Uber, the San Francisco startup that connects consumers with on-demand limousine service, said Friday that it plans to begin offering ride-sharing in Chicago and several other cities.
Uber launched in Chicago in September 2011 and has added a lower-cost taxi option and pushed out to the suburbs. Customers request rides via a mobile application and typically are picked up in 10 minutes or less. The company stores credit card information so no cash is exchanged, and passengers and drivers rate each other.
Ride-sharing startups also use mobile apps and cashless transactions. But instead of working with commercially licensed limo and taxi drivers, ride-sharing companies such as Lyft and SideCar rely on everyday folks to ferry passengers. Drivers must undergo background checks and screening before being added to the system. Riders agree to pay a certain amount, which the company describes as a donation, and drivers keep a portion. San Francisco-based SideCar launched in Chicago in mid-March.
Uber Chief Executive Travis Kalanick said his company initially shied away from ride-sharing because he felt those "apps were taking extreme regulatory risk in rolling out." But over the last year, California gave ride-sharing companies explicit permission to operate and signed such an agreement with Uber. In several other cities where Lyft and SideCar have operations, Uber saw that authorities appeared to have a "non-enforcement policy" that the company is taking as "tacit approval," Kalanick said. Chicago is one of those cities.
Kalanick said Uber plans to wait 30 days from the time a ride-sharing company launches in a city, then look to roll out its own service. But he said he does not view Uber's move as a defensive one against competitors such as SideCar, but rather "an opportunity to provide more Uber-quality, realiable transportation at a lower cost."
Kalanick stressed that the service will be safe, with ride-sharing drivers undergoing "much stricter background checks" than what is done with commercial drivers.
In Chicago, Uber is facing a lawsuit from the city's major taxi operators, who say the startup is violating taxicab and livery service regulations. Uber and its competitors, including Lyft and SideCar, have raised the ire of the Taxicab, Limousine & Paratransit Association. The group, which says it is the oldest and largest transportation trade organization of its kind in North America, issued a report last month describing Uber, Lyft and SideCar as rogue apps "that operate outside of the regulatory framework, thereby failing to protect the public."
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