The View From France: Uber and the French (r)evolution

[Ed. Note: In this inaugural “The View From” post, I’ve invited my friend Benjamin, originally from Paris, to write a guest post breaking down a recent current event from a French perspective. He and his partner Aida have a blog called Feuille d’érable et sables bitumineux – a highly entertaining and informative account of life in Alberta as seen from a French couple’s eyes, with a particular focus on energy systems and urbanism. Check it out! And look out for future “The View From…” posts to read global perspectives on the events shaping our world.]

 

The Story

In many of the markets the app-based car service Uber has entered, it has faced threats and bans from regulators. The resistance, especially pronounced in Europe, hit a new level over the past year after Uber introduced UberPOP, a cheaper version of the service that allows anyone with a driving license to freelance as a taxi driver. Spain, Italy, Germany, and the Netherlands have recently banned UberPop from operating.

In France, more than anywhere else, UberPop has triggered a public, and somewhat violent debate. France has a tradition of highly state-regulated sectors and the taxi industry is one of them. The number of medallions available is strictly regulated, keeping the fleet small. As a result, medallions can only be found on secondary markets at a price of nearly 200,000 euros in Paris ($219,000). In 2009, the parliament authorized a new category of taxis that could be booked in advance – and couldn’t be hailed in the street. The market expanded slowly, until Uber entered the game in 2011.

 

Taxis were never happy about the 2009 law, but they became irate when Uber arrived, as the application was jeopardizing their market share. In 2014, the tension increased when Uber launched UberPop. Uber’s new service overhauled the organisation of the taxi market. On one hand, anybody could easily register as a driver. On the other, the flexibility, the convenience and the cheaper price of UberPop attracted many traditional taxi customers, threatening for the first time taxi’s monopoly.

 

Taxi drivers first went on strike in January 2014, blocking highways and vandalizing Uber cars. The government heard taxi drivers’ concerns and decided later the same year to make UberPop illegal – Uber’s black-car service being still legal. In return, Uber attacked the law for being against the French Constitution and announced they would support and pay the fine of UberPop drivers that have been pulled over. This enraged taxi drivers even more, and on June 25th, 2015, they organized another of their ‘Operation escargot’ (blocking traffics on main highways by driving very slowly) coupled with a violent protest that paralyzed Paris’s traffic. In addition, some taxi drivers vandalized Uber cars – including those legally operating – and even beaten some of Uber’s users and drivers. A few days later, Uber executives were detained by the French police. And less than a week later, Uber announced the suspension of their UberPop service in France ‘in gesture of peace’ until the court decision.

 

Background Articles

• “User’s French Resistance“, by Liz Alderman (New York Times)

• “Uber Executives Detained as France Wages Battle over Ride-Hailing App“, by Andrea Peterson (Washington Post)

• “UberPop, jugé illégal, n’a pas fini d’énerver les taxis“, by Robin Korda (Slate France)

• “The On-Demand Economy: Workers on Tap” (The Economist)

Key Quote

France is known for shielding workers, strategic industries and a variety of professions from “concurrence déloyale,” or unfair competition. Completely altering the landscape in which businesses operate is not viewed as positively in France as it is in Silicon Valley.” (New York Times)

Context

Why is Uber experiencing such troubles in Europe, and especially in France? The company sees its service as a marketplace that connects people who want to earn money with people looking for a ride. But France, home of one of the most protective regulatory regimes in Europe, sees it in a radically different way. The country has a long tradition of protecting workers and most of industries from unfair competition. In other words, disrupting the landscape in which businesses operate is badly considered, making UberPop typically un-French.

 

Uber not only disrupts traditional taxi services’ business landscape, it also pressures the French social model. In the aftermath of WWII, France built a strong welfare state where high taxes are coupled with extensive unemployment, health and pensions benefits for everyone. Many factors such as the economic crisis in the 1980s, globalization in the 1990s, and the ageing French population shook up France’s social model. Uber encourages new business models where drivers are no longer employees – but freelances, through a legal status called “auto-entrepreneur”.

 

Freelances bring about two main issues for the French social model. First, freelances pay lower incomes taxes and do not have to buy an expensive medallion to operate as taxi. In addition, there is no systematic control of car insurance and other requirements. This situation creates an unfair competition with taxis. They pay higher taxes and are subject to many legal constraints. Therefore, there is a need to level the field for all players. But in which direction?

 

This brings the second issue. As a freelance worker, an individual contributes little to the pension plan and does not contribute to the employment insurance at all. In the long term, if the freelance status spreads, this could lead to a social dumping and will create two categories of workers: on one hand, employees with access to full social benefits if unemployed or when retired, and on the other, the freelance worker with precarious social benefits. This two-class system is not compatible with the French social model of mutualisation of costs and risks to ensure equal access to social benefits to everyone.

 

In the context of a rising unemployment in France, Uber also contributes to the debate on job creation. The French economy minister, Emmanuel Macron, who recently cited Uber as an example for France, has pushed for reforms to ease regulations as well as to deregulate certain industries to encourage competition. At the same time, the younger generation, 25 percent unemployed and thrilled by becoming ‘entrepreneur’, was providing a large share of the UberPop drivers. The Uber case highlights the government’s conflicting views – the jobs on one hand, the taxi industry and the social model on the other.

 

There are many other side aspects that participate to the conflict between Uber and taxi drivers. One of them is the technology. As French taxi industry was reluctant to use technology (such as geolocation for the taxi fleet), Uber is offering a service with real added value, especially for the urban, connected, and global generation. One last but not least aspect raised by the Uber case is the typical attitude of taxi drivers in France, especially in Paris: often rude – and you should not expect them to always take the shortest route. The user experience created by Uber is radically different. There are many reasons why Uber is ramping up in France. And it is not only about the money.

 

Discussion Questions

• How can highly regulated businesses and professions survive or adapt to new business models, especially those enabled by new technology?

• New apps, such as Uber, AirBnB are often considered as jeopardizing the old social model of old European welfare states because they promote precarious freelance status and raised issues of tax collection. Is it possible to reconcile new business models enabled by apps with the European social welfare, or are they intrinsically incompatible?

• New technology creates a virtual market place that allows to connect supply and demand for any type of work. How do we feel about a future where most of us could be workers-on-tap, e.g. freelance and depend on a few apps to provide tasks to do, with sometimes a minimal added-value?