Here's Why NYC's Lyft Crackdown Probably Isn't Linked To Uber

AP417629995193APA Lyft car with its trademark pink moustache.

The New York Taxi and Limousine Commission is cracking down on the ride-sharing service Lyft, which plans to launch Friday. However, the company’s main New York competitor, Uber, has enjoyed a better relationship with the TLC.

Uber managed to get licensed by the TLC after initially launching in New York City without the commission’s approval. However, some have accused Uber of having an inside advantage.

Last month, leaders in the traditional yellow taxi industry criticised Uber’s decision to hire Ashwini Chhabra, then the TLC’s deputy commissioner for policy and planning. Some even suggested an element of corruption and at least one person called for an investigation.

“About 4-5 weeks ago, [we] … accused Ashwini of working for Uber presently and in the past,” Evgeny Freidman, who owns one of the largest taxi fleets in New York, wrote to TLC Commissioner Meera Joshi shortly after Chhabra’s hire, according to the New York Observer. “I would insist as a major stake holder in this industry ‎that the TLC open a [Department of Investigation] investigation into this matter.”

Ethan Gerber, the executive director of the Greater New York Taxicab Association, a taxi owner’s group, told Business Insider on Thursday he still felt Chhabra’s hiring was “incredibly suspect.”

“As far as Uber concerned, the whole way that they got licensed, the whole way they have affiliated bases, how many cars they have at those bases, all of that was walked through by the guy who left,” Gerber said. “So the whole thing was very suspicious.”

However, no industry experts contacted by Business Insider believe Chhabra’s hire led to the TLC’s crackdown on Lyft.

Wayne Hawley, the general counsel of the city’s Conflict of Interests Board, pointed out that any former city employee in Chhabra’s position would have to break the law to lobby his old agency. Hawley told Business Insider the law forbids any communications done in a paid capacity between a former government employee and the agency he used to work with for a period of one year.

“The city can’t prevent someone from earning a living. But the city can ensure that you don’t have profit directly from your new position by lobbying the very agency [you were at] or working on issues that you worked on while at the agency for a period,” echoed Dick Dadey, the executive director of the good government group Citizens Union. “You can be an inside adviser with no contact with the TLC.”

More to the point is the fact that Lyft hasn’t even attempted to get on the TLC’s good side. Unlike Uber, the company hasn’t agreed play by the TLC’s rules and openly admits they do not believe they should be regulated by the agency.

“It’s important to clarify that our differences of opinion are not about safety standards, and that’s because we put safety first,” a Lyft spokeswoman told The New York Times. “Where we differ with the TLC is that we do not believe its licensing and base station rules apply to the Lyft ride-sharing model.”

Because of this, insiders think a crackdown from the commission was inevitable regardless of Uber’s TLC connection.

Reached for comment, a source close to Uber pointed Business Insider to an earlier-stated TLC position: “If you are acting as a taxi or a car service, without the benefit of a licence, the TLC will shut you down.”

In contrast, Uber has embraced these regulations and operates with only city-licensed vehicles, according spokesman for the New York City Council’s transportation committee chairman, Ydanis Rodríguez.

“From our perspective, … Lyft is unique from Uber in a larger sense because they’re not following TLC regulations. Uber, at least from what the TLC says and what Uber says, is following all the regulations,” the spokesman, Russell Murphy, said.

Additional reporting by Megan Rose Dickey.

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