​Uber and Brazilian Taxis Are in the Middle of a Cold War

I did the math and it turns out I rode through 37 miles of São Paulo’s legendary traffic to come up with this story.

On the bus, I took notes while doing the classic transit dance amidst the constricted environment comprising of backpacks, wallets, seats and people. In cabs, all I had to worry about writing in my notepad and getting the cabbie his cash. And when using Uber, I had to think about even less.

It’s still a novel experience here in São Paulo: A few taps on my smartphone and a luxury black car with tinted windows showed up on the a street guided by a tie-wearing chauffeur. As a whole, the Uber package is an experience for customers, an ace in the hole for investors, and a fierce attack on the cabbies of which and every country Uber comes to—including Brazil.

“We’re not a livery company,” Guilherme Telles said, speaking in Portuguese, as if he was trying to rule out the common misconception that Uber Brazil actually owns and operates the cars it dispatches—instead, it charges independent cab drivers for being the middleman between driver and fare. With that, the young chief of operations for the company in São Paulo welcomed me to his office.

With his shirt sleeves pulled up and a passionate discourse not unfamiliar to Silicon Valley, he told me about the tool which, according to him, can solve one of the biggest issues of the traffic-snarled Paulista capital: mobility. “We have the technology, the resources, and the right people to tackle this,” he said.

In Brazil, the only option currently available is Uber Black, both in Rio de Janeiro and São Paulo. The app premiered on the country in mid-June, giving me more than enough time to play the boss with one of Uber’s chauffeurs.

Besides showing up looking sharp with a beautiful sedan, they generally open the doors for you, offer you some cold bottled water, and use GPS. Except for that detail, I wasn’t all that accustomed to such pampering—not to mention being called “sir” during a typical conversation between driver and passenger.

Those driving for Uber knows that refined service is vital to stay on the job. At the end of each trip, the chauffeur gets graded by the passenger, and to stay at the platform they have to consistently get high marks.

“[The driver] must have have a score of at least 4.6 stars out of 5, around 92 percent approval. I deactivate anyone below 4.6. The secret is: Happy driver, happy user,” Guilherme told me. That led me to the chicken or egg dilemma: Are the drivers nice because they want to get good grades or do they get good grades because they’re nice? Well, when it comes to money, both reasons are valid.

The car and insurance for passengers’ personal injuries belong to the guy behind the wheel. The company has no contractual ties to the drivers.

The payment for each trip is charged directly on the passenger’s credit card registered within the service. Uber’s tax is the sum of the following items: The minutes the trip took multiplied by BRL $0.42 (US $0.18), kilometers ran multiplied by BRL $2.42 ($1.01), and an initial price of BRL $5.00 ($2.09). From that value, 20 percent goes to Uber’s piggy bank and the rest right into the chauffeur’s wallet.

That’s one of the few attachments between both ends. The car and insurance for passengers’ personal injuries belong to the guy behind the wheel. The company has no contractual ties to the drivers.

“Uber is a technological platform that connects passengers to drivers,” said Guilherme. That high-minded talk doesn’t always resonate with drivers or riders. The former, especially in the US, have pushed back against Uber’s cutthroat approach to its relationship with drivers, and in California, there’s a new association devoted to fighting for labor rights. Meanwhile, riders have criticized Uber both for its confusing surge pricing policies as well as safety and insurance concerns.

According to one driver I spoke with, the Uber has around 300 drivers in São Paulo right now (a number Uber wouldn’t confirm), and they as of yet haven’t had any public disagreements with the company. The same can’t be said for taxi drivers and regulators.

“There won’t be any kind of facilitation for Uber to work around here. The activity is completely illegal,” Antônio Donizeti told me. He’s the legal counsel for São Paulo’s Public Transportation Department, or DTP, which is responsible for the management of the taxis in town, among other chores.

I spoke to Donizeti while sitting at an opulent wooden table in the not-so-opulent agency headquarters—a building on the Brás neighbourhood where loads of cabbies gather daily waiting for documents, permits, stamps, and other bureaucratic ephemera while talking about politics.

“Uber breaks municipal law 7.329, which regulates through a permit who can carry out paid transport activity in the city of São Paulo,” he explained. This law requires cabbies have a series of permits from the local government: a specific driving license from the local authority, DETRAN, which includes driving exams and psychological evaluations; registry within DTP, including a 15-day course; and, finally, the parking permit, which allows the driver to use a car for economic activities.

We won't facilitate Uber's work around here. The activity is completely illegal.

Currently there are around 70,000 authorized cabbies in São Paulo, almost double the number of cars with the DTP vehicle permit, which number around 34,000.

“The vehicle is only certified if it’s in the rental branch. And it has to go through a technical inspection. Uber has none of that,” said Donizeti.

Uber’s Telles confirmed that Uber conducts a 4-hour training sessions with each one of its drivers and the cars working with the company are also checked. “We don’t want any old cars roaming the streets: They have to be from 2010 onwards,” he said.

By using grey license plates instead of red ones, which are the norm for the rental category, Uber’s cars got on DTP’s surveillance radar. Since the company arrived in Brazil, three vehicles registered within the platform were seized and their drivers fined.

In DTP’s HQ, Motherboard had access to the case files where you can read the rationale for the seizure: Transporting passengers without proper authorization for the vehicle to do such activity, in disaccord with the municipal law from 1966.

“The law applies a fine of BRL $1,800 ($750). The release of each one of these vehicles cost the drivers about BRL $2,900 ($1213) with just two days on DTP’s patio,” said Donizeti.

It doesn’t stop there. “The driver can also get a traffic ticket due to the article 213 of the Brazilian Traffic Code,” Donizeti said. “If the inspection officers get the vehicle and call the Military Police, the driver can get a ticket with an average offense, which means 4 points on their license. The Independent Cabbies Syndicate also asked for measures to be taken. Our inspection guys are keeping their eyes peeled.”

Uber car fleet in the US. Image courtesy of Uber
The legal question, the seizing cases and Donizeti’s legal analysis are attached to a lawsuit made by the agency itself against Uber, which opened on August 15th. Still in administrative proceedings, the suit asked Google and Apple to remove the app from their respective app stores, justifying the request by saying Uber’s activities are unlawful.

Donizeti said that the next one to receive a notice will be Uber itself. In case DTP’s demands aren’t met, the agency is ready to argue its case in court. “If they keep operating, we’ll forward the process to the City’s Attorney General,” the lawyer said.

Donizeti also contended that Uber never went to the DTP or the Department of Transport for regulatory clearance, nor is he aware of any contact made within the City Hall.

Telles disputed those claims, and said his company has been trying to speak with regulators. “Uber has a pro-regulation stance,” he said. “We’re already speaking to lawmakers around Brazil to show we’re making passengers happy, making drivers happy and that our process is very strict.”

With the city’s public transit system still lagging in development, São Paulo’s cabs are just a small part of one of the world’s worst traffic jams. According to the city’s most recent subway survey, São Paulo has a fleet of 4.2 million cars—one for ever four inhabitants of the metropolitan area.

Now here’s the thing: 70 percent of the trips carried out by said vehicles include only the driver and no passenger. Over the last 50 years, the city has turned into one large traffic debacle.

“Technology has managed to solve our problems, but regarding traffic, things are going real slow. Bus lanes, construction sites, and the rotation system are all palliative solutions. The definitive one is to bring this technology into the game,” said Telles.

According to him, Uber Black would be the first step in the creation of this idyllic city with fewer stopped cars. The next step would come with the platform’s growth: a trickling-down of the service with cheaper options, something that is already happening in many of the 40 countries in which the company is present.

“First we launched our premium service, Black, then comes Uber X, which is cheaper. Next comes Uber Pool [for carpooling, as the name implies]. And what if we used that to deliver food? That’s Uber Fresh. Just imagine all these services with cars driven by themselves,” Telles said.

But that dream can only come to fruition if the service remains legal. Beyond São Paulo and Rio de Janeiro—where there’s a municipal law much like the one present on the Paulista capital—Uber’s lobbying will also have to work at the federal level, as Brazil’s Federal Law #12.468 could be used to stop the company from operating entirely.

The law is designed as broad regulation for the cab driver profession in Brazil, as explained by André de Oliveira. A candidate for the role of federal deputy in Rio, “André do Táxi,” or Taxicab André, as he is known, spoke to me about the coming of Uber to Brazil, and as it was expected, he isn’t too happy about it.

“Over the past few years we haven’t noticed a difference [in revenue] between August and September, but this year, right upon Uber’s arrival, taxi earnings plummeted. It’s unfair competition,” he told me.

In the beginning of June, André and about 300 cabbies put together a motorcade protest against Uber, which happened to stumble upon two vehicles in the company’s service.

“We called the police and the passengers were led to taxis,” he said. “As for the drivers, they went to the police station.” He also said that Rio’s Department of Transport forwarded a complaint to the local Cybercrime Precinct against Uber.

As you might guess, André does not use Uber, but he does use a series of other apps that connect passengers to taxis, such as 99Taxi or EasyTaxi.

“This kind of app is still within the segment,” he said. “No one is stopping people from getting cabs. These apps haven’t interfered with that. Quite the contrary, it actually helped out a bit.”

In São Paulo, the guys at the DTP also don’t have any beef with similar apps. “These apps deal with taxis registered and inspected by the DTP. It’s all legal. We don’t have anything against the operation of these apps,” Donizeti told me.

We called the police and the passengers were led to taxis,

The taxi cooperatives, on the other hand, were not that fond of this system when it began to pop up in the country, but they eventually have begun to embrace it. Both André and Donizeti don’t see that happening again when it comes to Uber.

“The cooperatives adapted, but dealing with Uber is not a matter of adapting,” Donizeti said. “This service clashes directly with the taxi driver’s job, an economic activity of his. It harms these professionals economically.”

Telles does not believe that Uber is in direct competition with regular taxis. He also argued that the laws don’t appropriately fit the actual business his company does.

“The laws aren’t made to stop progress, but to support it,” he said. “I think that’s how things change, but change is difficult. It’s normal that the regulators try to fit Uber into an existing law. Our job is to educate, explain what Uber is and work with them to update or create a specific regulation to control this technology that’s going around the world.”

As this Cold War in the transport sector plays out in São Paulo and Rio, Telles is already thinking about the service’s expansion in Brazil. Belo Horizonte is in Uber’s sights—although, given Brazil’s expensive, underdeveloped telecom industry, the company faces an uphill battle getting users to even have access to the app in the first place.

“Our main problem is the cell network. Here we even configured our system to accept slower transaction requests than anywhere else in the world,” he told me.

And yet no one seems to intimidate Uber: Not weak phone signals, nor legislation, not even Donizeti or André.

“There’s nothing in Brazil different from what we have seen elsewhere,” said Telles, and he’s right. Currently, Uber is valued at more than $18.2 billion dollars, and controversies aside, is easily the most powerful startup to come out of Silicon Valley in recent years—if you can even call it a startup anymore.

It wouldn’t be a shock if the company’s lobbying efforts were successful, and in the meantime, it will shoot even higher—perhaps by implementing a chopper service, something I heard about when talking to a driver, which would make sense giving the popularity of helicopter commuting for the São Paulo many ultra-wealthy.

Telles set the bar high. “My goal is to change mobility. It’s not an easy task, but is feasible,” he said.


This article was translated from Motherboard Brazil by Thiago “Índio” Silva. It has been published in Motherboard US (Oct/2015).

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