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Uber Gets Taken for a Ride in Israel
The mobile app platform has been cooling its heels because the government refuses to allow its ride-sharing scheme to be launched.
Avi Bar-Eli Feb 03, 2016 2:56 AM
A UK UBER driver at a protest against a rise in the commission taken by the company, outside its London offices in November, 2015. Phot Credit: Bloomberg


While Uber has been operating in 60 countries and has shaken up transportation practices in many of them, in Israel it's left no mark on the taxi market. And, despite stubborn attempts, UberX isn't available at all. Were it not for the widely covered altercation between [Prime Minister] Netanyahu and [Transportation Minister] Katz, interest in the app would have remained insignificant.

The immediate suspects in the whole tangled affair are probably the political considerations that are involved. The prime minister's desire for revenge led him, for the first time in years, to look into the political biases plaguing the transportation industry. But to attribute full responsibility for clipping Uber's wings solely to politics would be too easy. Uber's message of "shared transportation" is not some romantic ideal: It's an aggressive, global business, which has aroused local opposition nearly everywhere it goes, not just in Israel.

Pirate drivers
Politics, however, isn't the only thing at stake. Mobile apps like Uber threaten to upset the taxi industry and the tens of thousands of people who make their living from it, in particular those holding a "green number," as the license to own and operate a taxi is called. About 19,000 people have paid 200,000-250,000 shekels ($50,000-$63,000) for a green number, and the government would likely have to compensate no small number of them for the lost value.

What's stopping Uber?
While the knee-jerk reaction is to blame Katz for the Uber delays, the fact is that for the last 18 months no one else has tried to move the issue forward. The government has been demonstrating the same paralyzing helplessness toward other players in the shared economy, such as Airbnb services in Israel, which local regulators treat with hesitation mixed with suspicion. After all, what are Uber and Airbnb? High-tech companies that move from one country to the next, dismantling petrified local arrangements in favor of freedom to business, for which they cut a coupon exempt from tax and supervision.

Uber usually doesn't have the patience to wait until local regulators come to terms with the technology revolution. For the most part, the company tries to dictate policy by establishing facts on the ground, accompanied by aggressive and defiant campaigns. In London, for example, Uber paid fines imposed on its drivers, since, thanks to ostensibly "pirate" transportation, local regulations were violated. In effect, the only reason why Uber hasn't launched UberX yet in Israel is that here, as opposed to Britain, transporting passengers in an unapproved and unlicensed vehicle is a criminal offense, not a civil one.

The bottom line is that Uber is a service that Israel cannot avoid. Even if global corporations threaten local sovereignty in some way, the only real question today is whether the consumer benefits, and what needs to be done to mitigate any blow to the economy that will infuriate the regulator.

Does the customer benefit? In the case of Uber, the answer may be yes. Will the economy profit? In Israel, at least, nobody has examined the issue. The only work so far to calculate the cost/benefit of shared transportation was done by the TASC consulting company - at Uber's request.
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