Toronto’s cap on new Uber licences is good, actually

After years of regulatory capture, the city is finally setting limits and the Silicon Valley giant is crying foul
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Uber and its supporters on city council and in the business community are lashing out after council voted to temporarily pause the issuing of new vehicle-for-hire licences. It’s a sharp departure for a city whose regulatory processes have long been captured by the multinational platform monopoly, and a positive and gutsy step for Toronto’s newly-elected mayor Olivia Chow and the city administration.

The problem for Uber is that their business model relies on an oversupply of drivers. If the number of drivers is limited, they’ll have to pay them more.

Council decided to temporarily pause the issuance of vehicle-for-hire licenses at 52,000 — 10 times the historical, pre-Uber average — until a long-overdue sector review report is completed in 2024. Councilors argued the pause was necessary to avoid undue harm if the sector were to grow back to pre-pandemic levels, when Toronto had 92,000 licensed Uber drivers, as many as in New York City despite being a third of its size. In 2019 alone, this fleet replaced 31 million public transit trips with rides in private vehicles.

A temporary pause freezes some applications while a municipality reviews its policies, the status of required infrastructure, etc. It’s a modest step to ensure there isn’t an oversupply of drivers, leading many of those drivers to be unable to earn a living despite paying for a licence. The problem for Uber is that their business model relies on an oversupply of drivers. If the number of drivers is limited, they’ll have to pay them more. Desperate, precarious drivers will compete against each other to accept low-paying fares. Drivers in a well-regulated industry that balances supply with demand will command a living wage.

In the face of this modest and common sense move, we’ve witnessed dramatic pearl-clutching from some councilors and members of Toronto’s business community, including the Toronto Region Board of Trade (TRBT).

These voices claim to represent the public, but remain inexplicably enthralled with Uber, despite years of revelations that shiny Silicon Valley-based tech companies have not served the public good, advanced Canadian industry or supported local economic development.

New technology meets old-school exploitation

Uber is an $89 billion company that has steamrolled its way into city after city. The “Uber Files,” a recent leak of 124,000 emails, texts, memos and slide decks, detail how the company manipulated elected officials and rewrote legislation meant to regulate its operations. These documents were obtained in 2022 by the Guardian and shared with the International Consortium of Investigative Journalists (ICIJ) and the Toronto Star.

In a detailed exposé, the Star’s Sara Mojtehedzadeh reported how the revolving doors between Municipal Licensing and Standards (the regulator), the mayor’s office, lobbying firms, and Uber resulted in Toronto being one of the first big markets where Uber succeeded in rolling back existing vehicle-for-hire regulation in favour of a company-friendly framework.

It’s been no secret that Mayor Tory was a “fan,” and Uber got what it needed to enter Canada’s largest market unobstructed.

This process involved eliminating existing emission controls, driver training programs, insurance requirements, and city control over vehicle numbers and fares. It’s been no secret that Mayor Tory was a “fan,” and Uber got what it needed to enter Canada’s largest market unobstructed.

Toronto’s lobbyist registry chronicles how the company encouraged city council to deregulate and set the stage for what is now a near-monopoly. As reported by the Star, between 2013 and 2022 Uber logged 4,700 communications with staff, councilors and the mayor’s office. Most of these contacts, about 70 per cent, took place between 2015 and 2016 when the company captured Toronto’s regulatory process, paving the way to an Uber-friendly city.

To put this into perspective, Alphabet subsidiary and Google sister company Sidewalk Labs, which tried to build a surveillance testing site and privatize large chunks of Toronto’s waterfront, communicated 1,550 times with staff, decision-makers and government officials between March 2018 and May 2019 alone. That translated into 110 lobbying contacts monthly, 27 contacts a week or 5.5 daily. By now, we should have all learned a thing or two about Silicon Valley’s playbook.

While some residents, business leaders, academics, community advocates, and elected officials opposed Sidewalk Labs’ project, it received noteworthy support from co-opted civic leaders and organizations like the TRBT. Where we might have hoped they would advocate for domestic technology, intellectual property, and public interest policy, we instead witnessed a full-throated defence of Sidewalk Labs’ efforts to harvest our data on publicly-owned land.

Fast forward to today, and we see a rush to the defence of Uber’s monopolizing aspirations from some elected officials, most notably status-quo councillor Brad Bradford (who inexplicable continues to carry water for former Mayor Tory and Uber), some members of Toronto’s business community, and the TRBT — even under new leadership who should know better.

Once again, these cheerleaders are ready to peddle gig work with little to no consideration paid to Uber’s impact on local economic development, labour, the environment, congestion or public transit.

Induced precarity is the business model

What is really at stake for companies like Uber? Why do they call up their friends for statements of support when faced with a temporary cap?

Uber relies on oversupplying the market with drivers. It does so to reduce pick-up times and wages. This reckless oversupply of drivers is essential for the company. Driver oversupply ensures customer pick-up times remain low, but the burden of maintaining these rapid response times is shouldered by precarious drivers who spend much of their time “deadheading” or driving empty and “unengaged” as they compete with other drivers.

In 2022, about 2,700 drivers cancelled their licenses on average every month, or 36,000 drivers in total.

City data shows drivers spend 48 per cent of their time deadheading, and Uber states that drivers earn $32/hour of “engaged” time, meaning drivers get paid about $16 for an actual hour of work. When you factor in gas, insurance and wear and tear, drivers are left with $7.90/hour at day’s end, way below minimum wage.

Drivers figure out very quickly that they can’t make a living, and as city data obtained through an access to information request shows, they quit in droves. In 2022, about 2,700 drivers cancelled their licenses on average every month, or 36,000 drivers in total.

A cap on overall vehicle-for-hire license numbers means that if business levels increase, the company will have to utilize its drivers more efficiently. As a result, drivers would spend less time deadheading and more time engaged, translating into fewer kilometres per vehicle travelled, fewer total emissions, fewer cars on the road, more trips taken by public transit, and more money in drivers' pockets. It would begin to force Uber to be a better employer, with better worker retention, and to re-code its algorithms towards maximizing social efficiency.

Regaining control over the vehicle-for-hire policy in Toronto is no small task. Eight years of regulatory capture under Mayor Tory has allowed the company to induce additional demand for car-based travel. The company seemingly still has its stooges on council and will hire all the communications, lobbying and political help it can get to launch its counter-offensive.

Resources are no obstacles for Uber, but the company’s own history, revealed by the ICIJ and the now widely available data illustrating Uber’s detrimental impact on labour, the environment, congestion and public transportation, has made it easier for the public, politicians and business leaders to engage with the company critically.

Thorben Wieditz is an urban geographer who works at the intersection of labour, community and cities. He is the co-founder of MetStrat, a research and campaign firm that specializes in public interest campaigns.
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