came along, these countries had car-sharing, an informal practice that allowed underemployed citizens to make extra money. Silicon Valley didn't invent the sharing economy, it's just trying to make money from it. 

Nor did Uber come up with the idea of circumventing the regulatory strictures of the traditional taxi business in developed countries, with labor unions, elaborate driver exams and fixed fares.

Eager for some order on the streets, extra tax income and stricter safety standards, emerging nation governments have made it easy to get a taxi license. In Moscow, it takes less than two weeks if your car is yellow and about a month for vehicles of different colors. In India, with five types of taxis permitted in New Delhi alone, the process isn't particularly arduous, either. Cab companies proliferate, and so do apps that make it easy to order their cars.

In Moscow, there is fierce competition between Yandex Taxi and GetTaxi. In Kiev, riders use Uklon.com.ua, and neither know nor care which of hundreds of cab companies will come to pick them up. In Delhi, there are OLA and TaxiForSure (now banned along with Uber for running unlicensed services).

The ostensible difference between all these arrangements and Uber is that the latter seems to offer the security of dealing with a large multinational company, a major global brand.

Cab aggregators aren't responsible for the service rendered by small companies or, in some countries, by unlicensed cabs. If you complain about being poorly served, the aggregator will at best raise the issue with the taxi owner, and perhaps even ban it. That only means its drivers will sign on with somebody else. In Kiev, I met a cabbie who worked for five companies, riding around with five mobile phones and cherry-picking orders.

In theory, Uber doesn't suffer from this kind of fragmentation and subsequent lack of responsibility. It is supposed to be answerable for its drivers, and it says it screens them rigorously, at least in the U.S. In India, Uber's customers expected something similar and were disappointed when Uber chief executive Travis Kalanick accused the Indian government of failing to run thorough background checks on the drivers it licenses. If Uber relies on the authorities to handle the screening, it is no different from the aggregators, which trust their smaller contractors to have their drivers licensed and checked by the state.

One might argue that Uber provides an extra layer of security by keeping tabs on all its drivers. After all, it did provide the police with information that led to the arrest of the New Delhi rape suspect. Turns out the driver had served prison time for sexual assault.

But the aggregators also can also easily track which car filled an order, and no small cab service will want to cover up a crime for fear of being closed down. Also, the victim in New Delhi took care to photograph the car's number plate. That would have made it possible to locate a completely random gypsy cab operator, too. 

In emerging economies with shaky taxi regulation, Uber can't be disruptive if it is as lax as the incumbents. Its offering can only be of value if it tries to be more like a traditional Western taxi service, obeying strict rules and convincingly projecting an image of safety and reliability. That is something it isn't equipped to do now.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net