About a week ago, on October 23, Uber announced that it was cutting prices for its UberX service in Dallas for the third time since the service made its Dallas debut in November 2013. Taking an UberX from my Oak Cliff apartment to the Observer offices costs about $7 now; the same trip in a Yellow Cab would be about $12.50 plus tip. It's a big difference -- one that's likely unsustainable.
As UberX becomes an established brand in Dallas and builds market share, it could become vulnerable to a predatory pricing lawsuit. Federal anti-trust law bans companies with large market shares from selling products or providing services at a loss when doing so creates a likelihood that company slashing its prices will monopolize a market.
In July, Uber was sued for predatory pricing by a group of Maryland cab companies. Now that Uber has admitted that it pays drivers more than it collects from customers in some markets where rates have been slashed, more lawsuits may follow.
To make a suit less likely in Dallas, Uber will have to raise UberX prices in the future.
"The longer that [UberX] is around, the more vulnerable [Uber] is to a predatory pricing lawsuit," Chad Ruback, a prominent Dallas civil attorney says. A judge isn't going to have a problem with a company offering a new product at a steep discount to entrench it in a market, according to Ruback, but that argument becomes less viable as people in the market become familiar with and use the service.
The pricing issue is separate from the biggest one facing Uber -- its viability in the city. City Council member Vonciel Jones Hill and the council's transportation committee continue to wade through the adoption of new transportation-for-hire regulations. Those new regulations are unlikely to make Uber change its pricing -- although Yellow Cab has said in the past that both Uber and its competitor Lyft should be subject to Dallas' mandatory cab prices -- but now that Michael Morris, the regional transportation planner from NCTCOG czar, has been brought into the process, there's no telling what could happen. Uber may not have to raise prices because it may not even be legal in Dallas.
These are the good times for UberX users in Dallas, but enjoy it while you can. A storm, in the form of regulations or, at the very least, higher prices, is coming.
Keep the Dallas Observer Free... Since we started the Dallas Observer, it has been defined as the free, independent voice of Dallas, and we would like to keep it that way. Offering our readers free access to incisive coverage of local news, food and culture. Producing stories on everything from political scandals to the hottest new bands, with gutsy reporting, stylish writing, and staffers who've won everything from the Society of Professional Journalists' Sigma Delta Chi feature-writing award to the Casey Medal for Meritorious Journalism. But with local journalism's existence under siege and advertising revenue setbacks having a larger impact, it is important now more than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" membership program, allowing us to keep covering Dallas with no paywalls.