Ride-Hailing Firms Face New Challenges in Iran

EghtesadOnline: The widespread clash between ride-hailing services like Uber and Lyft on one side and authorities and old-school cabbies around the globe has made its way to Iran, with municipalities across the country calling on the government and Parliament to "regulate" the online services, while ride-hailing firms oppose such interventions arguing that such moves would certainly create a conflict of interests involving authorities.

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15 August 2018

The Interior Ministry has drafted a bill concerning e-hailing services and submitted it to the government for review, which if approved would put ride-hailing services such as Snapp and Tap30 under the direct supervision of municipalities, reported the Persian economic daily Donya-e-Eqtesad.

Each Iranian city has a taxi organization controlled by the respective municipalities. Furthermore, in order to claim a share of the vast ride-hailing services market, the taxi organizations have introduced e-hailing platforms as well.

Considering a clear conflict of interests that the introduction of the bill would entail, private firms like Snapp and Tap30 have vehemently taken a stand against the bill, Financial Tribune reported.

Furthermore, the companies point out that free competition is essential to expansion of startups, which can lower the price of services, leading to affordability and accessibility for the lower middle classes, a point overlooked in the proposed legislation.

The bill proposes that municipalities determine the fee that can be charged by ride-hailing services in each city they operate in and set a price, which will certainly disrupt competition in the market.

Moreover, the online services will be obliged to obtain licenses from municipalities.

As municipalities have established their own online services, one of them operating in Tehran dubbed Carpino, and pose as rivals to the private sector, their authority over licensing will not be devoid of bias.

>Private Sector Pushes Back

Ride-hailing companies held a press conference on the matter on Saturday, publishing a statement against the proposed law.

The gathering, attended by Snapp and Tap30 officials, companies with the largest share in the market, is hoped to attract the attention of authorities before they make their final decision.

The statement reads, "Have we not created jobs? Have we not obtained all the necessary licenses? Have we not brought peace and prosperity to the public? Complaints against the startups have been minimal, a sign of supervisory success.”

The statement further reads that considering the current economic state of Iran and the widespread pressure that Iranian startups are facing, "it is unfortunate that government bodies are also pursuing to restrict the activities of ride-hailing services."

The main argument behind the statement is that municipalities have a vested interest in the sector and cannot be neutral over the matter and certainly hinder the private sectors' growth.

>Widespread Struggle

The leading ride-hailing application in Iran is Snapp. Founded four years ago, the service is currently available in 26 provinces and 62 cities around the country but the platform still faces hostility.

Just a few days ago in the northern city of Babol, taxi drivers surrounded Snapp's office and refused to let the personnel enter or exit. The police arrested the company employees, saying they have not obtained the necessary licenses from the city's taxi organization.

Startups are required by law to only gain the necessary permission from the E-Commerce Union.

Yellow cabs and e-riding drivers are nervously waiting for government's position on the bill, as both groups' livelihoods hang in the balance.

Either way, the decision will have far-reaching implications and serve as a precedent in all other disputes between traditional and modern modes of business in the coming years.

Given the administration's record in being in favor of Internet-based businesses, observers are hopeful they will not impede activities of private ride-hailing services.

>A Global Issue

Major cities around the globe have been grappling with the same issue as well. In April 2018, New York's yellow taxi drivers joined with drivers from Uber and other app-based ride services to ask for a $15 hourly minimum for all for-hire drivers.

Two days ago, the NYC Council opted for a conservative approach and voted to cap the number of licenses available for ridesharing services for one year in an effort to save the city's yellow cab system.

The world is struggling to regulate the rapid growth of ride-hailing services without delivering a blow to either side of the fight.