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New York to cap Uber and Lyft. Will other cities follow suit?

Proponents of the cap have said the regulations will protect drivers, regulate the industry and reduce congestions on the streets.

New York City Council passed regulations on ride-hailing services such as Uber and Lyft on Wednesday, capping the number of vehicles on the road for one year and requiring that drivers be paid a minimum wage.

Mayor Bill de Blasio and Corey Johnson, the City Council speaker, said the regulatory bills will curb cars clogging on the streets and improve low driver wages.

Regulatory changes in New York City, one of Uber’s largest US market, could provide a model for cities eager to combat worsening traffic on the streets that have increased even as they’ve revolutionized transportation.

“Even with high levels of shared trips, funneling travelers from space-efficient modes such as public transit, biking and walking, to space-hogging sedans, SUVs and minivans is not a productive strategy to speed traffic,” writes Bruce Schaller, a former deputy commissioner at the city’s Department of Transportation in “The New Automobility: Lyft, Uber and the Future of American Cities.

Uber and Lyft put 2.8 new vehicle miles on city streets for each mile of personal driving they take away. Both Uber and Lyft have disputed Schaller’s findings.

Uber argued that it saved more than 315 million vehicle miles around the world in 2017 when riders moved to its pool service.

Proponents of the cap have said the regulations will protect drivers, regulate the industry and reduce congestions on the streets. The fallout could affect both Uber and Lyft, as well as its riders.

Could Dampen Upcoming IPOs

The regulatory changes in New York City could immobilize the growth of Uber and Lyft in the U.S. market as both companies are heading towards an IPO. Their business is largely dependent on recruiting as many drivers as they to cut down pickup times.

If more cities follow suit, it could dampen Uber’s growth potential, as well as the effectiveness of its lobbying operation. Last year, Uber recorded more than $7 billion in revenue but lost $4.5 billion.

The ride-hailing services warned that the cap would lead to reduced service in outer boroughs and to higher fares when the city’s transit systems are struggling.

"These sweeping cuts to transportation will bring New Yorkers back to an era of struggling to get a ride, particularly for communities of color and in the outer boroughs," Joseph Okpaku, Lyft's vice president of public policy, said in a statement. "We will never stop working to ensure New Yorkers have access to reliable and affordable transportation in every borough."

The cap does not apply to wheelchair accessible vehicles or areas that have not been affected by congestion.

But the drivers are happy with the proposal

"Our city is directly confronting a crisis that is driving working New Yorkers into poverty and our streets into gridlock," wrote the mayor in a tweet. "The unchecked growth of app-based for-hire vehicle companies has demanded action -- and now we have it."

Drivers have supported the proposal and as it means that the companies will take steps to cut their earnings.  Roughly 80,000 drivers in New York City are affiliated with Uber, Lyft, Via and Juno, according to a report commissioned by the Taxi and Limousine Commission and conducted by The New School’s Center for New York City Affairs. This is up from 12,600 in 2015.

London, Uber recently regained its taxi license after it agreed to comply with stricter regulations, including providing the city with the traffic data it collects. Uber is also embroiled in regulatory battles in Canada, Italy and Brazil.

The package of bills also ensures that drivers earn at least $17.22 per hour.

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