Better for Drivers, Cheaper for Passengers: How an Illegal App is Displacing Uber and Lyft in New York

An illegal ride-hailing app, Empower, continues to operate in New York City, gradually undermining Uber and Lyft's dominance in the driver-based transportation market. It positions itself as a platform that benefits drivers, but operates in defiance of city regulations. Gothamist tells in more detail.

Empower offers drivers a fixed subscription model feeDrivers pay $50 per month to use the app. They receive 100% of the trip cost and set their own rates.

The company claims that this system results in lower prices for passengers and higher income for drivers. However, Empower rides are being offered contrary to the Taxi and Limousine Commission's position. The agency even launched a separate website warning city residents not to use the app.

Why is the service considered illegal?

For ride-hailing through the app to be legal in New York City's five boroughs, the platform must register a so-called "base" with the Commission. This is the dispatching facility through which the company routes cars to passengers and conducts its operations.

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Empower doesn't have such a database. To obtain one, the company must pay a $1500 registration fee and insure each vehicle.

Position of the company's management

Empower CEO Joshua Cyr said the company doesn't completely reject the city's demands, but considers them unfair.

"We're not completely against the idea, but we think it's important that drivers have the right to work for themselves," said Sir, who openly flouts city rules.

"Every licensed professional can work independently and determine how much to charge for their services," he added.

According to Cyr, thousands of drivers make "tens of thousands" of trips across the city through Empower every week. This is significantly fewer than the 88,000 drivers for Uber and Lyft, who make over 4 million trips per week. Nevertheless, Cyr claims that major companies have already taken notice of the competitor.

"I've spoken to members of Uber's board of directors," Cyr said.

"This is an existential threat to their business, and they will do everything possible, bribe officials, influence anyone, and use every lever to prevent drivers from working for themselves," he concluded.

Empower's approach is reminiscent of Uber's strategy in the 2010s, when the company entered markets without regulatory approval and competed directly with licensed taxi companies.

Litigation and the current situation

Empower is in an ongoing civil lawsuit with city regulators in Washington, D.C. County officials objected to the service's launch without a permit. A court found the company and its executive in contempt of court after they continued to provide rides. Court documents indicate that Empower is appealing the ruling.

Despite this, the service continues to operate in New York City, with prices remaining significantly lower than those of competitors.

Compare travel prices

A ride from Bushwick to SoHo during Monday morning rush hour cost $28,18 via Empower. Uber offered the same service for $68, and Lyft for $60.

Another trip from Lower Manhattan to the Port Authority Bus Terminal, about 5,6 miles long and taking 28 minutes, cost $21 through Empower, compared to $34 through Uber.

Conflict with the regulator

Sir argues that if Empower builds a base and starts complying with city regulations, the service will become on par with big tech companies.

"Uber controls almost all the bases," he noted.

The commission insists that the app must undergo a legal process if it wants to continue operating in the city. The agency warns drivers that using Empower in the event of an accident risks a fine of up to $500, loss of license, and loss of eligibility for benefits.

"Despite repeated attempts to encourage Empower to apply for a license, the company continues to operate illegally," said Commission spokesman Jason Kersten.

"Passengers using unlicensed apps should understand that their journeys are not tracked, and in the event of loss of property or problems, they will likely be left without protection," he explained.

Other illegal services and the situation of drivers

Empower isn't the only illegal service in the city. Another app operating in New York is Luxy. It bills itself as a "professional business-class car booking platform," but isn't licensed by the Commission.

WhatsApp groups such as Tri State Limo Owner Operator and Sale & TLC Rental illegally route cars to hotels and other locations using networks of licensed and unlicensed drivers.

Why do drivers take risks?

Many drivers are looking to earn extra money. They're facing rising insurance costs, car loans, and the increasing cut that Uber and Lyft take from rides.

Some drivers completely reject regulation. They offer rides near airports and set their own prices.

Taxi Workers Alliance Executive Director Bhairavi Desai stated that some union members are using Empower as a source of "additional income." However, she added, the service first needs to "enter the market" and attract more passengers. And it can only do this through legal means.