Uber in Zurich: a case of unfair competition?

Since Uber’s ride sharing service arrived in Europe, it has offered an alternative to traditional taxis and disrupted the market. But what’s hidden behind the lower fares? (SRG 10vor10,/swissinfo.ch)

The controversial business model of San Francisco-based Uber has caused waves of protests from taxi drivers across Europe. Most recently, Germany banned  Uber Pop, the company’s lowest cost offering. The national taxi industry association took it to court for non-compliance of German transport law. It is the first time it has been told to stop operating across an entire country.

Uber says it manages to offer cheaper fares by providing drivers with a smartphone. The Uber app puts the customer in direct contact with its drivers, allowing the company to do away with expensive infrastructure like call centres used by traditional taxi services.

Uber charges a fee of 20% for the use of these digital services but in Zurich it also pays drivers 20CHF for each trip. This allows Uber drivers to offer fares which are much more competitive than traditional taxi providers. Uber says it can offer this perk to its Zurich’s drivers because of substantial start-up capital.