In a significant setback for Uber, New York became the first major American city on Wednesday August 8th to halt new vehicle licences for ride-hail services.
The New York Times reports that the legislation, passed overwhelmingly by the City Council, will cap the number of for-hire vehicles for a year while the city studies the booming industry. The bills also allow New York to set a minimum pay rate for drivers.
Since 2015, when pressure was last applied for a cap, the number of for-hire vehicles in the city has surged to more than 100,000. This compares with about 63,000 in 2015, according to figures released by the city.
Mayor Bill de Blasio and Corey Johnson, the City Council speaker, said the bills will help reduce the worsening traffic on the streets and improve low driver wages.
“We are pausing the issuance of new licenses in an industry that has been allowed to proliferate without any appropriate check or regulation,” Mr Johnson said before the vote, adding that the rules would not diminish existing service for New Yorkers who rely on ride-hail apps.
Mr de Blasio praised the bills and said he planned to sign them into law. The cap on new for-hire vehicles would take effect immediately.
Uber has warned its riders that the cap could produce higher prices and longer wait times for passengers if the company cannot keep up with the growing demand. Ride-hail apps such as Uber’s have become a crucial backup option for New Yorkers having to cope with the constant delays on the city’s creaking subway, and they are also popular in neighbourhoods outside Manhattan where the subway does not reach.
New York is the latest city to tackle the question of how to regulate the ever-expanding company, recently valued at $62 billion. In London, Uber’s most lucrative European market, Uber regained its taxi licence in the spring after agreeing to stricter regulations, including providing the city with the trove of traffic data that the firm collects and has often been reluctant to share. Uber has also faced regulatory battles in other American cities, like Austin, Texas, and in countries such as Canada, Brazil and Italy.
Meanwhile, the traditional taxi industry has been decimated by Uber’s rise. The price of a taxi medallion, which is required to operate a taxi in New York, has plunged from more than $1 million to less than $200,000.
Elizabeth Cassarino, a yellow taxi driver, said she supports the cap and hopes it will improve business for taxis. As she drove her cab through the clogged streets of Manhattan on Wednesday, she said her credit cards were maxed out and she had trouble making enough money to pay for food.
“Finally,” she said. “We’re starving to death.”