Uber and Careem: The two major ride-hailing services in Egypt - Egypt Today
CAIRO – 27 May 2018: After a piece in the New York Times, Uber has admitted last March that they often use the software Greyball in several countries across the world to evade local authorities in countries where the car-hailing service is banned. Egypt recently joined the list of countries legally battling the apps after 42 taxi drivers filed a case against UAE-based Careem and US-based Uber in February 2017.
The taxi drivers accused the two companies of violating Egyptian traffic laws, specifically a law banning the use of private-owned vehicles for commercial purposes. Furthermore, the case stated that the two firms were registered as a call center and an internet company, suggesting that they are not legally regulated as ride-hailing services, making them unsafe to the public.
In response to these accusations, the Cairo Administrative Court accepted the case and ordered the suspension of the two companies’ licenses in Egypt. The two companies appealed the court’s verdict and on April 7, Egypt's Court of Urgent Matters ruled to annul the Cairo Administrative Court ruling.
We chat with various taxi drivers to understand why they aren’t accepting of the new players in the business, and just why they wouldn’t consider shifting over their activities to the car-hailing apps.
Barriers to Entry: Black-and-white cabs speak out
“It is just not fair for us,” says Hossam Kareem, a 41-year-old married full-time cab driver. “Look, you get into one of these cabs and you do not think that it is too expensive, you think it is fair. Then you get into a black-and-white cab and you start debating the price and telling them that a starting fee of LE 5 is too much. Is it really? They make you pay just as much and we are sometimes quicker too; you do not have to wait until we arrive and we do not rate you as a customer. One ride when you’re in a bad mood does not affect your chances of getting a cab in the future, as opposed to the case with Uber and Careem.”
Kareem’s dashboard is home to a picture of his two beautiful girls, Zainab and Alia, whom he is worried he would not be able to marry due to his declining income. “Zainab has just turned 18, but Alia is still 15, so I have some time. Zainab now wants make-up and new clothes for university next year, I am not sure how I will afford everything they need given my declining income. And girls cost their fathers so much when they get married.”
Mahmoud Fekky, a 29-year-old engineering graduate, is a peculiar case; he actually switched to Uber and Careem for a while before he gave both apps up and switched back to the black-and white-cabs. “I used to have both applications and then I stopped using Careem because they would delay my on-credit money; this never happened with Uber. Uber was great, but more and more people started joining, and my income really took a hit—that is when I switched to black-and-white taxis.” Several other drivers agreed with Fekky that the income generated from Uber and Careem has been on decline recently.
Youssef Hamza, a small shop owner and part-time taxi driver, tells Egypt Today that when he came to choose between Uber and Careem or renting a black-and-white cab, he found it “almost impossible” to get accepted into the ride-hailing services. The regulations were hard to understand and the process was too difficult, explains Hamza; showing a seemingly missing link between the older or less technology-savvy drivers and the two services. Rana Ghanem, Careem Egypt’s public relations manager, previously told Egypt Today, however, that they often go to universities and malls to raise public awareness among users and potential drivers on the service, and how to download and register for Careem. Mahira Tarek, Marketing Communications Manager at Careem Egypt, adds that they run social media campaigns to attract their potential drivers as they target people who are technologically-savvy. Right there, perhaps, is the issue in all this. Although their campaigns run on several media platforms, including traditional media, they mostly target social media users.
According to Ghanem and Tarek, their campaigns target the education of potential drivers and attempt to recruit drivers who may not know how to join Careem. Yet, when asked where their campaigns are usually rolled-out, both mentioned shopping centers, universities and other public areas; places generally targeting younger people and not normally frequented by taxi drivers.
When asked if they tried to join, a few taxi drivers said that it was too difficult for them or that they did not understand the necessary steps, further supporting the idea that Careem and Uber lack tools to include older drivers. During our taxi riders, we asked seven taxi drivers in their 50s about why they haven’t joined Uber or Careem; they all agreed that there is little opportunity for them to join the ride-hailing service because they neither understand how the systems work nor can they afford buying a car that fits with Uber and Careem’s regulations. Although, Mansour Reda, a 26-year-old man getting married in August, says that Uber offers its drivers a car after a specific amount of trips if they have a review of 4.7 out of 5 or above, he argues drivers like him cannot afford the initial car they’d need to get that score to begin with. “Any car today would cost maybe LE 200,000 or LE 250,000; where am I expected to get this from? If they want to make it fair for us, they should offer us a way to purchase a car. This is not about them not paying taxes, this is about fair opportunities,” he adds.
Numerous Taxi drivers said they do not like the ride-hailing applications that are “stealing their jobs,” as a few of them termed it.
Not everyone is against a little competition though; Hisham Gamal has been a cab driver for 30 years now and sees no issue in people having a digital alternative. Sipping on tea while driving his cab, Gamal tells Egypt Today, “I leave my house every morning knowing that I will transfer some people from one place to another and that I will have some pleasant conversations. It is business and your profit is almost certain. You are a cab and you’re bound to find someone who needs a lift in Cairo; it’s a busy city.” Laughing off the question regarding whether his income has declined because of the two ride-hailing services, Gamal said, “Human beings are enemies to what they do not understand.” Development is guaranteed in all businesses and a bit of competition is not bad, for Gamal.
A look across the globe: Uber fights for room in the industry
Over the past few years many countries in Asia, Europe and the Americas, have challenged Uber, partially or fully banning the service for a multitude of reasons.
In Asia, despite Uber operating well in India, the same cannot be said for China, Japan and Taiwan. In China, Uber’s Chinese competitor Didi Chuxing bought out Uber after both companies reported losing billions of dollars while attempting to compete, according to Bloomberg.
Meanwhile, in Japan, Uber can only operate in some areas; for example, in Tokyo, Uber cannot operate UberX, as only luxury cars or taxis with licensed drivers can operate legally. Uber is mostly allowed to operate in places that are too small to support public transportation in Japanese cities.
Like France, Taiwan has hit Uber with millions of dollars in fines, leading the ride-hailing service to suspend its services in 2017. In an attempt to start operating in the country again, Uber agreed with the Taiwanese government to start using rental car agencies to get registered cars and drivers on the streets of Taipei, to which the service is limited.
In Europe, 10 countries have challenged Uber during the past few years, pushing it to transform, develop and alter its services to fit local regulations and laws. In Bulgaria, taxi drivers and the government brought up the issue of unfair trade practices by the Silicon Valley darling. Consequently, the service was suspended for “unfair trade practices,” but is free to come back if it meets the minimum legislation requirements, including registering as a taxi service, according to Grozdan Karadzhov, chairperson of the transport committee. However, not being registered as a taxi service has given Uber much edge as it does not have to pay for taxes, meaning it can offer cheaper services. If it pays taxes, it will no longer be as cheap. Although not yet banned, Italy’s cabs have also brought up the idea of unfair competition, leading the government to decide to block Uber’s services and not allow them to advertise.
Denmark, on the other hand, is not so upfront with its suspension of Uber, but developed a law that required all taxis to have meters, meaning that Uber was forced to stop operating in 2017 after being in the market for a short three years.
France and Germany have both banned UberPop, an on-demand service that encourages passengers to share a car and split the fare, a move that benefits the driver, who gets a few more journeys, and the ride-hailers, as they need to pay less. France’s court has slapped the company and two of the company’s senior executives with a €800,00 and €50,000 fine, respectively, for running an “illegal” service. The fine was suspended, meaning that only half the amount needs to be paid, given that another offence is not committed. Germany has not been very friendly with UberPop either; a Frankfurt-based regional court upheld Germany’s ban on the service’s lower-costing UberPop, rejecting an appeal of the decision by Uber. The Netherlands also suspended its UberPop service after coming under fire.
Hungary did not ban Uber, but tightened regulations to ensure that it abides by its rules. The Hungarian government passed legislation stating that Uber “breach[ed] regulations other taxi firms must adhere to.” As a result, the legislation allows the National Communications Authority to block internet access to “illegal dispatcher services.” Despite it being an obvious move to block Uber, Rob Khazzam, the general manager for Uber in central Europe, claims that this is not a ban, “It is not a ban. Uber has not been banned in Budapest, it is simply a forced suspension—we have been left no other alternative by the authorities in Hungary in response to these developments.”
In Finland, Uber has had to suspend its services after the government launched criminal investigations against some 50 Uber drivers over taxi permit regulations, according to a Bloomberg report. This move comes as part of a police crackdown on drivers who lack the correct paperwork. However, to solve the Uber issue, Finland will establish new legislation that deregulates transportation services in July 2018, meaning Uber will be free to return. Joel Järvinen, Uber’s country manager, confirmed during an interview with Kauppalehti that the company will return to the Finnish market as soon as it becomes possible.
The UK and the Czech Republic both challenged Uber for a while but eventually accepted the ride-hailing service, with the exception of Brno, the Czech Republic’s second-largest city, where Uber is still banned.
So far, Uber has not faced any problems in South America. However, trouble might be brewing in Brazil, where taxi companies want the service stopped and the government is watching out for legal fights and regulations that Uber is fighting against around the globe, according to an in-depth report by The Associated Press.
In fact, a 2016 Bloomberg Technology report had forecast that the ride-hailing service would double its presence by the end of 2017 in Latin America; their forecast came true, according to another Bloomberg report.
Turning to North America, although Uber has had a somewhat rocky time in Canada, having faced some suspension threats there, it operates well in the country. After Uber fought 20 states over the legality of Transportation Network Companies (TNCs) and their relationship with traditional taxi services, the United States now enjoys an alternative to public transportation in most states – Uber does not operate in or has been banned from Texas’s Austin, Alaska and Oregon (except for Portland).
It seems that Egypt is not the only country that has had trouble understanding and dealing with technology-savvy ride-hailing services. Although the fight has been long in many countries for these services, it seems that there is a global move towards accepting them. In Egypt, they are safe, at least for now.