Uber warns bill would make ride sharing impossible in Brazil

Potential law would require insurance for carrying passengers and pension benefits for drivers

Fighting yet another threat to its global business, Uber is warning that a bill before Brazil’s Congress on Tuesday would make ride-sharing apps impossible in Latin America’s largest nation, the company’s second-largest market.

The Senate was expected to vote as early as Tuesday on a bill passed in April by the lower house that would require municipal governments to regulate ride-sharing apps, including requiring insurance for carrying passengers and pension benefits for drivers, as well as increased oversight of drivers and their cars.

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As senators discussed the matter in the chamber, hundreds of drivers – of taxis and for ride-sharing apps – followed the session from the hallway, cheering those who spoke in favour of their positions. Some drivers called out the names of senators who disagreed with them and booed. Hundreds more from around Brazil parked their cars in front of Congress.

Senate President Eunicio Oliveira has said senators are looking to find a compromise that balances the interests of the two types of drivers, that “doesn’t crush one and doesn’t crush the other.”

Congressman Carlos Zarattini, who wrote the bill, has acknowledged that it would likely end ride-sharing as it currently exists, but he and other lawmakers say the apps offer too little protection for their drivers.

As it stands, the bill will “strangle” ride-sharing apps, said analyst Fabro Steibel, without offering clear benefits to passengers or drivers.

“It is 19th century legislation for a 21st century economy,” said Steibel, who is the executive director of the Institute for Technology and Society of Rio de Janeiro, a think-tank.

One thorny issue in the bill is a requirement that drivers own their cars, which would exclude the many drivers who rent. Another is a requirement that drivers get an authorization from the city in which they operate. That could mean drivers couldn’t take passengers from Sao Paulo, for instance, to the city’s international airport, which is in another municipality.

Uber has called the changes a “covert ban” and said they would make its business unviable. It has launched a massive lobbying campaign against the bill, collecting the signatures of more than 800,000 Brazilians who say they oppose it. On the Senate website, the survey that accompanies every bill before Congress shows that more than 200,000 people have said they don’t support the bill, while more than 40,000 do.

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Uber has faced similar challenges in other countries. Last month, London’s transport regulator stripped Uber of its license, though the company continues to operate while it appeals. The company has been the subject of litigation in France, where it has been banned from offering rides with non-professional drivers. It is fighting new regulation in Quebec and threatened to pull out of that market but now says it hopes to strike a deal.

But walking away from Brazil, one of the jewels in Uber’s crown, could be harder. The Brazilian market has exploded recently and is now the second-largest market worldwide in terms of rides for the company, which provides a smartphone application that allows customers to connect with drivers who it considers independent contractors.

Other similar services exist in Brazil, such as Cabify, but Uber is the major player. The company says it currently has more than 500,000 drivers working for it in Brazil, with more than 17 million users – making Brazil home to about a quarter of the company’s drivers and users worldwide. In Sao Paulo, the largest city, it has 150,000 drivers alone, compared to its more than 37,000 active taxi licenses.

Drivers for the ride-sharing app say the work is a lifeline in an economy struggling to recover from its deepest recession in decades. Unemployment stands at 12.4%, and many drivers say they turned to Uber when they lost more traditional jobs. Rafael Lima, a 22-year-old who was fired by a mattress company earlier this year, said that with Uber he now makes about twice what he did in his previous job.

“If this bill is approved, basically 500,000 drivers will be without income,” said Marlon Luz, a 37-year-old Uber driver who helped organize a protest against the bill in Sao Paulo on Monday. What’s more, passengers who use Uber “will be without urban transport.”

Luz said that’s because Uber drivers are willing to go where many taxi drivers are not: into Brazil’s slums, known as favelas, and the low-income neighbourhoods where public transportation is often scarce.

As in other countries, taxi drivers are accusing Uber of unfair competition, saying the company is able to undercut the prices of cab rides because it doesn’t face the same regulation. That lack of regulation, they argue, puts passengers at risk.

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Roberto Ferreiro, a Sao Paulo cabbie who has been driving for 35 years, said he has seen his business fall off 30% since the arrival of Uber, which coincided with the 2014 World Cup.

Passengers “use it because it’s cheaper. And the question of security? What is cheap ends up expensive,” said the 62-year-old. “If you’re worried about paying a lower price, you also have to worry about your security.”

But Tais Souza, who frequently uses Uber, said she feels safer with the service than in a taxi because the app tracks every journey and records the name of the driver.

She acknowledged that price first drew her to the service, but she continues to use it because of the ease of hailing a car on her phone and the fact that she knows the price of her journey before she gets in.

“Taxis in Sao Paulo are a mafia,” said the 23-year-old who works for a travel agency in the city. “Taxi drivers are losing a lot [because of the apps] and so they are asking the government for help.”

Associated Press writer Mauricio Savarese in Brasilia contributed to this report.

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Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.