Ridesharing company

Yellow Uber car in Moscow

A ridesharing company (also known as a transportation network company, ride-hailing service; the vehicles are called app-taxis or e-taxis) is a company that, via websites and mobile apps, matches passengers with drivers of vehicles for hire that, unlike taxis, cannot legally be hailed from the street.

Ridesharing companies were founded after the proliferation of the Internet and mobile apps: Uber was founded in 2009, Ola Cabs was founded in 2010, Yandex Taxi was launched in 2011, Sidecar was launched in 2011, Lyft was launched in 2012, DiDi was launched in 2012, Careem began operations in 2012, Bolt was founded in 2013, and Free Now was founded in 2019.

The legality of ridesharing companies by jurisdiction varies; in some areas they are considered to be illegal taxi operations, while in other areas, they are subject to regulations that can include requirements for driver background checks, fares, caps on the number of drivers in an area, insurance, licensing, and minimum wage.

Studies have shown that ridesharing companies have created net jobs and improved the efficiency of drivers of vehicles for hire due to advanced algorithms that pair riders with drivers.

Terminology: ridesharing vs. ridehailing

Although the term "ridesharing" is used by many international news sources, in January 2015, the Associated Press Stylebook, the authority that sets many of the news industry's grammar and word use standards, officially adopted the term "ride-hailing" to describe the services offered by these companies, claiming that "ridesharing" doesn't accurately describe the services since not all rides are shared, and "ride-sourcing" only is accurate when drivers provide rides for income. While the Associated Press recommended the use of "ride-hailing" as a term, it noted that, unlike taxis, ridesharing companies cannot pick up street hails.

The term "ride-sharing" has also been defined to refer to on-demand carpooling or shared transport, whereas "ride-hailing" has been defined as the hiring of a private driver for personal transportation.


Airports in California, such as the San Francisco International Airport, regulate where TNC vehicles may pick up, drop off, or wait for passengers.

Criticism from taxi companies and taxi drivers

Values of taxi medallions, transferable permits or licenses authorizing the holder to pick up passengers for hire, have declined in value significantly. In 2018, this led to failures by credit unions that lent money secured by taxi medallions and suicides by taxi drivers.

Legal cases by taxi companies and taxi drivers

No lawsuit against Uber in which the plaintiffs were taxi companies has ended with a judgment in favor of the taxis. The only case that proceeded to trial, Anoush Cab, Inc. v. Uber Technologies, Inc., No. 19-2001 (1st Cir. 2021), which alleged that Uber caused asset devaluation by competing unfairly, resulted in a full verdict for Uber.

Flywheel, the largest operator of taxis in San Francisco, sued Uber in 2016, alleging antitrust violations and predatory pricing. In 2021, a federal judge threw out the bulk of the case and Uber settled the remainder of the case by integrating Flywheel taxis into its mobile app.

In 2019, 6,000 taxi drivers, represented by law firm Maurice Blackburn, filed a lawsuit against Uber in Australia alleging illegal taxi operations and financial harm. A trial is scheduled for March 2024.

Driver classification under employment law

Unless otherwise required by law, ridesharing companies have classified drivers as independent contractors and not employees under employment law, arguing that they receive certain flexibilities not generally received by employees. This affects taxation, working time, employee benefits, unemployment benefits, and overtime benefits and has been challenged legally.

Jurisdictions in which drivers must receive the classification of "employees" include the United Kingdom (after the case of Aslam v Uber BV which was decided by the Supreme Court of the United Kingdom), Switzerland, New Jersey, and the Netherlands. California Assembly Bill 5 (2019) was passed to force drivers to be classified as employees in California, although ridesharing companies received an exemption by 2020 California Proposition 22, a ballot initiative. Ridesharing companies spent tens of millions of dollars on the campaign.

Compliance with minimum wage laws

Some drivers earn rates that are below minimum wage; as a result, in some jurisdictions, laws were passed to guarantee drivers a minimum wage before and after expenses.

Safety issues

Crimes have been committed by rideshare drivers as well as by individuals posing as rideshare drivers who lure unsuspecting passengers to their vehicles by placing an emblem on their car or by claiming to be a passenger's expected driver. The latter led to the murder of Samantha Josephson and the introduction of Sami’s Law. Ridesharing companies have been accused of not taking necessary measures to prevent sexual assault. They have been fined by government agencies for violations in their background check processes.

Ridesharing has also been criticized for encouraging or requiring phone use while driving. To accept a fare, some apps require drivers to tap their phone screen, usually within 15 seconds after receiving a notification, which is illegal in some jurisdictions since it could result in distracted driving.

Ridesharing vehicles in many cities routinely obstruct bicycle lanes while picking up or dropping off passengers, a practice that endangers cyclists.

Price fixing allegations

In the United States, drivers do not have any control over the fares they charge. A lawsuit filed in California, Gill et al v. Uber Technologies, Inc. et al, alleged that this is a violation of the Sherman Antitrust Act of 1890; the lawsuit was forced to arbitration.

Insufficient accessibility

Ridesharing has been criticized for providing inadequate accessibility measures for disabled people, in violation of local laws.

In some areas, vehicle for hire companies are required by law to have a certain amount of wheelchair accessible vans (WAVs) in use. However, most drivers do not own a WAV, making it hard to comply with the laws.

While ridesharing companies require drivers to transport service animals, drivers have been criticized for refusal to transport service animals, which, in the United States, is in violation of the Americans with Disabilities Act. In 2021, an arbitrator awarded $1.1 million to a visually impaired passenger who travels with a guide dog because she was denied rides 14 separate times.

Bias against passengers in certain demographic groups

Complaints that drivers have not accepted ride requests from passengers in certain demographic groups has led some ridesharing companies to hide passenger identities until the ride request is accepted by the driver. A 2018 study in Washington, D.C. found that drivers cancelled ride requests from African Americans and LGBT and straight ally passengers (indicated by a rainbow flag) more often, but cancelled at the same rate for women and men. The higher cancellation rate for African American passengers was somewhat attenuated at peak times, when financial incentives were higher.

Traffic congestion

Studies have shown that especially in cities where it competes with public transport, ridesharing contributes to traffic congestion, reduces public transport use, and has no substantial impact on vehicle ownership and increases automobile dependency.

Dead mileage specifically causes unnecessary carbon emissions and traffic congestion. A study published in September 2019 found that taxis had lower rider waiting time and vehicle empty driving time, and thus contribute less to congestion and pollution in downtown areas. However, a 2018 report noted that ridesharing complements public transit. A study published in July 2018 found that Uber and Lyft are creating more traffic and congestion. A study published in March 2016 found that in Los Angeles and Seattle the passenger occupancy for Uber services is higher than that of taxi services, and concluded that Uber rides reduce congestion on the premise that they replace taxi rides. Studies citing data from 2010 to 2019 found that Uber rides are made in addition to taxi rides, and replace walking, bike rides, and bus rides, in addition to the Uber vehicles having a low average occupancy rate, all of which increases congestion. This increase in congestion has led some cities to levy taxes on rides taken with ridesharing companies.

A study published in July 2017 indicated that the increase in traffic caused by Uber generates collective costs in lost time in congestion, increased pollution, and increased accident risks that can exceed the economy and revenue generated by the service, indicating that, in certain conditions, Uber might have a social cost that is greater than its benefits.

See also

This page was last updated at 2024-01-01 00:14 UTC. Update now. View original page.

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