Uber has been no friend of authorities since its launch. The ride-sharing company has always billed itself as a technology or information company, not a Taxi firm, in order to bypass regulations regarding commercial driver licensing. But according to a report from German language publication Wirtschafts Woche, this will soon be changing.

According to the report, Uber will be providing its drivers in Europe with commercial driver licenses and will be going through the proper steps to license itself as a taxi and chauffeur service.

“We will also pay the €150 to €200 it would cost our partners to have the Chamber of Commerce license them as taxi companies,” Fabien Nestmann, Uber’s chief in Germany is quoted as saying.

It’s not clear if the costs will be passed on to riders.

Uber’s new strategy

For a company of its valuation (which is said to be near $40 billion), Uber’s compliance with local laws regarding taxis and chauffeur services is practically non-existent. One would be hard-pressed to find a company of similar, or any size, that takes the same approach with regulators.  Uber’s libertarian approach to ride sharing and taxi services has its fans, but will ultimately fall on deaf ears with authorities. Though the law may be imperfect, Uber needs to comply with it — it can then lobby lawmakers to perfect it.

No doubt Uber is under pressure from its investors to become compliant with local laws. Investors don’t want to see their $40 billion company become outlawed in major markets around the world, and Uber’s lack of compliance is hindering it from raising its next $40 billion.

While the company will ultimately lose face given its disruptive nature, throughout the year it’s expected that it will take steps to be compliant in the markets where it operates around the world. Uber drivers — the little guys — are the ones that are under the most pressure. They are the ones given the tickets for operating an unlawful taxi service. If Uber wants to keep its personnel and hire new ones it will have to take steps to work with authorities to become compliant.

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Uber has not had a great month for publicity, with all sorts of accusations being directed at the company for its business model and behaviour. Now, the company faces another PR challenge as a security researcher has found that the company’s Android app hoovers up all sorts of data on its users.

According to security researcher Joe Giron, Uber’s app sends back a litany of data from the user’s phone — most of it unrelated to the apps functionality. Below is a list of the data that Uber sends back from the user’s phone:

– Accounts log

– App Activity

– App Data Usage

– App Install

– Battery

– Device

– GPS

– NetData

– PhoneCall

– SMS

– TelephonyInfo

– WifiConnection

– WifiNeighbors

– Root Check

– Malware Info

For Uber, having this data is advantageous, but its collection — especially without clearly informing the user — is unethical. Uber’s business model requires the company to have strong analytics data to plot its next moves, but this appears to be coming at the expense of user’s privacy.

Uber, for its part, has shifted blame to Google when confronted by the press on the issue.

“Access to permissions including Wi-Fi networks and camera are included so that users can experience full functionality of the Uber app. This is not unique to Uber, and downloading the Uber app is of course optional,” the company said in a public statement.

Technology blog Re/Code notes that Uber competitor Lyft also has an extensive permissions set.

But unless Uber, or Lyft, comes out with a satisfactory explanation of why it needs all this data users will be rightfully skeptical of the company’s intentions.

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After a continued tussle with Indian authorities over lack of two-factor authentication support for its payments, Uber has announced that all future payments will be carried out exclusively through a digital wallet powered by Paytm. Customers interested in riding with Uber have to set up their debit cards on Paytm and add money to their digital wallets.

To incentivize the move to Paytm’s service, Uber has been offering five free rides last week to all users who have linked their cards to Paytm’s digital wallet. Uber has been vocal with regards to the Reserve Bank Of India’s mandate that requires all businesses to provide two-factor authentication for all transactions online, calling the move “a major challenge for businesses trying to offer Indian consumers a better purchasing experience.”

Two-factor authentication woes

Back when Uber launched in the country earlier this year, it allowed customers to pay using a credit card without two-factor authentication, which drew the ire of the RBI. Uber was able to circumnavigate Indian business rules by processing transactions through its Netherlands subsidiary, leading to a formal inquiry by the RBI to curtail such measures. The Indian regulator dictated that any service operating out of India has to offer payment services within the country.

Uber was given until Nov. 30 to comply with RBI’s regulations, which led to the service collaborating with Paytm. Uber’s reticence to do so was evident in a blog post on its official blog, which labels the mandatory two-factor authentication as “an antiquated solution that is cumbersome for consumers and stifling for businesses.”

“India’s current regulations require every transaction made with an Indian credit card, no matter how small the amount, to include two-factor authentication (2FA). As you are aware, we recently expanded the available payment options on Uber to include a Paytm Wallet, which allows you to pay for your rides through Debit Card, Credit Card and Net Banking. Paytm is the leading e-wallet provider in India, and this solution is 100% compliant with all applicable regulations including 2FA.“ 

With the new system in place, customers will be able to add money to their wallets using a debit card using the Verified by Visa or MasterCard Securecode two-factor authentication systems. The points Uber mentions in its blog post are all valid. While the two-factor authentication is a vital security measure, the RBI should be willing to allow certain service providers to make it convenient for users to pay without having to undergo an additional step.

Tough for the customer

As a long-time Uber customer in India, I can say that the two-factor authentication is more cumbersome to use in this particular instance. Adding money to a digital wallet before availing the service is often frustrating, and the redirection to Visa or Mastercard’s authorization services is not always seamless.

Furthermore, while the collaboration with Uber may seem like a profitable move for India’s Paytm, the service’s CEO revealed that it is not as lucrative as it seems:

Our RBI licence doesn’t allow any interest earning or other use of this money in ur wallet. Kept in a nationalised bank escrow on ur behalf.

— Vijay Shekhar (@vijayshekhar) December 1, 2014

Uber is now asking the RBI for a 45-day extension to allow existing customers to move to the digital wallet service. As for new user acquisition, Uber is set to challenge the autorickshaw industry with its latest pricing tier, UberGo. The low price tier, which is now being rolled out in ten cities across India, allows customers to ride in a taxicab for far less than what it costs in an auto. Uber even made a chart to highlight the price difference:

With several pricing tiers and affordable pricing across categories, it is clear that Uber is targeting growth in the country in lieu of profits. UberBlack, for instance, is priced at an aggressive Rs. 18 ($0.3) per kilometer. As to whether any of this succeeds in getting the service a considerable amount of traction remains to be seen.

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Being an innovator, Uber has faced various legal hurdles, especially in relation to franchise and license regulations in certain jurisdictions. In Manila, an Uber car was apprehended through a sting operation run by the Philippines’ Land Transportation, Franchise and Regulatory Board (LTFRB). The owner was fined PhP 200,000 (US$4,461), with the possibility of the car being impounded for up to three months.

It’s the same story in Germany and certain cities in the US like Las Vegas, Portland and Little Rock. More often than not, the move to ban Uber is initiated by taxi operators, who understandably wish to protect their industry. Uber has established its presence in 128 cities globally, thereby disrupting the traditional franchise-oriented transport business models in these locations. While users have appreciated the convenience that a black car or inexpensive UberX ride can provide, resistance from the old guard is somewhat expected.

The Manila incident was initially reported by TV5’s James Beltran, who said the black SUV was impounded with an LTFRB agent posing as a passenger leading the bust.

Yesterday, a black SUV with plate # WII-360 was impounded when LTFRB booked a trip through Uber. Owner fined P200,000. @news5aksyon

— James Beltran (@iamjamestv5) October 23, 2014

“We are just being fair with legitimate franchise owners,” says LTFRB Executive Director Roberto Cabrera, who says the agency understands the advantages of the new technology for users, but expresses concern for the safety of passengers. He says companies like Uber and Tripid (a ride-sharing app that facilitates carpools) operate a “public service” and are therefore required to have a franchise.

The agency had earlier received complaints from the Philippine National Taxi Operators Association about Uber running a “colorum” (illegal or without franchise) for-hire vehicle operation in Metro Manila. This is similar to how taxi operators in Berlin complained against the e-hailing service, citing that it does not provide adequate insurance to its passengers, whereas licensed operators do.

In stark contrast however, riding the public transport system in the Philippines — taxis included — is oft considered unsafe due to incidences of theft and reckless driving resulting in accidents. Independent taxi operators rarely — if ever — have insurance coverage for their passengers. Meanwhile, Uber supposedly works with established car rental services in the country to provide its unmarked cars.

LTFRB Chairman Winston Ginez has clarified that Uber in itself does not violate the law, but the practical application of its service does. “[Uber] doesn’t need to secure a franchise because it’s not a transport company, they don’t carry passengers. But through its application, private unlicensed vehicles are able to engage in public land transportation without securing a franchise from LTFRB,” he said.

In an interesting twist of events, the Metropolitan Manila Development Authority (MMDA), an inter-city governmental body tasked to enforce traffic rules and discipline in the metro, has sided with Uber, citing its benefits in easing traffic congestion. MMDA Chairman Francis Tolentino gave advice to the LTFRB in a statement saying government’s role is to reasonably assist new transport services in complying with the law (or perhaps making amendments to the law), rather than summarily impounding vehicles based on archaic regulations.

“The muscle of the law and the procedural and technical arms of government agencies alone cannot resolve the lack of alternate means of transportation problem, they can only increase apprehension records, Uber or hybrid carpooling is a well-meaning technology-driven effort intended for public safety and convenience that’s why people are patronizing it,” said Tolentino. “We cannot curtail their mobility rights. This is similar to private bridal cars and private ambulances for rent which is a private transaction between the rider and the owner of the vehicle.”

Uber Philippines has issued a statement, saying it will continue to support partners and users, and will “seek swift resolution to this incident.”

Featured image credit: Uber

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