How to regulate digital transportation applications

How to regulate digital transportation applications

By NLM Writer

The regulation of digital transportation has been a source of head-scratching for regulators. What was once seen as a breakthrough in sanctifying the tainted traditional taxi industry has become a proper headache. The source of this conflict is attributable to one thing: pricing.

Digital transportation apps such as Uber introduced new models of pricing that made them competitively beneficial to users. Initially, fare determination was based on negotiation between a customer and the driver. This was not the best option as sometimes drivers started grumbling about the price and could demand for higher prices. However, with invention of digital transportation, these problems were solved as the price was set beforehand. Notwithstanding the positive developments, these companies have been accused of setting ridiculously low prices that have lowered the returns for drivers. Drivers are forced to work for long hours with low pay in order to get returns for their labour.

This conflict has been imminent in cities such as Nairobi where drivers have engaged in mass action over low pay. In Europe, this conflict escalated and was brought to the European Court of Justice.

In the conflict with the European Union, Uber clashed with regulators in the European Union. The firm Uber argued contended it is a technology company. The Court disagreed and held that it is a transportation company. As a result, Uber could be brought under the jurisdiction of national and county governments.


Given the decision, a lot of countries are at a loss about how to regulate companies such as Uber. Cities such as Pennsylvania, Texas had tried to regulate Uber and failed. Nonetheless New York was, however, has successfully regulated Uber, which brings me to my next point.

Most societal problems are best solved with the participation of the government. For instance, in rural Kenya, illicit alcohol had wreaked havoc in the lives of many people. And when the government intervened through the infamous Mututho rules, there was order. Despite the fact that the problem was never fully addressed, government intervention brought some order in the industry. We can use this same model on digital transportation.

The intervention of the government is important. To begin with, the government understands societal needs, therefore it is better placed at implementing measures that ensure the good of its people – Uber drivers in this case. Secondly, the relationship between drivers, users and technology companies has human rights elements. Since the driver’s labour is central to the job, rights such as dignity, fair labour practices and life, among others, come up. Government, being the custodian of human rights, has to ensure that the rights of its citizens are protected. Lastly, governments are under an obligation to ensure that their people are not exploited by multinational companies.

The regulatory mechanism

If we can all agree that regulation is necessary, the next puzzle is how to regulate these companies. First is to recognise that Uber drivers are contractors, not employees – meaning that they are under a contract for service and not that of service. This implies that the Employment Act does not apply to them. For regulators to effectively control this sector, they ought to impose regulations that require drivers to be employed under a contract of service and not that for service. The advantages of this are plenty.

After converting the contracts, the Employment Act comes in. Under this, the set minimum standards in the Act will apply. These include non-discrimination and good working conditions among others. Furthermore, this will enable drivers to form unions. Under the Act, there are provisions for collective bargaining, which will enable drivers to appeal for better pay.

Unionising will also enable drivers to set an agreed rate per kilometre, percentage collectable by the companies, and provisions for variations based on the economic conditions, among others. In the alternative, if the contracts are not converted, regulations can require drivers to form digital guilds that enable them to agitate for better conditions. However, unionization is better as legal strikes are protected under law.

Thirdly, one of the highly suggested options has been the capping of cars – that is, limiting the number of cars that allowed to join Uber. This has worked in New York where regulators capped the number of Ubers allowed at any given time – this arose out of a conflict with the yellow cabs.  Although this suggestion would work in ensuring that the traditional taxis are not kicked out of the business, research suggests that most customers in the third world prefer digital transportation apps.

The other issue is a differentiation of economies as demonstrated by Kenya and the United States. In developed nations, Uber driver jobs are part of the gig economy; in developing nations, these jobs are full time. And capping Ubers in economies where the Uber job is full time equals denying a driver a source of livelihood.

The other regulation option is requiring these companies to publish information monthly on their pricing practices. The advantage here is that it gives the government the opportunity to scrutinise pricing practices, which facilitates evaluation regarding conformity with the law.

The story of digital transport applications and drivers can be compared to the biblical story of David and Goliath. However, in this case, David does not have the sling and the presence of God. On the other hand, Goliath has the full body armour. In our case, the Uber drivers are the Davids without the sling and the companies are the Goliaths shielded by secrecy, self-regulation and economies of scale. For David to get to Goliath, he needs the stone and the presence of God which comes through government regulation. Though, governmental regulation is not coming in to kill ‘goliath,’ it is doing so to ensure that drivers are adequately compensated of their input.

The driver’s labour is tied to his dignity, which ought to be protected. Moreover, the clamour for profits, market control and dominance should not blind us to the need to protect the rights of drivers.

At the same time, we should not ban digital transport companies but rather create a conducive environment where companies, users and drivers can co-exist. This should be the paramount objective for regulators. Once we are all in agreement, we can refer to Europe’s success in regulating big technology companies as a benchmark. (

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