The New York Times ignited a small firestorm when it reported on Friday that the ridesharing firm Uber has used a software program called "Greyball" to protect its drivers. The controversy comes from how the program helped Uber drivers avoid stings set up by police and taxi regulators before ridesharing was fully legalized in most cities and states. Often the consequences of these stings were hefty fines: $1,650 for one poor driver snared in Washington, D.C., and Los Angeles charged another driver $1,000 to release her car from their impound lot.
In multiple cities — Dallas, Tampa, and Philadelphia to cite a few — the stings to catch drivers illegally transporting passengers for a profit were actively assisted and applauded by local taxi companies. This shouldn't be at all surprising. Recent research by myself, Matt Mitchell and Chris Koopman illustrates how for more than 80 years taxi regulations have created barriers to entry for new entrepreneurs. Taxi special interests have always opposed new competition that would threaten their government-granted monopoly power. The industry offers some of the worst examples of regulatory capture.
However, there is a more interesting element to this story, something that those who are gnashing their teeth over Uber drivers evading capture seem to have missed. Greyball is a perfect example of how well ridesharing's tools and technologies work to keep drivers and passengers safe. In this application, it is protecting drivers from law enforcement, but the same technology can be used to identify and ward off other dangers, such as banning unsafe drivers or aggressive passengers from the app.
The effectiveness of Greyball at screening drivers from potential threats supports other research by Koopman, Mitchell, and Adam Thierer which suggests that the new technology used by platform firms often does a better job regulating driver-passenger interactions than the hundreds of pages of taxi regulations. This is vitally important, and not just for passengers—taxi drivers have the highest on-the-job murder rate, more than twice as high as that of police officers.
So if a platform firm's mediation in the interaction between two consenting adults creates a better outcome than even government regulators can offer, why prevent it? Those venting their ire at Uber for the Greyball program seem to have mistaken their target—the true enemy is immoral taxi regulations. These regulations have been kept in place by taxi special interests and captured regulators, preventing people from earning an honest living for generations.
Laws exist to keep us safe — often from other people. But if the victims of a crime have no interest in reporting it, and the only way to catch the perpetrators is through sting operations, a wise person might question whether any crime has truly been committed.
Michael Farren is a research fellow at the Mercatus Center at George Mason University.
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