It’s one thing when a politician embraces a profitable company and tries to take credit for its success.
It’s another when a politician seeks out photo ops with a company operating under a currently illegal business model while actively helping grease the skids for that company’s future expansion, all for political benefit in an election year.
That’s what’s happening right now in Illinois with ride-sharing giant Uber. Gubernatorial candidates Pat Quinn and Bruce Rauner, along with a host of other politicians, are falling all over themselves to praise Uber while at the same time working to change the playing field in a heavily-regulated industry to help ensure the company’s success.
On Monday, Democratic Governor Quinn visited Uber’s headquarters in Chicago as part of the company’s announcement it was adding 420 new jobs as part of a expansion of its regional headquarters, contingent on favorable legislation engineered by Quinn being upheld in the state legislature.
He got to hang out with some of the city’s brightest and most talented tech employees while praising Uber. The ride-sharing company, Quinn said, “understands that having the opportunity to get a good job that pays a decent wage, that serves the market and serves consumers—that’s what it’s all about.”
Quinn’s Republican opponent, Bruce Rauner, has been no slouch when it comes to singing Uber’s praises, either. In July, Rauner called on Quinn to veto a bill that would have required a level of background checks and liability insurance for Uber’s drivers. At the time, Rauner called Uber an "innovative, growing company” and that signing the bill was tantamount to saying “Illinois is closed to innovation.”
There’s only one problem: Uber’s less the innovative tech start-up its backers make it out to be and more just a company looking to steal market share by avoiding regulations with the help of well-placed, powerful politicians.
Let’s review some facts. Uber’s business model involves hiring non-professional drivers who use their own vehicles to provide transportation services to customers. The company takes roughly 20 percent of whatever’s earned and provides support, such as smartphone apps that lets customers call for a driver anytime they want.
Uber says it operates in 130 cities. In each of those cities, a taxicab industry already exists, likely heavily regulated by local and municipal governments. To earn market share, Uber must take away existing business from this industry or find new customers currently not using taxi services for one reason or another.
The issue of taxicab regulation is where the rub comes in. Picking up a stranger in a car and driving him or her to another destination is fraught with risk and potential problems all along the way. That’s why every municipality with a taxicab industry actively manages and regulates those who work in the industry, including requiring background checks, commercial liability insurance and the like.
Uber wants nothing to do with any of this. Instead, it wants to hire unprofessional drivers and allow them to operate without any regulation at all. That’s why it’s hired some of the biggest and most well-connected lobbyists, lawyers and public relations firms in the country in a bid to influence municipal and state political leaders to give it a pass.
As of late, that list even extends to David Plouffe, who once ran Barack Obama’s presidential campaign and served as key White House advisor. As well, Chicago Mayor Rahm Emanuel’s brother, Ari, holds a financial stake in the firm.
Uber has parlayed its story of industry innovation into one of the world’s largest corporate valuations, hovering near the $18 billion mark for a company with only a few million in revenues.
Yet all the lobbying efforts in the world can’t cover the fact that what Uber offers is currently illegal in city after city.
Recently, Attorney Generals in San Francisco and Los Angeles County District Attorney Jackie Lacey sent letters to ride service companies like Uber claiming they are operating illegally and warning them about possible legal action if they don’t change their practices. In Washington, D.C., authorities had to ticket Uber drivers for illegal street pick-ups. In Chicago, the company had to be stopped earlier this year from making illegal pick-ups at the city’s busy O’Hare Airport.
As well, some Uber drivers have said the company promise of big paydays doesn’t match reality. As well, there’s a growing consensus among savvy tech industry observers that Uber’s sky-high valuations are more mirage than anything else.
That hasn’t stopped Illinois politicians from standing by the company’s side, however.
In fact, to hear politicians like Quinn tell it, Uber is the veritable future of Illinois economic growth.
“Through innovation and job creation, Uber is helping drive Illinois’ economy forward,” Governor Quinn said in a statement tied to the company’s announcement of new jobs. A few paragraphs later, he touted his own plans to help business, citing programs to help business find “an easier path to creating new jobs and ensuring workers have the skills to drive a 21st century economy.”
Apparently, it doesn’t really matter how a company makes its money for some Illinois politicians to come-a-running.
All that matters, really, is whether it can promise some new jobs in an election year.