New York Attorney General grapples to regulate new web-based businesses in old ways

The New York Attorney General (AG) had an op-ed in the New York Times presenting a curious mix of resistance to change, insistence on regulating new things in old way, acknowledgement that web-based businesses create some value and regulators can’t always enforce rules intelligently, and sprinkled now and again with the barely disguised threat that regulators will not be refused in their efforts to assert dominance over the upstarts. Actually, the threat is not even barely disguised:

Just because a company has an app instead of a storefront doesn’t mean consumer protection laws don’t apply. The cold shoulder that regulators like me get from self-proclaimed cyberlibertarians deprives us of powerful partners in protecting the public interest online. While this may shield companies in the short run, authorities will ultimately be forced to use the blunt tools of traditional law enforcement. Cooperation is a better path.

Ah, yes, the “blunt tools of traditional law enforcement.”

The two targets of the piece are room-sharing service Airbnb, with which the AG’s office has already clashed in court, and car-finder Uber, which the AG may or may not charge with price gouging for the company’s surge pricing policy.

Another example is Uber, a company valued at more than $3 billion that has revolutionized the old-fashioned act of standing in the street to hail a cab. Uber has been an agent for change in an industry that has long been controlled by small groups of taxi owners. The regulations and bureaucracies that protect these entrenched incumbents do not, by and large, serve the public interest.

But Uber may also have run afoul of New York State laws against price gouging, which do serve the public interest. In the last year, in bad weather, Uber charged New Yorkers as much as eight times the company’s base price. We are investigating whether this is prohibited by the same laws under which I’ve sued gas stations that gouged motorists during Hurricane Sandy. Uber makes some persuasive arguments for its pricing model, but the ability to pay truly exorbitant prices shouldn’t determine someone’s ability to get critical goods and services when they’re in short supply in an emergency. I’m hopeful that the company will collaborate with us to address the problem thoughtfully.

You know the Seinfeld/Uber story, right? Last December during heavy snows in Manhattan Jessica Seinfeld used Uber to get her children to Saturday evening social obligations and, due to the company’s surge pricing policy, was charged $415. Even though the app notifies you of the price up front, before you call a car, Ms. Seinfeld felt compelled to complain on Instagram with a picture of her $415 charge and the caption, “UBER charge, during a snowstorm (to drop one at Bar Mitzvah and one child at a sleepover.) #OMG #neverforget #neveragain #real”

Uber, the AG’s office is giving you time to think it over, so what will it be: thoughtful collaboration or the “the blunt tools of traditional law enforcement”?

But I’m not sure what kind of thoughtful collaboration with the AG’s office is going to help Uber get the children of the rich and famous through the snow to their social obligations in a timely fashion. We can cap the amount that the much, much poorer private car drivers of New York City can offer to drive the offspring of the rich and famous through the snow, but that probably will lead those much, much poorer private car drivers to head home instead, and force the rich and famous to send their doormen out into the streets to compete for access to the limited supplies of well-regulated taxis.

 

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One thought on “New York Attorney General grapples to regulate new web-based businesses in old ways

  1. I am outraged to learn that Ms. Seinfeld collaborated in a possilbly illegal price gouging deal by offering to pay far above the “reasonable” rate for services delivered to her.

    If she and all other actual and potential collaborators had refused to pay more, then other less fortunate and more needy people would have been able to buy those transportation services at the usual rate. She used (it seems) her considerable wealth without thinking.

    I also call on all wealthy people to refuse to pay ridiculous prices for caviar and filet mignon. Refuse to pay more than $12/lb for caviar and $8/lb for filet. Give the rest of us a chance. Don’t raise market prices. Don’t collaborate in gouging the rest of us.

    Money. Use it responsibly. Leave something for the rest of us. Put an end to luxury goods.

    Now, about your expensive home or apartment ….

    EasyOpinions.blogspot.com

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