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Regulatory intelligence

Uber, Facebook and regulation: Two approaches, two outcomes

Uber and Facebook have different attitudes toward regulation. What results is each approach earning?

Last week was a tough one for tech companies as two the industry’s largest companies, Uber and Facebook, had to roll with some regulatory punches. The difference in their attitudes and strategies toward regulation reveals an interesting contrast between two schools of thought.

Uber loses London

On Friday, Transport for London announced it would not renew Uber’s license to operate in the city.

Uber’s approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications,” the agency said in a statement.

There are an estimated 40,000 Uber drivers and 3.5 million users in the city of nearly 9 million people.

Transit for London gave specific demerits for Uber’s approach to reporting serious criminal offenses and its perfunctory way of performing background checks on drivers. Uber’s “Greyball” software, which can be used to block regulators from gaining full access to Uber’s app, was also singled out.

Uber’s assertiveness and single-minded pursuit of efficiency (more on that later) has not endeared it many in the UK. In July, Shadow Secretary of State for Business, Energy and Industrial Strategy Rebecca Long-Bailey said she did not think it was “morally acceptable” to use Uber because it is “exploiting its workers.” There has also been hand-wringing over whether Uber was eroding the customer base for London’s black cabs, one of the city’s most enduring and iconic symbols.

A London taxi crosses Waterloo Bridge in London July 29, 2009.
A London taxi crosses Waterloo Bridge in London.

Facebook faces the music

Also on Friday, Facebook announced it would turn 3,000 advertisements paid for by Russian sources over to Congressional investigators. A day earlier, it said it would make it possible for any user to see who had paid for a political ad.

Both moves were made to deflect growing government and public disapproval of how Facebook conducted itself during the 2016 U.S. presidential election. Earlier this month – after months of denying anything of the sort had happened – Facebook divulged Russian entities had spent $100,000 on advertising with the social media giant, further adding to suspicion that Russia interfered with the 2016 U.S. Presidential election.

Facebook’s move represents a significant shift in tone, given how strenuously the company has denied it was a medium for any undue election influence. Shortly after U.S. president Donald Trump’s election, Facebook CEO Mark Zuckberg said the concept of Facebook being used to sway the results was “a crazy idea.” There can be little doubt Facebook started taking the issue seriously once it became evident Congress had questions and wanted them answered,

Congressional rumblings are a sign that social media companies, which have skirted regulations written with television and newspapers in mind, are now coming into regulators’ crosshairs.

A tale of two companies

Neither Uber’s nor Facebook’s story is finished being written, but it’s interesting to contrast the results their different approaches have earned.

Uber is infamously brash. Its business model has been to charge into markets before regulators were ready and exploit the gaps in local regulatory schemes. On the one hand, this “do it first, ask forgiveness later” approach helped Uber grow exponentially in just a few years. On the other, its roughshod way of doing business has earned the company public scorn and government disapproval. It isn’t hard to imagine how Uber’s unsavory image could harm its case in front of regulators.

Facebook, in this most recent instance, has taken a different tack. When the government began to make noise about regulations affecting the company, it turned sweet and compliant, displaying little of Uber’s “What are you gonna do about it?” attitude. Playing nice like this is a time-tested way of staving off external oversight; the Motion Picture Association of America and its rating system, for example, were created to quiet government critics who were mulling regulations for Hollywood output.

Uber and Facebook are not going anywhere any time soon, so it will be illustrative to watch each as it grapples with attempt at regulation.

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