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Friday, September 25, 2015

Sao Paulo and Rio de Janeiro Are Expected To Ban Uber

Photo
Taxis were parked on the street during a protest against Uber in downtown São Paulo, Brazil, this month. CreditPaulo Whitaker/Reuters
SÃO PAULO, Brazil — Brazil’s two largest cities may be on the verge of banning Uber’s service, adding to the ride-hailing service’s growing list of regulatory problems.
City Councils here and in Rio de Janeiro recently passed bills that would prohibit Uber and other ride-hailing services like it. Now Rio’s mayor is planning to issue a decision on whether he will sign or veto one of the bills no later than Tuesday, with the mayor here expected to decide early next month.
Uber’s prospects are not looking good.
“Our path is signing it, unless there is some irregularity or unconstitutionality,” Eduardo Paes, Rio’s mayor, said this month. Fernando Haddad, the mayor of this city, said the proposed ban was “in line with how our administration thinks.”
To stave off prohibition, Uber has noted its capacity to provide jobs in Brazil, which has been dealing with an economic crisis. The company, which is based in San Francisco, released a statement two days after the council vote here in which the company promised 30,000 jobs for drivers by October 2016.
“In every country, we talk to governments about how we can create jobs, but we’re emphasizing it more here because of the economy,” said Fabio Sabba, Uber’s director of communications for Brazil.
Uber’s troubles in Brazil are another regulatory headache for the company. Because Uber’s service disrupts established taxi and transportation services, there have been protests in many locations where the company has begun operations, in turn drawing scrutiny from authorities. France this week upheld a law that banned Uber’s UberPop ride-booking service. On Thursday, a Belgian court also ruled that UberPop could not operate in the country.
Jefferson Moura, the only member of Rio’s City Council to vote against banning Uber, said the company’s message of jobs might resonate. Brazil’s unemployment rate is 7.6 percent and rising, compared with 4.3 percent at the end of 2014.
“The economy has only gotten worse,” Mr. Moura said. “The promise of jobs could influence the mayor and some of my colleagues to change their minds.”
Brazil is a small market for Uber, which began operating in the country just over a year ago. The company said it had 5,000 drivers in Brazil; in contrast, it had 20,000 active drivers in Chengdu, China, alone in June. But Uber said it had ambitious plans in Brazil.
“We want to expand to every city in Brazil which has transport problems, which is pretty much every city here,” said Guilherme Telles, Uber’s general manager for Brazil. “The country has over 200 million people and a huge penetration of smartphones and credit cards.”
It also has relatively few taxis. This city, with a population of 11 million, has fewer taxis than the capital of Argentina, Buenos Aires, where the population is three million. In Rio, more than 20,000 people are on a list in case City Hall decides to issue more taxi licenses. The last issuance was in 2014, when the city issued 148.
Both cities have a lively black market in taxi licenses, with asking prices often more than $50,000. The average annual salary in Brazil’s major cities is less than $7,000.
Taxi drivers said Uber would not create new jobs but would take their jobs through unfair competition because Uber drivers do not face the same taxes and regulations.
Uber declined to say what it would do if it were banned, but in other countries it sometimes continued operating despite legal roadblocks and seizures of vehicles. Mr. Telles said the company’s lawyers believed that any ban would violate Brazil’s constitution.