The rapid rise of Uber and Careem has put the transport sector’s technology-led players firmly in the cross hairs of Dubai’s regulator.
The Roads and Transport Authority (RTA), which operates a fleet of 9,497 taxis, is understood to be preparing a circular, to be issued soon, reminding private car hire service companies in the emirate of the existing regulations in place.
In recent months, amid a rapid expansion by Uber and Careem in the region, there have been reports of increased fines for the drivers operating under their brands and tension between the regulator and the new technology-led firms over alleged violations of the existing regulations, which do not directly address private transport services booked via smartphone apps.
For Uber in particular, the expected notice from the RTA will be a timely reminder of the confrontations that the San Francisco-based company has experienced in other parts of the world, including in New York and London.
It is understood that the notice from the RTA will specifically address non-compliance by private hire cars operating under the Uber and Careem brands, with regulations including keeping prices at a minimum of 30 per cent above taxi fares, and not making airport and hotel pick-ups.
Until now, laws had not directly addressed cars booked using a smartphone app as the services ultimately provide drivers from private hire companies, which are directly subject to regulations.
The circular from the RTA will represent the first time that these rules have been clarified since the emergence of new app-based transport services such as those offered by Uber and Careem.
News of the tension between the technology-led firms and the regulator come after Uber and Careem both announced significant new investment for the region in recent weeks. Uber Technologies last month said it had put US$250 million towards expansion in the Middle East and North Africa and Careem, also last month, raised $60m from investors including the private equity firm Abraaj.
However, it has typically been the rapid success of these companies that have put them in the sights of regulators around the world. For example, in April, Uber said that since its UAE debut in September 2013, it had a twentyfold increase in its overall vehicle supply base.
In the UK this year, Uber successfully fought off a legal challenge claiming its taxi app was illegal. Similarly, in New York this year, it managed to shake off efforts by the city to more tightly regulate it and its rivals.
Uber’s critics claim its approach is too aggressive, while the firm credits its success to its fast-paced expansion strategy, which in five years has helped it spread to 311 cities and 58 countries around the world.
Uber said it is committed “to working with policymakers to recognise how new technology can increase mobility in cities and be part of the local framework”.
An Uber spokesman said: "Globally, transport regulations in each market were written well before smartphones came out. Specifically to Dubai, we very much see a role for ourselves within the city's ecosystem as travel and tourist hub."
In Dubai, The National understands, Uber and Careem have narrowly escaped a clampdown by the regulator that would have significantly curtailed their abilities to operate. The biggest issue has been the alleged failure to maintain prices above taxi fares. On its website Uber states that " … in Dubai, regulations require our fares be 30 per cent higher than taxi fares".
The Uber spokesperson told The National that the company is "consistently at 30 per cent above taxis, as per Dubai regulations for limo companies".
It is understood, however, that the regulator had been planning a far stronger response to the practices of private hire companies booked by smartphone app, ahead of new regulations to address the emergence of technology-led companies in the transport sector. These regulations are expected next year, according to previously reported comments from the RTA.
It is understood that the Dubai government stepped in before the row escalated to ensure that innovative companies such as Uber and Careem would not be hamstrung by any action by the RTA. The circular is understood to represent a kind of temporary truce between the regulator and the technology firms maintaining the status quo for now.
The RTA said that “no circular concerning Uber or Careem has been issued”, without commenting further on the matter.
Careem declined to comment for this article.
* with additional reporting by Adam Bouyamourn
Follow The National's Business section on Twitter