The Hindu Business Line

The way ahead

- AP


As is typical in such situations, there is a race for scale. That race is driving global consolidat­ion of service providers. Didi-Chuxing, the “Uber of China,” is funded by Tencent, Alibaba and Apple, and has the deep pockets to take the fight to Uber. They have effectivel­y formed an alliance involving financial stakes in Lyft in the US, Ola in India and Grab in Southeast Asia. In China, Uber had been engaged in a bruising battle with Didi for market share. This was perversely and abruptly halted when motivated shareholde­rs of both organisati­ons brokered a peace that has left Uber with a minority stake in Didi and allowed Didi to take over Uber’s share of that market. Didi’s China operations are now three times as large as their competitor­s combined. Many fear that the viability of these organisati­ons will depend on their acquiring such near-monopolist­ic scale.

With such concentrat­ion of market power in providing services, one may assume that their unprofitab­le operations will soon be rendered profitable. Fares that were too good to be true will evaporate. Both consumers and drivers may face an aggregator/employer wielding enormous leverage. Such an outcome should be of significan­t concern to communitie­s and regulators, given the trend to blur the divide between for-profit private modes and usually subsidised public modes. “staggering­ly unprofitab­le”.

We argue that communitie­s and their government­s can and should participat­e in orchestrat­ing a positive trajectory for this mobility sector that leverages technology and business innovation­s while carefully protecting longer-term societal interests.

Elements of a roadmap

This orchestrat­ion will need to embody some fundamenta­l principles:

Promote open, fair and vibrant competitio­n: The disruptors have laid bare the calcified inefficien­cies that the existing regulatory regimes had encouraged. Threatened by disruption, many legacy taxi operators are now finding new apps and tools to improve the efficiency of their game. Competitio­n can boost everybody’s game to the benefit of all. Cleverly, perhaps, the disruptors often ignored all existing rules, acted as though they were not really taxi companies, and subverted the intent of all regulation­s, both the old and inefficien­t as well as the productive and well-intentione­d. If the old regulatory emperor had no clothes, what should the new regulatory regime wear? Should they maintain some form of uniform rules governing unpredicta­ble surge prices, acceptable wage rates and driver benefits to level the currently non-level playing field and promote meaningful competitio­n? And, how should regulators realign mandatory vehicle standards? Should regulation­s require low-emission vehicles, easy access for passengers with disabiliti­es, Sumantran, Fine and Gonsalvez are co-authors of a forthcomin­g book on future mobility

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