Uber expansion strategy: Using consumers and petitions to fight local regulators.

Bans Don’t Scare Uber. But This Proposed Law Might.

Bans Don’t Scare Uber. But This Proposed Law Might.

Moneybox
A blog about business and economics.
Dec. 9 2014 11:21 AM

Why Is Uber Threatening to Leave San Antonio?

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Uber is accustomed to barging into cities and continuing to operate regardless of what local regulators do and say. But in San Antonio the company is currently trying a different strategy: threaten to leave if it doesn't get its way.

On Sunday, Leandre Johns, an Uber general manager, sent a letter to the San Antonio mayor and city council stating that if certain regulations were adopted this week, it would "likely result in Uber closing their operations" in the area. "The only people to benefit will be those who own the taxi companies," the letter continues, adding that keeping Uber around is "important to attract and keep our younger citizens."

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Uber brought its low-cost ride-sharing platform known as UberX to San Antonio in March, and spent several months waiting for a local task force to present recommendations on how its service should be regulated. The proposed changes, according to Johns' letter, would require drivers to get a "full physical and eye exam before driving," "take a pre-scheduled drug test," be certified as able to read and speak English, complete a "defensive driving course," and subject their vehicles to "random checks." Uber estimates that complying with all of this would cost drivers about $300 apiece.

In addition to sending that letter, Uber has started an online petition asking San Antonio residents to "help stop this bill!" The petition currently has 9,077 signatures, about 25 percent away from its goal of 12,000. Here, Uber takes care to sound far more helpless than it does to the mayor and city council—telling readers that local regulators "will force Uber out of San Antonio," not that Uber might choose to leave rather than comply.

Rallying local citizens to its cause has become a tried and true strategy for Uber, which readily admits that it is running a political campaign as much as a business one. When Germany imposed a nationwide ban on Uber in September, the ride service ignored the ruling and kept operating, making the familiar bet that demand for its service would overwhelm attempts by local regulators to suppress it. (Uber's bet turned out to be right; the ban lasted all of two weeks.) As Uber becomes bigger and more pervasive, this tactic gets less and less risky. For every city or country that tries to ban its service, Uber can point to dozens of others that have not, and marshal support from the hundreds or thousands of other riders in nearby areas who like and support its operations.

As San Antonio's government prepares to vote on the proposed regulations, Uber is facing a fresh wave of resistance around the world. In Portland, Oregon, it was hit on Monday with a lawsuit and asked to suspend operations immediately. On Tuesday, it was banned in Spain and Thailand, and over the weekend it was kicked out of New Delhi after a driver was accused of raping a passenger.* In each of these cases, though, the local regulators aren't trying to regulate Uber—they're trying to stop it. Which might explain why Uber is not threatening in these cases to leave, but to stay.

In Portland, Uber is already mustering a counteroffensive with a petition; in New Delhi it has pledged to improve the background check process. In Spain and Thailand it's too soon to tell what will happen, but odds are Uber plans to keep Ubering on anyway. San Antonio alone is the outlier. Right now, Uber claims it's ready to leave if it doesn't get its way. Should the proposed regulations actually pass this week, they'll be an interesting test of how credible that threat is.

*Correction, Dec. 9, 2014: This post originally misspelled New Delhi.

Alison Griswold is a Slate staff writer covering business and economics.