Uber hit with cap as New York City takes lead in crackdown

In this Jan. 31, 2018, file photo, a Lyft logo is installed on a Lyft driver's car next to an Uber sticker.
In this Jan. 31, 2018, file photo, a Lyft logo is installed on a Lyft driver's car next to an Uber sticker. –Gene J. Puskar, File / AP Photo

NEW YORK — Even as Uber has become one of Silicon Valley’s biggest success stories and changed the way people across the globe get around, the company has faced increased scrutiny from government regulators and struggled to overcome its image as a company determined to grow at all costs.

On Wednesday, the tech giant was dealt a major setback in its largest American market as the New York City Council voted to cap Uber vehicles and other ride-hail services. The City Council approved a package of bills that will halt new licenses for Uber and other ride-hail vehicles for a year while the city studies the booming industry. The legislation also allows the city to set a minimum pay rate for drivers.

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The new rules will make New York the first major American city to restrict the number of ride-hail vehicles and to establish pay rules for drivers. New York’s aggressive stance raises questions about Uber’s growth as the company, which has been valued at $62 billion, plans to move toward an initial public offering next year.

Mayor Bill de Blasio and Corey Johnson, the City Council speaker, say the bills will curtail worsening street congestion and improve low driver wages.

“We are pausing the issuance of new licenses in an industry that has been allowed to proliferate without any appropriate check or regulation,” Johnson said before the vote, adding that the rules would not diminish existing service for New Yorkers who rely on ride-hail apps.

De Blasio has supported the legislation and is expected to sign it. The cap on new for-hire vehicles would take effect immediately after the mayor signs the bill.

Uber has warned its riders that the cap could produce higher prices and longer wait times for passengers. Uber criticized the City Council’s decision, but said the company would work to keep up with growing demand despite the limit on new vehicles.

“The city’s 12-month pause on new vehicle licenses will threaten one of the few reliable transportation options while doing nothing to fix the subways or ease congestion,” Josh Gold, a spokesman for Uber, said in a statement.