The “15-minute law”: Past, Present & Future

The “15-minute law”: Past, Present & Future
French-Startup

15-minute lawJanuary 1st, 2014, it would seem as though the Taxi Commissions have won. The dreaded ’15-minute law’  will take effect, requiring smartphone chauffeur apps to wait 15 minutes after customers order a ride before picking them up, in order to — well, we can’t claim to understand what the intended ‘balanced’ result is meant to be.

The history of the Paris Taxi market is a long one, which we covered earlier this year – the number of taxis in Paris has remained relatively unchanged since 1950, and when Paris taxis want to flex their muscle, they need only block all major roads and highways in order to get their way. The Paris taxi market is so well controlled that Uber founder Travis Kalanick came up with the idea for his chauffeur service while in the City of Light, looking trying to hail a taxi for 30 minutes to attend LeWeb in 2008.

The ’15-minute law’ (which is actually a presidential decree, and not a law voted by the Senate & National Assembly) is not news to most; we heard earlier this year that the decree had been proposed, After the initial shock of such a law set in, it seems that the chauffeur apps like SnapCar, LeCab, Chauffeur Privé, as well as Uber had spoken with the Minister of Transportation, among other people, and had convinced the group in charge of the decree to put include a clause stating that the law would only apply to users who had signed up in the past 24-48 hours – said clause would have, of course, rendered the decree useless, as there is both no way to verify on sight when a passenger signed up for the service, nor do new-passengers make up for a large percentage of daily users on chauffeur apps.

In the days leading up to the announcement about whether the decree would be put in place, it seems the Paris Taxi Commission threatened once again to block all major thoroughfare unless the caveat to the decree was removed and the decree enacted as originally announced.

And so we find ourselves here – looking at the precedent about to be set in France which encourages preserving old industry and punishing startups looking to improve broken markets – that sounds similar to what the Minister of Industrial Renewal Arnaud Montebourg said at LeWeb in December.

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Of course, the usual suspects began the old chant of ‘France hates competition‘ – it’s a chant reserved for France, and not for cities like New York which are working on banning Airbnb-like services, or San Francisco, which has … well, tried to legally ban Lyft & Uber several times before ultimately giving in.

No, whenever there’s a chance for the international community to chime in about what France is & isn’t, you can always count on them to do exactly that. And, of course, by international community, I mean Softech VC Partner Jean-Francois Clavier, oDesk VP of Product & former head of PayPal France Stephane Kasriel (“Retarded. And Sad.”) and TechCrunch’s resident Lyonnais Romain Dillet – yes, indeed, the international community of French people, who despise their own country and long to be back in a city fighting a different war with a different startup, came out in droves like the droves they are.

I’m sure a psychologist would have a field-day with this aforementioned French epidemic.

Looking beyond the instant desire to repeat the same ‘startups can’t exist in France’ discourse, the future of chauffeur apps in France looks shockingly similar to the present; that is, Uber has a huge upper-hand over the local competition. Nicolas Colin recently wrote that the 15-minute law is more likely to strengthen Uber’s position than weaken it, as creating more local barriers will make it harder for other chauffeur apps to compete with Uber, who can leverage its presence in dozens of other countries to withstand any legal or financial blowback from the decree.

If the goal is to preserve the advantage that taxi-drivers have, then the decree may accomplish its attended goal. Indeed, while no amount of wait-time will change the reputation & burden that comes with wearing the label of ‘taxi driver’ in Paris, the numerous former honest taxi-drivers, tired of their colleagues making life difficult for them by breeding a reputation of dishonesty & corruption, who have sold their license and switched to becoming independent chauffeurs, working for several chauffeur of the aforementioned local &international startups, will undoubtedly see their business continue to grow, despite the decree.

Before the law was made concrete, I sat down for coffee with PIerre-Dimitry Gore-Coty, who heads up Uber in France, and the impression I got was that Uber neither possesses the ability to implement technologically such a delay into its service, nor does it have any plans of investing time, energy & money into making its service compatible with such a decree.

On the contrary, their money & energy will be invested, along with other chauffeur startup founders, into fighting the decree – as it turns out, a decree cannot sihft the competitive balance without being voted on by the legislative branch (thus rendering it a law), and there is a pretty good argument for saying that the decree give an unfair competitive edge to taxis, given that MInister Montebourg himself said that this was the government’s intended goal.

The real future of the “15-minute law” can be predicted by looking at every other fight that Uber has ever fought. In Washington DC, the taxi commission planned a sting operation on one chauffeur – the people revolted and Uber won mindshare, press, and legal right to exist. In San Francisco, the service was nearly outlawed before being voted into law; in fact, the desperate retaliation of a taxi commission in any given city can be seen as the last hurrah of a dying monopoly in a respective market. Chauffeur apps are not illegal, nor are the chauffeurs making a living on them. They are merely a circumvention of a perceived monopoly that has existed for far too long, much like Hotels, Car Rental agencies, and any other group that has put up barriers inhibiting anyone from doing what their doing.

Taxis got fat by controlling the market, which is OK. Where they went wrong was doing it at the expense of the customer, because the customer is always right, and right now, the customer is choosing chauffeur apps.

16 Responses

  1. martin Dixon

    The best outcome for all concerned would see taxi drivers in Paris forced to resort to picking up fares in the streets of Paris. Removing the law forbidding pickups within a certain distance of taxi stands will be necessary too. Licensed taxis are the only ones allowed to pick up fares in the street, but they complain because almost all of them currently work on the prebook by telephone market. This market is not the “taxi” market, but another sector entirely.

  2. Lucas Bonan

    Nice article Liam.

    You might also have talked about the Autorité de la Concurrence statement, which was clearly in favour of VTC saying that the 15 min wait would be unfair for competition, and which wasn’t followed by the Government. http://www.autoritedelaconcurrence.fr/user/standard.php?id_rub=482&id_article=2285

    In my opinion, if the government hasn’t followed this statement at first, it’s because they have to deal with the eventuallity of a taxi strike, which could in deed block Paris, (see the situtation in Place de La République in 2008 there: http://www.lepoint.fr/actualites-politique/2008-01-30/les-chauffeurs-de-taxi-en-greve/917/0/221153) and thus would be very unpopular before the élections municipales. (FYI if you check for “Opération escargot paris” on google, you’ll see it also works for trucks drivers and farmers…).

    This is real politics, I don’t think that the Government is really against Uber and the like, it just has to manage a multiplicity of stakes. In our case, it’s also the government’s duty to reasonably regulate the value of Taxi Licences which worth hundreds of thousands euros and represent the taxi drivers retirements. Opening the market all at once, which would mean completely liberizing or deregulating the market would be an unfair decision for Taxi Drivers.

    That’s the reason why the Government is drawing a grey picture, and want to do things progressively. It is very likely that this first move was to butter up to the Taxi Lobby. But on the other hand, we’ll see if the Conseil d’Etat cancels the “décret” or not. If it follows the Autorité de la Concurrence, one could say that it’s a very nice slowplay from the Government saying to the Taxi lobby “you see we tried…”.

    At the end of the day, the French Government is playing both sides against the middle, but in my opinion the real question is the agenda of the taxi licences number decrease in the upcoming years.

    One last point Liam, what leads you to say that in any market the customer is always right?
    To illustrate my point, if you take TelCo market, you cannot consider the offer without the investment on the network. All the operators have to invest in the Network capacity in a common effort. One could say that the dumping may benefit to the customer at first on the price side, buy it could hamper the whole quality of the service in the future (take the poor 4G coverage of Free VS the huge investment done by Bouygues to have the best 4G network).

  3. Dave Ashton

    an excellent article, liam. the reality is that this law will be ignored and will soon pass the way of the dodo in france just as has happened throughout american cities over the last several years. and it will be like that in every city. france is no different than other places in that regard.

    the main issue is simple: in 2010 less than 1 of every 20 on demand chauffeured transport bookings (taxi and “vtc”) was made via smartphone app. in 2020 it will be 20 out of 20. 20/20 in 2020.

    i have nothing at all against taxis and wish them all the best. but they will adapt or they will die, and the laws passed over the last 50 years (in every city) to protect them are neither good for the customer nor relevant in today’s world. it is called progress.

    today, absurd regulations like the 15 minutes’ decree fuel the opposite result as to what was intended by its creators: they raise the profile of vtc players to general public awareness and align the people’s interests with the service the laws are attempting to stamp out. we have the taxi lobby and a smart (and increasingly techno-savvy public) to thank for that. i thank them every day.

    happy new year.
    dave

  4. Romain Dillet

    Good post Liam. For the record, I tried to write a fair post on TechCrunch, presenting the rule (because it’s news) and not drawing any conclusion about innovation in France — I still love France. There are a lot of naysayers in the comments, but they don’t necessarily reflect my position. Drawing attention to the rule is the only way I had to raise public awareness and help those startups.

    • liamboogar

      Romain, I totally agree, and trust me, no one is happier to see articles, negative or otherwise, passing on TechCrunch. I recall a few NaySayers when I wrote about the Pigeon movement – but negative press is better than no press, in these cases.

      That being said, I felt your article left off a few key points, such as the fact that no one plans on adhering to the law, or that it isn’t actually a law, but a decree, a point which will likely lead to its downfall.

      There’s a bit of ‘editorial line by omission’ that goes on when people write about France – and the same issue happened with the Dailymotion-Yahoo deal (no one clearly explained that Dailymotion is 100% owned by Orange, which is 21% owned by the French Government, so the government actually has a say in what happens – or that it was actually Orange’s fault that it fell apart), as well as with the 75% tax (most people still think that the rich are taxed at 75%).

      Drawing attention is Step 1. Step 2 is transparency, visibility & access. Going beyond ‘look what’s happening’ and saying ‘why does it matter’ and ‘what are the other factors at play’ is the difference between people writing ‘France sucks’ comments, and people writing ‘good article’ comments.

    • Romain Dillet

      Chauffeur-privé plans on adhering. In fact, many companies gave a no comment. I said that startups are confident when it comes to attacking the rule. I just don’t want to guess the future and would rather follow up with another post. TechCrunch’s audience is very different, that’s why comments are different. Just look at comments on Reddit and HN for my post, there were some thoughtful debates.

      We also said all those things about Yahoo/Dailymotion (and we broke the news).

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