Sweden takes progressive steps towards on-demand taxi services
Last week, a year-long investigation was concluded and handed over the Swedish Infrastructure Minister. The “Taxi and Ridesharing commission” (Directive 201581) was set to investigate three key issues relevant to the mobility sector:
- Whether a taximeter should be mandatory in all vehicles used for taxi services.
- Whether there is a need for a new category of professional drivers (or semi-professionals) who carry passengers with their private car, light truck, or any other vehicle.
- Whether there is a need to change or clarify the existing rules for ridesharing between private individuals.
THE SWEDISH ACTORS
The non-profit Ridesharing Movement Skjutsgruppen has about 70.000 participants. It all started as a Facebook group in 2007 to facilitate interactions between private individuals who wish to share a car, a boat, a bus and what not, for a trip. Today, more than 50.000 people still arrange rides on Facebook, but Skjutsgruppen has it own website with search functions and integrated maps since 2012. In 2014, Skjutsgruppen reported 1.6 billion km shared in Sweden; which is relatively high compared with the 5 billion km shared on BlaBlaCar in 18 countries. Skjutsgruppen has also established strong partnerships with 30 municipalities and regions to develop collective transportation that includes ridesharing which led the collective public transportation industry to name its founder the 2016 Traffic Hero (Årets Trafiklabhjälte prize) last month.
GoMore began as a ridesharing platform in Denmark (2005) as a non-profit organization (similarly to BlaBlaCar, moved to a for-profit business model in 2011), and only entered the Swedish market in 2014. GoMore takes a 10% commission from the driver’s fixed price and has approximately 50.000 users in Sweden. In June 2015, GoMore launched its P2P rental services in Sweden too, so that its platform users can both share empty seats or underutilized cars (Gomore has a 20% commission on each car rental). GoMore has adopted a more commercial approach to ridesharing, campaigning aggressively in Sweden to gain market share (i.e. advertising for GoMore’s platform in existing Skjutsgruppen’s Facebook groups, proposing car owners to “advertise” their cars to make more profit). It also expanded its services to France in January 2016, although Drivy.fr is the world leader in P2P car rentals.
Samåkning.se (2008) takes a 12.5% fee from the passengers when booking online. Owned by Sysware GMBH in Germany, the platform claims 180.000 users in its Scandinavian, German, Dutch and Belgian markets. Sysware has demonstrated aggressive practices, when its owner registered Skjusgruppen’s trademarks and similar domain names in 2009 (see IIS case 687) and GoMore’s in 2013 (see IIS case 735), to redirect their users towards its own ridesharing platform.
Mobilsamåkning.se is a smaller-scale initiative existing in 13 cities, providing an IT system (accessed from computer or mobile phone) for local communities who self-define “security zones”, popular itineraries, and required stops. The app matches passengers and drivers who only have to confirm rides by SMS. Passengers pay an extra 5SEK/ride, additionally to the agreed upon price. From 2011 to 2015, 2248 rides have been shared with a total of 2985 passengers.
Hertz Freerider, since 2005, is a programme to enable Swedes to drive rental cars back to their original Hertz locations, for free. Hertz covers gas, tolls and bridge fees. The program counted 30.000 members in 2009. In October 2015, Hertz partnered with Skjutsgruppen to offer the empty places in rental cars driven by Freeriders for ridesharing.
UberPop was launched in Gothenburg and Stockholm in September 2014, and discontinued in May 2016, when about 30 drivers were sued for operating without a taxi license. Later in August 2016, 60 people have been caught for tax evasion after Uber gave them up to the Swedish authorities. Approximately 5.000 Swedes have at some point driven for UberPop. On-Demand taxi services UberX, UberBlack, UberLux are still operating in Stockholm, Gothenburg and Malmö. UberEats was also supposed to be launched in Sweden later this year. Uber’s commission is claimed to be 25%, but is around 33-50% in practice. For comparison, France has sued about 200 UberPop drivers.
Heetch launched in Sweden last summer 2016, after UberPop officially gave up the market. Heetch started in France in 2013, and its main difference with UberPop services is that it offers only night rides (i.e. 18:00–06:00 on Fridays/Saturdays). Drivers are limited to make 40.000SEK per year, from donations. Yes, Heetch only “suggest” a price donation which passengers follow or not, so there is no price tag. Yet, the Swedish police argues that this won’t be enough to escape tax authorities. There are around 30 Heetch drivers (Oct. 2016) in Sweden (30 000 in total and 500 000 users). Heetch takes a 12% commission. On Dec. 8. Heetch was also facing the French court and might be fined 300.000€, just as UberPoP was fined several times earlier this year too.
The Swedish Taxi Association (Svensk Taxiförbundet) represents 70% of the industry (9.000 vehicles). ShareFix (see below) has been their campaign for a stronger regulation of on-demand services, illegally competing with industry incumbents.
In Sweden, ridesharing dates back to the late 70’s when colleagues or family members made ad-hoc arrangements to share commutes to work and education. But ridesharing practices have mainly been popularized during the past 5 years, thanks to ICT developments (social media, smartphones) and recent powerful online matchmaking platforms.
Ridesharing, or liftsharing (UK) or carpooling (USA), is “adding additional passengers to a pre-existing trip. Such an arrangement provides additional transportation options for passengers while allowing drivers to fill otherwise empty seats in their vehicles” (Shared Use Mobility Center definition). Simply put, ridesharing is organized hitchhiking, with a high degree of organization complexity. A successful shared ride needs coordination regarding the trip itinerary, place and time of pick-up and drop-off, and so on. So “hitchhikers 2.0” use online platforms to interact and share rides with a network of other drivers and passengers. These platforms provide ridesharing opportunities for participants without regard to any previous historical involvements (e.g. strangers).
According to this definition, ridesharing does not cover taxis and chauffeured vehicles in which drivers make a special trip to carry a passenger. Transportation network companies (TNC) provide taxi services on very short notice (UberX) or en-route (UberPool, non-existing in Sweden) and enable drivers to make a profit. In such “ride-sourcing” or “ride-splitting” (respectively), drivers are for-hire, like traditional taxi services, but they use their personal, non-commercial vehicles. Therefore, these companies offer regular taxi services, but on-demand. Many have already voiced their concerns on the semantics of the “Sharing Economy” and criticized these companies (i.e. “Stop saying Uber is part of the Sharing Economy”; “Uber and Airbnb have nothing to do with the sharing economy”; “What Should the ‘Sharing Economy’ Really Be Called?”). In Sweden too, the Ridesharing Movement has argued similarly: “Restaurants are not picnic – taxi is not ridesharing.”
The Swedish commission actually follows this definition of ridesharing, distinguishing taxi services: “Ridesharing is based on the principle that the people who share a ride are going to the same place or in the same direction. When people travel to the same destination, or in the same direction, they have their own transportation needs, that is, the driver would have taken the trip even without the passenger, unlike taxi services where only the client that has a travel needs.” Furthermore, the report points out that “a new legislation on ridesharing should be based on the principle that the cost of a shared ride should be split between the individuals involved.” In short, nobody makes an economic profit in ridesharing. The cost can be shared unevenly (and there is nothing to prevent someone to offer one or more people a ride for free).
Looking at the overall Swedish picture, true ridesharing is very positive for society and should be promoted. However, when private persons drive other private persons around, they offer professional taxi services and this leads to more disadvantages. In short, Uber and Heetch are not ridesharing platforms, but taxi companies providing on-demand services to passengers that should be delivered by licensed drivers (although no form of employment is evoked). Importantly, drivers will not need the traditional taximeter (mandatory until now), but an app should be enough, which makes it easier for TNCs to recruit drivers in new markets, as long as they declare their revenues.
All rides shared on BlaBlaCar in one day.
- No mandatory traditional taximeter. Instead, the commission proposes a “special equipment for taxi vehicles” which should be connected to the taxi company dispatching drivers, measuring distances, and collecting payments. Taxi companies must account of these rides to the tax authorities.
- On-demand taxi service drivers who earn a profit from carrying passengers should own a license.
- Ridesharing, where the trip’s costs are shared between people with the same destination and the same itinerary, should not be defined as taxi traffic even if the persons concerned are not familiar with each other.
TNCs mislead people into roles entitled to responsibilities and existing regulations, without being duly informed so. For instance, their press releases announcing Uber’s “Ridesharing for everybody” or Heetch’s “Community-based ridesharing for real” is a derivative of #WeWashing (abusing of the words ridesharing and community). Uber and Heetch embed extractive business models into social interactions and commoditize individuals’ private resources that were previously outside of the market (personal cars, private time, etc.). Their so-called community of occasional drivers feels abandoned: “We were all tricked and we were all used. Why would you give someone a job if you know it would end up in a conviction in court?” (Sveriges Radio followed a few former UberPop drivers facing court). In contrast, the report highlights that the non-profit Ridesharing Movement has been promoting the best practices (i.e. the platform does not suggest prices) and societal impact (i.e. reduced CO2 emissions).
Eventually, the compensation of a shared ride is based on 18.5SEK/mil, or 0.18€/km (Income Tax Act 1999: 1229), which is 3 times more than in France where base cost is 0.06€/km (12 mars 2013, N° 11-21908). However, there are other expenses that could be included under the cost of a ride: car depreciation, car rental fees, SMS fees, platform commission, etc. Where is the limit? What are the implications for P2P car rentals and other sectors (i.e. accommodation)?
There have been many reactions to the Swedish commission. As expected, Uber and Heetch complained a little. But mostly, it’s been a positive debate. The Infrastructure Minister herself was glad that “the difference between taxis and ridesharing is clarified.” The editor of the Swedish newspaper Dagens Industri Digital, sums up the situation as “both unsexy and brilliant at the same time”.
Anna Felländer, co-author of “Sharing Economy: Embracing Change with Caution” (2015), says that it will “lead the traditional dinosaurs to embrace the technological challenge”: the commission’s aim to lower the barriers of entry to the Swedish taxi industry, which is good for TNCs, and competitiveness in general.
The director of the Swedish Taxi Association (Claudio Skubla) has commented that “the taxi commission has well balanced most issues. It is especially good that the investigator emphasizes the principles of fair competition and good opportunities for tax control.”
The new Uber Sweden Manager (Martin Hedevåg) is “disappointed that it has not been more progressive” he says to Sveriges Radio, “what it means for society and our drivers is that one can not take advantage of ridesharing and the benefits it could give us on a large scale.”
Another directive has been issued (dir. 2015136) on the Swedish users in the collaborative economy, due in March 2017. This time, the investigation is led by researcher Karin Bradley (KTH), who has already authored a report proposing the collaborative economy as one of four scenarios for a sustainable growth. In 2016, 10% more Swedes have been active in she collaborative economy compared to 2015 (cf. TNS-Nordea study). Eventually, the European Court of Justice is to decide whether Uber is providing transportation services or digital services, which verdict will impact other sectors and businesses as well (i.e. Airbnb).