Topic: Regulatory Studies

Regulation Could Hamper Uber Privacy Reforms

Uber has not had a good month. In the wake of an Uber executive’s worrying remarks regarding a possible smear campaign against critical journalists, the company has been on the receiving end of unflattering reporting related to its privacy policy and what one commentator has referred to as its “[something stronger than “jerk”] problem.” While it is certainly the case that Uber does have legitimate privacy issues to address, it should not be forgotten that existing regulations could hamper some of the privacy reforms many Uber passengers would like to see implemented.

For many, Uber is more convenient than taxis because of its ease of use. Once a passenger creates an account a ride that is paid for automatically is only a push of a button away. Drivers and passengers are rated by each other, providing an incentive for both parties to behave well. However, while the Uber platform’s simplicity is a major attraction, there have been disturbing reports of Uber drivers accessing passengers’ information.

In March of this year, Olivia Nuzzi, a reporter for The Daily Beast, wrote about two creepy interactions with Uber drivers in New York City. In her writing about the first incident, Nuzzi describes her driver showing her a photo he had taken of her before the ride began. Nuzzi was understandably upset and rated the driver poorly. Uber deactivated the driver, who later emailed Nuzzi, The Daily Beast, and a journalist who had written about Nuzzi. After this incident Nuzzi was told by an Uber employee there was no way the Uber driver could have accessed her full name and that he must have recognized her. 

Yet the second incident reveals that Uber drivers can discover the full names of their passengers, thereby making them easier targets for stalking. Months after Nuzzi’s first disturbing incident, one of her friends was contacted by an Uber driver over Facebook. The driver asked whether Nuzzi was single. When Nuzzi asked an Uber spokeswoman for comment regarding this incident she was informed that Uber drivers could in fact access the full names of their passengers. The Uber spokeswoman went on to explain that this data collection is possible because:

The New York City and Limousine commission, along with the vast majority of jurisdictions across the country, do require first and last names on what is commonly called a waybill or trip record. It’s intended to prevent gypsy cabbing in the taxi and livery industry… So Uber does provide trip sheets to drivers so that they can comply with those regulations that exist in most cities. 

Some readers might be wondering why Uber cannot simply anonymize passenger information in order to prevent the sort of stalking Nuzzi endured. The reason that passenger names are not made anonymous is that New York City Taxi and Limousine Commission (TLC) regulations prevent such information from being hidden, as Polly Mosendz explained this month in Newsweek:

While a user’s Uber profile only shows the first name and a small picture, the driver does have access to the full name as soon as the ride is ordered. Showing the full name opens up a number of issues, such as drivers Facebook messaging their riders or finding their homes, but Uber is unable to anonymize this unless the TLC changes its regulations.

In New York City, it seems that Uber must find a way to tackle TLC regulations in order to prevent the sort of awful behavior Nuzzi reported.

Of course, there are other complaints related to Uber and privacy, such as the tracking of journalists and “known people.” Uber is investigating the improper use of its so-called “God View” tool, which allows corporate employees to view the current location of Uber cars and users looking for rides. According to Uber, a New York executive’s use of “God View” to track a journalist on her way to Uber’s New York headquarters was in violation of the company’s privacy policy.

Perhaps unsurprisingly, Uber announced last week that it was working with the law firm Hogan Lovells in order to strengthen its privacy policy. It is welcome news that Uber is addressing the legitimate privacy concerns that have been raised by some passengers, but those watching Uber’s attempts to reform its privacy policy should keep in mind that regulations make that task considerably more difficult.

*UPDATE: Following the publication of this blog post I received an email from the deputy commissioner for public affairs at the NYC Taxi and Limousine Commission, who writes that there is no TLC regulation requiring that passenger information be included in trip data. The email reads (in part):
There is no such regulation.  We did, just this past week, approve a package of rules that will routinize the flow of required trip data, but it is – and always HAS been – limited to pick-up location, date/time, the dispatching base and affiliated base….no passenger information whatsoever.

Just in Time for Thanksgiving, Another Turkey from the Obama Administration

The shameful Obama Administration practice of proposing dreadful environmental regulations on or near national holidays continues. Last year they were on global warming, and this year it’s low-level ozone. Neither regulation will have a detectable “benefit,” but both impose enormous costs. Perhaps President Obama’s placing this announcement in the news cycle just before Thanksgiving and Black Friday is indicative of how popular he thinks these regulations will be.

So it goes. The lessons of November 4 remain unlearned, with the administration doubling down in the service of all of its green friends that didn’t vote. The fact is that the ground zero of the thermonuclear electoral explosion three weeks ago was in the coal mining areas of Kentucky and West Virginia. In Kentucky, Mitch McConnell was supposedly in a close race with Alison Grimes and instead won by a whopping 18 points. Nick Rahall, a 19-term (!) Democratic congressman from West Virginia saw a similar swing: he won his seat by eight points in 2012 and lost by 10 in 2014, with the net change in two years totaling 18. 

The proposed ozone rules are yet another example of what happens when good ideas go bad. Pretty much everyone agrees that EPA, along with the states, have done a remarkable job in cleaning up our air. The eye-stinging smogs of Los Angeles are history. Pittsburgh was once so dirty that masonry turned black, causing people to wonder what was happening in their lungs. We have done great things and enjoy air that is cleaner than that of any economic superpower in the history of this planet.

Environmental protection is what systems engineers call a “heuristic device,” defined as “a solution which is not guaranteed to be optimal, but is good enough for a given set of goals.” The problem, of course, is that heuristic devices don’t tell you when to stop. Instead they keep being applied, in this case by the bureaucracy-for-life known as the Environmental Protection Agency, producing massively diminishing returns for massively increased costs. And, at President Obama’s urging, it will never hear the word “stop.”

Millions of people are increasingly disenchanted with the administration’s high-handed approach to command-and-control regulations imposed when we aren’t supposed to be looking.  If enough people remain grumpy about this, Barack Obama may yet again stand in the way of a Hillary Clinton presidency.

SCOTUS to Hear Case on EPA Power Plant Rule

Today the Supreme Court granted a writ of certiorari on EPA’s 2012 ruling, Mercury and Air Toxics Standards. This ruling, projected in 2012 to result  in the closing of 68 power plants supplying electricity to 22 million homes, is EPA’s version of swatting a gnat with an atomic bomb. Here’s some sobering numbers, from a 2010 article in the refereed scientific journal Atmospheric Chemistry and Physics Discussions:

Total emissions of mercury (in metric tons):

  • From natural sources (mainly volcanoes and forest fires): 5200 tons
  • From human activity: 2320 tons
  • Total, natural and human: ~7500 tons
  • Human activity in the US: 117 tons, or about 1.6% of global emissions
  • From coal-fired electrical generation in the US: 48 tons, or about 0.6% of global emissions
  • Amount that actually falls on our soil from our power plants: 12 tons, or about 0.2% of global emissions.

Mercury can reside in the atmosphere for up to two years, unless it is rained out as “wet deposition,” which means that a lot of what comes out of the volcanoes of the Pacific Rim and wildfires winds up here.

If EPA was really serious about Mercury it would issue regulations capping volcanoes and outlawing wildfires.

Latest Essays in Cato’s Growth Forum

Today we add the following essays to Cato’s online growth forum:

1. Enrico Moretti wants to increase the R&D tax credit.

2. Daniel Ikenson calls for more foreign investment.

3. Scott Sumner argues for better monetary policy based on nominal GDP targeting.

4. Don Peck worries about growing dysfunction in the middle class.

5. William Galston offers a potpourri of proposals for faster, more inclusive growth.

6. David Audretsch highlights the central importance of entrepreneurship.

The remaining essays will posted next week.

Today in Cato’s Growth Forum

There are five new essays today in the Cato Institute’s online growth forum:

1. Ryan Avent argues against restrictive zoning.

2. Jagadeesh Gokhale makes the case for tax and entitlement reforms.

3. Michael Strain wants to put America back to work.

4. Karl Smith thinks about how to counter slowing labor force growth.

5. Robin Hanson calls for the meta-policy of decision markets.

Can Taxis Survive the Rise of Ridesharing?

If taxi drivers want to endear themselves to consumers, they had better find another way of protesting ridesharing companies than deliberately congesting traffic. On Monday night, taxi drivers with the San Francisco Taxi Workers Alliance caused traffic jams at San Francisco International Airport in the wake of last month’s news that the airport would allow rideshare vehicles to pick up passengers as part of a pilot program. Unsurprisingly, airport visitors were not pleased. This kind of protest has a track record of failure, and in the coming years these protests may be remembered as being among the most frantic and ultimately unsuccessful attempts taxi drivers made to combat the rise of ridesharing companies such as Uber, Lyft, and Sidecar. 

Taxis have deliberately congested traffic in rideshare protests not only in American cities such as San Francisco and Washington, D.C., but also in London, where the protest earlier this year reportedly resulted in an explosion in British Uber sign-ups. In Washington, D.C., the city council passed a rideshare bill in a 12-1 vote despite the protest.

Taxi drivers are right to be worried about ridesharing. In San Francisco, there has been a dramatic drop in the number of taxi trips since the beginning of 2012, the year Uber’s ridesharing service and Lyft both launched. In September 2014, the general manager of a Washington, D.C., cab company said “what we are seeing is, year over year, an approximately 30 percent decrease in business.” A draft study from the Virginia Department of Motor Vehicles reportedly predicts that once rideshare regulations are permanently in place in the state, rideshare drivers will outnumber taxis.

Many consumers have demonstrated over the last few years that they prefer rideshare services to taxis. Market incumbents such as taxis have a number of options when competitors arrive on the scene, but it is hard to see if any will halt the growth of ridesharing. 

Taxi companies could try to innovate to keep up with the technology used by Uber, Lyft, and Sidecar. What many people like about ridesharing is the ease of use. All users have to do is press a button on their smartphone in order to get a ride that is paid for automatically without cash. Hailo, a company with an app similar to the apps offered by ridesharing companies, provides a way for passengers to hail a taxi via smartphones. However, Hailo recently announced that it would be leaving North America because of the competition from Uber and Lyft. Given that anyone who can download a taxi app also has the ability to download a ridesharing app, it is hard to see what a taxicab app would be able to offer that ridesharing companies don’t already provide. Of course, it is not inconceivable that the taxi industry will develop a competitive app, but it will be difficult for that app to succeed considering that rideshare companies already enjoy name recognition as well as a loyal customer base.

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