The manifestations of taxi drivers against the application Uber, which has caused commotion in São Paulo and other metropolises worldwide, are an eloquent example of the impact of disruptive innovations in society. This experience is a compulsory reflection for those who are and want to continue in the market.
The first thing to observe: it does not matter in which sector you operate, be intent to the opportunities and threats that innovation presents. The taxi drivers in the local market, which is over-regulated, could never imagine that their space would be threatened by a foreign company, coming from the virtual world and without any relation with transport, until the arrival of Uber.
Second comment: the more deficient the market, the faster is the migration of the consumer to new models of service or products. That is why in megalopolises the Uber progresses so fast.
Let’s look at New York as in a mirror. In that city, the taxi drivers have been protecting their market for decades using the conventional method: pressure on the local government not to raise the number of licenses in operation. So, there are only 13,600 of these licenses, issued as a metal badge applied on the hood of the car, known as medallions. (Just to have an insight of the feat: in 1937, when the system started there were 12,000 licenses.)
Uber landed in New York in 2011. Today its fleet of 20 thousand cars surpasses the yellow cabs. The taxi drivers have seen their clientele diminish and, for the rage of the masters of the taxi industry, the value of a medallion, that used to exceed one million dollars, decreased by more than 40% since last year. The strategy to protect the market against the interests of the consumers started to fall solemnly.
There, as in São Paulo, the two services are at war. The taxi drivers complain that the competitors from Uber do not have to pay taxes, do not have price table, among other obligations. They are right. Innovation cannot conspire against the equality of conditions in a competition. Uber, a company that is already worth 40 billion dollars in the stock market, rejoins that it is not possible to halt an innovation process that benefits the user. It is also true. The talk has just started. But, one thing is certain, the disruption is already installed.
*Arie Halpern, economist, director of the Israeli company Gauzy Technologies