Uber sues New York City, says 'cruising cap' threatens its business model

The city recently passed a law that limits the amount of time drivers can cruise certain parts of the city without a passenger.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
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Uber says new rules around traffic and congestion in New York City threaten its business model. The ride-hailing company filed a lawsuit against the city on Friday that aims to eliminate a law limiting the amount of time drivers can spend cruising certain busy parts of Manhattan without a passenger.

"Drivers' flexibility is already being threatened by Mayor de Blasio's regulations, and the cruising cap will only make that worse," an Uber spokesman said. "This arbitrary rule used a flawed economic model, did not take into account how drivers are affected by previous regulations."

New York City first passed a law in August 2018 that capped the number of ride-hailing vehicles that're allowed on its streets from services like Uber and Lyft. New York Mayor Bill de Blasio said the move aimed to fight congestion and provide higher wages to drivers. The law was set to expire after one year, but the city voted to extend it indefinitely in June.

With this extension, the cap additionally set a limit on how many empty vehicles can "cruise" the streets of Manhattan's central business district. Specifically, cars can be empty in set parts of the city for only 31% of the time, except after 11 p.m. The cap doesn't apply to wheelchair accessible vehicles or all-electric cars. 

Another new rule Uber is fighting in its lawsuit is a ban the city instituted on giving out new licenses to for-hire vehicles (FHV). This ban is set to last through August 2020.

"Extending the cap on the issuance of new FHV vehicle licenses for at least the next year in tandem with the cap on cruising is not only legal, it will bring needed relief to congested streets and hardworking drivers," said Seth Stein, spokesman for de Blasio. "The city's rules make our streets safer and are in the best interest of all New Yorkers."

New York City has been cracking down on ride-hailing services over the last year. Along with passing laws around congestion, it set rules around minimum wages for drivers, ensuring they get at least $17.22 per hour. 

Some drivers say the new rules have led to less rides, while others say they're now able to make a living wage.

"Uber wants to be able to flood the streets without limit and keep app drivers with their cars empty for longer, all the while wiping out yellow taxis and other sectors," said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance. "Uber has plenty of money to sue against life-saving rules that protect drivers drowning in a race to the bottom -- but apparently not enough money to actually pay drivers."

Originally published Sept. 20, 1:34 p.m. PT.
Updates, 1:55 p.m.: Adds comment from Uber spokesman; 2:26 p.m.: Adds comment from de Blasio spokesman.