Civil Disobedience as a Business Model

MIT recently announced that it is offering a $250,000 Disobedience Award for someone who offers “an extraordinary example of disobedience for the benefit of society.” Because, “You don’t change the world by doing what you’re told.” Is this meant to encourage civil disobedience? Of course, because “Laws evolve over time and are meant to be challenged.”

The guidelines specifically call on the principles of “non-violence, creativity, courage” and say nominations should not be limited to examples from politics or civil rights but can also include those who strike a blow for “the freedom to innovate.” The New York Times describes it as an award for “breaking the rules.”

Submissions are still open until May 1, which is good because I would like to make a timely nomination. The award should go to: Travis Kalanick, CEO of Uber.

We’re all supposed to hate Kalanick right now, and there has been a whispering campaign—no, people don’t whisper any more, it’s a shouting campaign—fueled by a spate of bad publicity. Kalanick got a little snippy with a disgruntled driver who was yelling at him (and who then sent the video to Bloomberg, which treated the incident as if it were news), and the company has been dogged by rumors that Uber has a classic Silicon Valley “bro” culture that’s not friendly to women. But the thing that got Uber in the most trouble is something that is a sterling example of non-violent disobedience that fosters the freedom to innovate and makes the world a better place.

I’m talking about Uber’s use of a “Greyball” app to keep busybody local officials from hailing rides on Uber in order to crack down on the company.

Uber’s use of Greyball was recorded on video in late 2014, when Erich England, a code enforcement inspector in Portland, Ore., tried to hail an Uber car downtown in a sting operation against the company.

At the time, Uber had just started its ride-hailing service in Portland without seeking permission from the city, which later declared the service illegal. To build a case against the company, officers like Mr. England posed as riders, opening the Uber app to hail a car and watching as miniature vehicles on the screen made their way toward the potential fares.

But unknown to Mr. England and other authorities, some of the digital cars they saw in the app did not represent actual vehicles. And the Uber drivers they were able to hail also quickly canceled. That was because Uber had tagged Mr. England and his colleagues—essentially Greyballing them as city officials—based on data collected from the app and in other ways. The company then served up a fake version of the app, populated with ghost cars, to evade capture.

This is supposed to be very, very serious evidence of terrible wrongdoing. But a bunch of us just read that passage and burst out laughing, congratulating Uber’s engineers on their cleverness in leaving some blue-nosed petty authoritarian standing at the curb waiting for a car that never comes.

More to the point, we’re thinking: isn’t this what Silicon Valley is supposed to do? Isn’t this what all of that talk about “disruption” is supposed to mean?

The fact that Uber violates local laws is no secret. That’s the company’s whole business model. To be more exact, Uber exploits grey areas in the law. Regulations on commercial activity are written in the context of a particular era and a particular technology. Taxi laws, for example, were written to restrict cabs that roam the streets waiting for riders to physically hail them—you know, by waving their arms, like we used to in the olden days—and also to restrict companies that dispatch cabs to riders from a fixed, central base. What they didn’t anticipate is a smartphone app that could dispatch cars to riders without a central base, which is the specific loophole Uber cited when moving into New York City.

Legal technicalities aside, Uber’s obvious strategy has been simply to flood city streets with its drivers and to keep regulators tied up in court long enough for urban riders to get used to having many more cars available at lower prices. The point is to offer a service people find so valuable that they question the very legitimacy of the laws that restrict it—and they form a political lobby sufficiently influential to override the entrenched interests of the taxi monopoly. That’s what happened when Bill de Blasio tried to shut down Uber in New York City. It didn’t happen in Austin, Texas, and the people of Austin have been worse off for it.

The old regulations were rationalized, as such regulations always are, by a lot of platitudes about public safety and consumer protection. But all they really did was to give the industry’s established players a captive market that had to put up with spotty service and inflated prices because they had no other choice. Uber gave them that choice and won their support, if not for actually lifting the taxi regulations, then for preventing government officials from enforcing them. Which is pretty much what civil disobedience is supposed to accomplish.

In other words: Uber—it’s like civil disobedience, but for stupid regulations.

The public has undoubtedly benefited from this. For decades, city governments have artificially restricted the number of taxi medallions, making it harder for the average citizen to find a cab and only benefiting the entrenched group of insiders who are able to afford medallions, which at their height could sell for more than a million dollars each. The cost of this government-mandated monopoly can be seen in the way the rise of Uber and Lyft and other ride-sharing companies has caused a collapse in the price of taxi medallions. Sure, that’s a loss to the holders of the medallions—but it’s also a measure of how much extra value they were extracting from the pockets of their customers thanks to special favors from local government.

Uber and Lyft are not the only example of this use of technology to make an end run around government regulations, undermining not only the practice of government-mandated monopolies but also their basic rationale. The other big example is Airbnb, which did for the hospitality industry what Uber did for taxis—and which is facing similar threats of a regulatory crackdown.

Another, less successful example is the case of DraftKings and FanDuel, companies that found a technological grey area to allow a version of sports gambling that is not obviously illegal. But apparently their customer base is not as sympathetic and politically influential as Uber’s, and they continue to struggle under the threat of prosecution.

This is not just about technological disruption. It’s about using technology to challenge legal restrictions that have survived for years based on inertia and the support of a small, entrenched establishment. Those who believe in technological “disruption”—and, indeed, those who talk about “resistance” against oppressive government power—ought to be celebrating this kind of creative use of disobedience.

Because the organizers of the Disobedience Award are right. The future is made by those who break the rules.

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