Editorials 13.7.2017 05:40 am

A new game plan awaits Uber

Uber.

Uber.

Uber’s competitive advantage comes not only from its technology but from how it has positioned itself outside the normal rules of business.

New technology which is considered “cutting edge” also carries with it an almost supernatural aura which mesmerises people to such an extent they do not believe any of the “old rules” apply.

Just look at social media. A lot of people think that they can say what they want in cyberspace because there will be no consequences.

A number of court cases have proved, though, that the centuries-old laws of libel and slander still apply to Facebook as much as they do to a newspaper.

One of the companies which crows loudest about being “disruptive” in the business sector is ride-hailing service Uber. It describes itself as a technology company which is completely turning on its head the “outdated” principles of making money in the taxi industry.

So, its app links drivers and users in what it calls a “seamless” transport experience and it is flying as a business all over the world. Uber’s competitive advantage comes not only from its technology but from how it has positioned itself outside the normal rules of business.

Taxi company competitors say, with some justification, that Uber’s unlicensed partners (the car owners and drivers) don’t have to meet the same rigid rule that the taxi industry does, including in areas such as liability insurance and public driving permits.

Some of those issues are being addressed currently by the government, but the Commission for Conciliation, Mediation and Arbitration (CCMA) has also become involved: it ruled this week that Uber drivers are employees and not independent contractors. This means they are entitled to the same protection under labour laws as other workers.

Uber has appealed the ruling because having to comply with the same rules as the taxi industry would take away a chunk of its competitive advantage.

The disruptor has been disrupted. We wait with interest to see the outcome.

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