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Uber Win: DC City Council Shelves Anti-Disruption Amendment

· July 10, 2012

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In a (temporary) victory for disruptive industries and Internet innovation, the DC City Council has just announced–in response to a flood of Internet outrage–that it is removing an amendment that would have mandated a price floor for Uber (a disruptive transportation company utilizing the Internet to compete with traditional cab companies) that would have made the service’s minimum price 5x more expensive than the minimum price of cabs.

[Side note: DisCo blogged about the company a few weeks ago and highlighted the incumbent industry pushback against the disruptive new business.]

The shelving of this clear attack on a disruptive innovator is another signal that the Internet is coming of age as a political force (not just as a medium for political communication, but as a cause in and of itself).  In many ways, this was a local politics analog to the SOPA fight.  A politically powerful entrenched industry [read: Hollywood and DC taxicab commission] was defeated by a grassroots campaign by a loosely connected group of “Internet activists,” much to the surprise of the political establishment.

The irony is that the same phenomenon is at play in both the business and political arenas.  Uber used the Internet to lower the transaction costs of providing “sedan-class” transportation services and Uber’s devoted fans used the Internet to lower the transaction costs of mounting a political movement that quickly allowed a loosely linked group of people with a common cause to overturn legislation being pushed by a local political juggernaut. (However, the victory is only temporary, as the amendment’s author has stated that it will be reconsidered this fall.)   It is refreshing to see that the Internet is developing into a political force that can support the disruption and change it is unleashing on the business world.

The incident also produced one of the better recent statements by a politician.  DC Councilmember David A. Catania (I-At large) commented:

“I use the service and think it’s a great one.  Our customers are not the taxi cabs, our customers are the residents . . . I didn’t take an oath of office to support the taxi cab industry.”

Amen!  (The incident also caught the eye of Rep. Jason Chaffetz who tweeted his support for the company and for consumers.)

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.