New York City Caves on Plan to Cap Uber Drivers

New York City Mayor Bill de Blasio, under pressure from business groups, citizens and high-profile celebrities and entrepreneurs, has backed off of a plan that would have limited the number of cars Uber could manage in the city.

Under an agreement, first reported by The New York Times, New York will instead conduct a four-month study on the effect of Uber and other non-yellow-cab companies on the city’s traffic and environment. A city council bill to impose a cap on the number of Uber cars will be scrapped for now.

"We're pleased to have reached an agreement with Mayor de Blasio's administration and the City Council to collaborate on a joint transportation study and to work together on ways to continue expanding economic opportunity, mobility and transportation access in the city," said Josh Mohrer, general manager of Uber NYC, in a statement. "We are pleased new drivers will continue to be free to join the for-hire industry and partner with Uber."

New York wanted what some saw as onerous regulations, capping Uber's growth, as well as the prospects for rivals like Lyft. Under the proposed plan that has been shelved, Uber would have been required to stay within the city’s limits, which would allow car bases larger than 500 vehicles to increase by only 1 percent each year.

De Blasio had said curbing Uber was necessary for environmental issues. But actual riders balked, saying New York's yellow (and green) cabs were notoriously unavailable and lacked the convenience of Uber, which has arguably the best ride-sharing and ride-hailing app.

De Blasio's plan was universally unpopular. New York Gov. Andrew Cuomo, a fellow Democrat, was against it. Several celebrities pressured de Blasio, who has earned distrust from the New York entrepreneurial community for what some perceive as an anti-business stance and pro-regulation stance by his administration. Ashton Kutcher, an Uber investor, has been among the loudest critics, but others, like actor Neil Patrick Harris and supermodel Kate Upton have also weighed in.

It even became a civil rights issue, as some black residents said Uber solved the problem of cab drivers intentionally avoiding picking up black passengers.

Uber has become the symbol of innovation and disruption in an industry, changing the way many people travel in major cities around the world. But that has clashed with entrenched and heavily regulated industries like taxis, who pay cities high fees for licenses to operate. This has caused Uber and its supporters to claim cities are engaging in regulatory capture, where governments protect the special interests of the groups over which they have the most regulation, at the expense of more innovative approaches to solve problems.