It is time to legislate on Uber

Lau Nai-keung argues that clarifying the legal framework in which ride-hailing services operate will send out a message that the SAR is a friend to innovation. 

Two Hong Kong Uber drivers were fined last Friday after pleading guilty to driving without proper licenses - the latest slap on the wrist for the global ride-sharing giant. 

The pair were among seven Uber drivers arrested in an undercover police sting in August. The charges against them were "driving a motor vehicle for the carriage of passenger for hire or reward" without a proper license, and driving without third party insurance.
 
Despite the epic amount of financing that it has received, Uber is facing obstacles around the world. On the one hand, there are Luddite taxi drivers who sabotage the Uber cars and beat the Uber drivers up; on the other hand, its legality is increasingly being challenged around the world. The Hong Kong ruling is nothing but the latest setback. 

This brings us to a timely reminder that Uber is more than a "tech company". In fact, most "Internet startups" are much more than "tech companies". In the tech industry, changes happen mostly by themselves - by that we mean progress is internally driven. A portable storage device I purchased a month ago had the capacity of 32GB; a newer version just released stores 64GB and is also smaller and cheaper. 

In other industries, innovations often mean the removal of legal obstacles. Big conglomerates emerged only after the world wars. Many of them were, and still are, oligopolies. In the US, for example, these oligopolies were anointed by the federal government with policies (and in wartime, large orders) that kept out competitors. This did not seem as dubious to government officials and the public at the time as it sounds to us today. The rationale is if a two-party system ensured sufficient competition in politics, why couldn't a similar system work for business too? 

Gradually, people realized that anti-competitive policies were doing more harm than good. In the US during the Carter administration, the government began to eliminate the oligopolies by introducing more competition. The word used for this process was deregulation, but what really happened was de-oligopolization. It happened to one industry after another. Two of the most visible to consumers were air travel and long-distance phone services, which both became dramatically cheaper after deregulation.
Deregulation has a liberating effect. It promotes competition and innovation. However, deregulation can also go wrong, as in the case of deregulation in the financial industry in the 1980s, which ultimately led to the financial tsunami in 2008. 

The point is, innovations are much more than technology. They are inevitably embodied in concrete social forms, such as companies, or the patent process. That is why innovations often also intersect with regulations, as in Uber's case. 

The current model that Uber is operating under is not perfect. The horrible rape stories bear testimony to the risks associated with the new way of finding a driver. However, this does not mean that the taxi industry is not inefficient, overpriced and not meeting the people's needs. It certainly is the case with our city's taxi industry. 

The Chief Executive has established an Innovation and Technology Bureau to promote innovation in the city. The new bureau may consider passing an Uber law in the Legislative Council to fill the void that has already been created by technology. By proper legislation, we can bring order to the chaos that now exists in this space. If we do it right, we can even guide companies such as Uber into reducing risks and providing more convenience. 

The fined Uber drivers were charged with driving without third party insurance. The irony is that no insurance company will underwrite the risk if Uber's legality is uncertain. This brings us full circle: By keeping Uber's legality uncertain, we are preventing it from doing things properly and complying fully with the law. 

An Uber law is not just for Uber. It tells the world that Hong Kong is willing to nurture new business models even when they may seem at first sight to be in conflict with existing rules. This can certainly become the city's new competitive edge.