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Born into a family of craftsmen in a hardscrabble Bavarian village, Richard Leipold started driving a cab as a college kid in Berlin.
He liked it so much that he kept doing it after graduation, and he ultimately helped topple a local taxi guild with competition-stifling work rules. He estimates he’s carried more than 100,000 passengers over the years — earning enough to purchase an apartment in a quiet southern suburb. In 1981 he bought his first Mercedes cab. The next year he added a second, and he now owns eight cars and employs 14 drivers.
Uber threatens all that, Leipold says. And the ride-hailing service, in turn, sees Leipold and his ilk as modern-day monopolists ready to be unseated.
“When someone comes and says I’ll take away the basis of your livelihood, then of course it becomes more than just a business matter,” he says as he tracks his drivers’ whereabouts in his office on the ground floor of a 19th century townhouse. “It becomes personal.”
Cabbies across Europe are furious about Uber. Last June more than 30,000 of them clogged streets from Barcelona to Berlin to protest its arrival. About 1,200 Parisian drivers blocked the city’s airports. In Madrid, demonstrators jeered Uber and chased taxis that hadn’t joined the parade. In London, thousands of black cabs and private limousines converged on Trafalgar Square and Parliament Square.
Some opponents turn to violence. Last year in Paris, cabbies broke windows and slashed tires of Uber cars. And in Milan, unknown Uber-haters on Feb. 10 hung a banner across a busy street calling the company’s country chief a “whore” and revealing her home address, where she was purported to be receiving clients. Since last year, she has been under police protection because of various threats.
In Berlin, where taxis generate revenue of about 450 million euros ($514 million) a year, Leipold has spearheaded the opposition. He led more than 500 local cabbies forming a phalanx in front of Berlin’s Olympic Stadium in the June strike, and he has pursued a lawsuit that threatens Uber’s ability to operate in the city.
For taxi drivers and owners like Leipold, the stakes could hardly be higher. While no one gets rich driving a cab, it can be a ticket to Europe’s middle class. Two vacations a year and homeownership have typically been within reach, and it’s an easy step for immigrants because it doesn’t require command of the native tongue.
That ticket, though, doesn’t come cheap. Parisian licenses can sell for more than 200,000 euros. Drivers in the British capital spend years memorizing 25,000 streets and 20,000 landmarks for a test called the London Knowledge. In Berlin, drivers must undergo regular medical checks, carry accident insurance and prove they can navigate the city.
Leipold says that when he started driving, it was a reasonable career choice even for college graduates; he holds degrees in history and Old German, and he knows mathematicians and linguists who drive. Former German foreign minister Joschka Fischer was a cabbie for years before turning to politics. John Griffin started as a driver; then, in 1975, he founded private- hire car company Addison Lee Ltd. and now ranks among Britain’s richest citizens.
Uber has vowed to turn the old system upside down — and it must if it’s going to merit the $40 billion valuation it fetched in its latest round of financing. Its founder, Travis Kalanick, argues that the legal protections taxis typically enjoy create a “monopoly” of drivers with little incentive to cut prices or improve service.
The current system “means more cars, more traffic, higher unemployment and a bigger carbon footprint,” Kalanick said on Jan. 18 at Digital Life Design, a tech conference in Munich. “It’s not serving the city. It’s not serving citizens. It’s serving a few people in the incumbent industry.”
Leipold got into the business much the same way Uber is attempting now: by wresting control from entrenched rivals. When Leipold came to Berlin in 1973, the city’s taxi scene was ruled by a guild of drivers known as the “Bacon Tops,” for the leather coats and caps that served as their de facto uniform.
West Berlin’s taxi fleet, controlled by the Gestapo during World War II, was reconstituted after 1945 by the U.S. Military Police. For decades, its main function was transporting soldiers of the occupying Allied forces, often barred from owning cars, back to their barracks before curfew. Supply was low — fewer than 1,200 taxis were registered in 1963 — and gratuities, often from tipsy military men, tended to be generous.
The Bacon Tops had long dominated the taxi scene with an unwritten rule that each driver had just one car and each car had just one driver, which kept competition low and guaranteed fares for everyone. But buying a cab was expensive: A new Mercedes went for more than 20,000 deutsche marks in the 1970s, or almost as much as West Germany’s average annual income at the time. And the one-driver rule meant the investment was parked for more than 12 hours a day.
Leipold and fellow students figured that if they split taxis, they’d be able to serve more passengers at lower cost and have enough time left over for partying. The Bacon Tops fought back by muscling the newcomers out of preferred taxi stands, cutting them out of bulk-discounted orders of cars and urging tougher licensing tests — which backfired, because the college kids were accustomed to studying.
“The smartest drivers understood that it made sense, but a lot of them saw this as a threat to their existence,” Leipold says.
Before long, Leipold and his buddies — derided by the old- timers as “Metal Frames,” for the John Lennonesque wire-rim glasses many wore — prevailed. Registered taxis in West Berlin jumped to more than 5,000 during the ’70s, and the cars spent far more time on the road as the number of drivers surged.
Over the years, Leipold has shifted from concerns such as negotiating the frigid Berlin winter in his “Iron Horse” — the Mercedes W123 diesel he bought in 1981 — to more esoteric issues like ensuring his software correctly records fares.
Leipold, now with a receding hairline and graying mustache, today is digging in just like the Bacon Tops did. But he says Uber’s move into Germany is different: It breaks the law — something he insists he and his friends never did in the ’70s.
His primary complaint is that Uber offers a service equivalent to taxis — ferrying people from point A to point B upon request — but doesn’t adhere to the same rules.
Leipold says his best drivers take home 1,800 euros a month including tips, or about 9 euros an hour. Since January, every driver has been guaranteed a minimum hourly wage of 8.50 euros before taxes — or a bit less than 7 euros in take-home pay for a full-time driver — which taxi bosses say will force them to cut staff unless fares rise significantly. They’re asking for a hike of as much as 30 percent. Authorities in Berlin are reviewing their demands.
Uber calls its drivers self-employed “partners,” which voids many German legal protections for workers, such as paid vacations, health care and social security. The company doesn’t guarantee income to drivers, and any legal complaints they have against Uber must be submitted in English to a court in the Netherlands. Uber says it doesn’t directly employ drivers because that’s not part of its business model, and instead aims to attract people who want greater flexibility.
“The driver has many obligations and basically no rights,” says Lara Sherman, a labor lawyer at Pflueger Attorneys in Frankfurt. “It would be scary if that set the standard for the relationship between employer and employee.” German labor and tax authorities say they haven’t investigated Uber.
Leipold says he first noticed the U.S. company about 18 months ago, when it started offering its limousine service, UberBlack, in Berlin. The vehicles’ drivers were ignoring rules that required them to return to their base after delivering a passenger, Leipold says, instead hanging around busy areas to avoid an empty run.
Seeking to enforce the return-to-base rule, Leipold sued, and on Feb. 9 he won a court injunction barring Uber from brokering limo rides. In a statement, Uber said it’s “disappointed” but that it accepts the ruling, and it pledged to work with “regulators to modernize outdated German transport regulations.”
Leipold’s court proceedings and the cabbies’ protests seemed to backfire at first. People who had never heard of Uber suddenly saw taxi drivers blocking roads to defend their turffrom a rival service that offered lower prices.
Then, last August, Berlin banned UberPop — rides with informal drivers in their cars — because its workers aren’t licensed for commercial transportation. Uber has failed to overturn this and similar bans in Hamburg and Dusseldorf (though it’s operating in Munich and Frankfurt). The service, available in scores of countries worldwide, has also been restricted in Spain, India and China.
To get around Berlin’s UberPop ban, the company has cut prices to 35 euro cents per kilometer — what Germans can claim as a tax deduction for driving their car for work. That barely covers the cost of fuel and is about a fifth of what taxis charge, but it allows Uber to stay on the road because it’s no longer technically a commercial service. With little incentive for drivers to get behind the wheel, Uber tops up fares with extra payments. Even so, the service is limited to weekends.
“They can throw a lot of money into marketing and lawsuits, but I really don’t think there’s anything innovative in their business model,” Leipold says. “I doubt it’ll be enough to get traction here.”
Although Uber declined to say anything about its finances in Germany, the company says it has received more than 12,000 applications from drivers in the country, and Kalanick has vowed to appeal to Germany’s highest courts to win approval for Uber.
Even as cabbies step up their resistance, Uber’s arrival has spurred Berlin’s taxi companies to rethink their business. The dominant taxi-dispatching service last year introduced customer-relations training on topics such as avoiding awkward situations in the cab. More than 1,000 drivers have passed the final exam (and about 250 have failed). Acceptance of credit cards will soon be mandatory, and most Berlin taxis can now be booked through an app that — not unlike Uber — lets passengers rate drivers.
“A few years back, nobody here had any interest in service training and the like, and now look what’s happening,” says Wolfgang Jaeschke, a driver who was one of the original Metal Frame cartel-busters alongside Leipold back in the 1970s. “The younger generation is going to feel the pressure much more than me. I think the times where someone starts a taxi company and runs it for 35 years are over.”
This article was written by Cornelius Rahn from Bloomberg and was legally licensed through the NewsCred publisher network.