American ride-hailing giant Uber and the Karnataka government have long been locked in a battle over the recently passed cab aggregation rules. With the former continuing to defend its decision of surge pricing, the Karnataka High Court dealt a final blow by rejecting its plea challenging the state’s authority over such decisions.
Under this decision, the high court has ordered the cab aggregators, including both Uber and home grown rival Ola to comply with key rules and limit surge pricing on their platform. The high court agreed with the government and unheld some provisions which were contested by Uber in its objection in June. But, its pleas regarding the various regulations defined in the cab aggregation rules have rejected for the final time.
For those unaware, Karnataka government was the first state to lay down regulations for cab aggregators under the Transportation Technology Aggregators Rule, 2016. In brief, the rules state that online ride-hailing services need to cap price bands, install panic buttons in cabs, and driver being a resident for 2 or more years, among others. These actions have now also been emulated and implemented by Maharashtra, Delhi and West Bengal.
Post this final decision, Uber has been granted a month’s time to comply with the regulations and obtain a license to operate in the state. Previously, the ride-hailing giant also complained about the Karnataka transport ministry not complying with them and rejecting their applications without any valid reasons. They also accussed them of favoring the local rival Ola and granting them a licence without much effort.
In addition, the high court further added that the state was within its right to frame such aggregation rules for ride-hailing apps but also said that they should encourage and promote the startups in the taxi sector. It also maintained the status quo on surge pricing, which they defined as an issue which affects the populous and asks them to shell out fares multiple times of what they should actually be paying. Thus, Ola and Uber are free to implement surge pricing but not exceed the set limit of Rs. 19.50 per km, including a wait charge of Rs. 1 per km.
While the court upheld most of the provisions put in place by the government, it also rebuked and partly struck down some of those — calling them ‘unconstitutional.’ It added that the transport authorities have no right to suspend or cancel a cab aggregator’s licence if a criminal complaint is filed against a driver or an employee of the company. The judge also struck down rules related to having a minimum fleet of 100 vehicles and the state demanding personal information about passengers. The users have a right to privacy and unnecessary info in the hands of the state could be abused by anyone. Also, the cab aggregators now also don’t need to deposit Rs 1 lakh to register up to 1,000 taxis.
The decision of the Karnataka High Court is a definite setback for both of the major cab aggregators Ola and Uber operating in the country. They’ll now need to comply with the regulations set in place by the different governments and focus in growing their business with new offerings and services.
Ola has recently upgraded its tech services, inlcuding rich notifications but Uber has yet again beaten the local rival with the release of the completely redesigned app experience. The new Uber app is minimalistic and shifts focus to social community(i.e friends and family) instead of being a simple basic aggregation app.