Driving Uber Away: First Austin, Now Montreal? There is no reason to make Ubers more like taxis—if anything, taxis need to be allowed to become more like Ubers.
This article is coauthored with Jonathan Hamel.
Visitors to Montreal, Quebec find an open-minded cosmopolitan city with a beautiful skyline, great restaurants and friendly residents. Americans in particular often describe the feeling of visiting a romantic European city, in no small part because Quebec’s official language is French. But there is one much more troubling way in which the Canadian province resembles France—its hostility to ridesharing .
The latest example of this hostility started on May 12, when Quebec’s Minister of Transport Jacques Daoust unveiled draconian legislation specifically designed to shut down ridesharing services. Bill 100, as it is known, would treat ridesharing platforms such as Uber in the same manner as the Montreal taxi industry. If passed, it would force Uber drivers to purchase taxi permits for the “privilege” of conveniently and cheaply transporting people around.
These taxi permits cost approximately $200,000 apiece, which is far too expensive for any part-time driver to afford. In the United States, half of Uber drivers work for less than ten hours a week. If Bill 100 is passed, even students at Montreal’s many colleges who drive with Uber to earn some extra spending money will need to buy taxi permits.
Additionally, the bill would create a single fare structure that applies to all Uber and taxi rides. This would destroy one of Uber’s main benefits—the constant availability of rides, even at times of high demand. Uber achieves this by allowing its drivers to earn higher fares when the demand for rides is greater than the supply of drivers on the road.
Uber has already indicated it will be forced to close its entire Quebec operation if the bill is adopted, something the company and Lyft (its largest U.S. competitor) recently did in Austin, Texas after the city decided to apply outdated taxi regulations to ridesharing. The ensuing madness in Austin—especially after large events and bar close—should give Montreal policymakers pause.
Despite the threat of losing a popular service, and the political repercussions that would follow, the odds of Daoust changing his mind on this question are low. He admitted to never having used Uber. Before presenting his bill, Daoust did not even seem to know what the company’s app did. When asked by a journalist how he could legislate a service he has never tried, the 68-year-old responded that one does not have to try drugs to ban them. This is the same minister who recently blamed missing pages in an important government report on his lack of familiarity with Microsoft Word.
It is difficult to make politicians who want to preserve the status quo at all costs warm up to new technology —but people have not stopped trying. Members of Daoust’s own Liberal Party overwhelmingly voted to support the sharing economy—including Uber, Airbnb and other successful Internet platform companies—at a convention just two days after Montreal’s anti-Uber bill was presented.
Rather than regulating Uber out of existence, policymakers should focus on allowing taxis to better compete with ridesharing services by unbridling them from outdated, burdensome regulations. Unfortunately, the calls for regulations that acknowledge that the taxi system is broken fell on deaf ears. Even Quebec’s Premier, Philippe Couillard, who once supported the positive integration of Uber into the transportation sector, has stepped aside to let Daoust defy the will of his own party.
What could possibly push a government to suppress open competition? Far too often, policymakers prefer to subsidize old, broken models over embracing disruptive innovation. There is no reason to make Ubers more like taxis—if anything, taxis need to be allowed to become more like Ubers.
Another dynamic at play is the newly-launched, home-grown Téo Taxi. Dubbed the local “Uber-Killer” by some, the small startup is being promoted by local television star and venture capitalist, Alexandre Taillefer. Essentially, his invention is a licensed taxi company that uses electric cars and runs on an Uber-like app. If this were a true private competitor to Uber, its introduction would be welcome. However, rather than being funded by private capital, the project resembles an arm of the government.
Téo Taxi has received more than $45 million in public funding (excluding the generous subsidies for the purchase of electric cars) since it launched less than a year ago. Uber has received no public funding in Quebec, though in the United States some Florida cities are mistakenly moving to subsidize the company. Since its launch, Téo Taxi has had a painful start. Many customers complain about the application’s spotty GPS location services and its limited service range (only a very small part of downtown Montreal is covered).
The Quebec government routinely talks about Téo Taxi as a standard bearer for innovation in the province, even as it continues to prop up its subpar business model with taxpayer dollars. All the while, free-market solutions end up being suffocated by antiquated regulation. One can see how the government’s treatment of Uber may be directly related to its investment in Téo Taxi. After all, the service’s chances of succeeding would vastly improve if Uber left town.
Other jurisdictions have had to deal with the changes brought by ridesharing. Manyfound some level of light regulation that ensures public safety while encouraging innovation. Quebec’s proposal falls far short of this standard. In Montreal, a city of 1.65 million people, Uber logs over 450,000 rides a month. Polls show broad support across the political spectrum, and the Liberal Party’s most fervent supporters are likely bewildered by their government’s actions.
On the surface, Montreal seems to have all the attractions to be a great global city. But its political leaders have shown their willingness to suppress innovation to protect special interests. If local and provincial policymakers’ stance towards ridesharing is any indication of future legislation, unless you have a taxi license, business in Quebec’s largest city should be done at your own peril.
Jonathan Hamel is a Quebec entrepreneur, tech industry advocate, and speaker. Jared Meyer is a fellow at the Manhattan Institute for Policy Research and the author of Uber-Positive: Why Americans Love the Sharing Economy. Follow Jonathan and Jared on Twitter.
This article originally appeared in Forbes.
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