Published on October 30th, 2016 | by Guest

Ridesharing Giant Faces Regulatory Disputes in the UAE

Dubai based multinational transportation company is the local rival for the ride sharing giant in Dubai because of the regulatory pacts signed by the country’s officials with Careem. Mudassir Sheikha and Magnus Olsson founded the multinational transportation company in July 2012 in Dubai. Initially it was founded as a site based service for the corporate bookings as the founders faced much reliability and booking availability for the business travelers when they had to go for frequent corporate trips in their working period. After the demand of the service, the company extended their service into an app based service that focuses on the individual those who wish to hire a local car for their day to day activities. The founders of the transportation company said that they will tailor their service depending on the market needs and satisfy their clients.

Abdulla Elyas joined the transportation company in 2014, earlier he had his own address mapping website and app that helps to resolve inaccuracy of the addresses and the problems of mapping. The address mapping company was founded in 2012 and upon joining hands together both the companies utilized their technological purpose to aid with the transportation problems in the area. The company has secured 71.1 million US dollars from the fund with an initial funding of 1.7 million US dollars in 2013 led by the STC Ventures, in 2010 Al Tayyar travel group and STC ventures offered ten million US dollars funding. In 2015, sixty million US dollars was led by the Abraaj group.

Regulatory deals and agreements

The transport regulator of the Emirates signed an agreement with the local ridesharing company and this has forced other transportation networks do follow the same road. Dubai’s RTA (Roads and Transport Authority) signed the deal with Careem, the transportation multinational network, according to which the riders of Careem can book the four thousand seven hundred limousines and nine thousand eight hundred and forty one cars through the company’s app. The riders were allowed to book vehicles only within a limited option earlier, but now the regulatory policy allows them to book from a wide range of vehicles.

Mattar al-Tayer, the Director General of the Roads and Transport authority said in an interview that any online ridesharing companies that wish to operate their service in the country must officially sign with them because they are responsible for the safety and the tariff in Dubai. The Director General also said that the deadline for the car hailing companies to sign the deal in only up to the month of March next year. Those companies that fail to obtain the agreement will not be permitted to operate their service in the country.

Violation of the regulations

In August 2016, the online ridesharing companies like Careem and Uber faced violation disputes in Abu Dhabi, where fifty drivers were detained and the reports were spread in the social media websites. The services were also suspended in the capital and the drivers were detained because they failed to obey the regulations that were imposed by the officials. However, the authorities did not mention the drive details and the violations they made.

The Vice President of Marketing and Communication for the Careem, Christian Eid said to the reporters that their drivers were stopped by the authorities in the capital, Abu Dhabi mainly because of the license issues and hence they are suspending their service in the capita, which brings a capital loss for the ridesharing company. The American based ridesharing service Uber also suspended its service in the capital because of the unforeseen situations in the capital. The said to the reporters that both the car hailing companies decided to halt the service in Abu Dhabi and resume its service operation as early as possible. However, there are no interruptions of the service in Dubai. In 2013, the American ridesharing company launched their service operation for the Middle East and North Africa, that have their fast growing business in these places and they have invested two hundred and fifty million dollars to expand their service.

The reporters tried to contact the Regulation of Transport of the Abu Dhabi government through the help of the Hire Cars taxi regulator via email and through the social media network, but were unable to meet them or receive any response regarding the issue. The Center for Regulation of Transport own eighteen limousines and 7 taxis in which some of the vehicles are owned by the government. There were also rumors spread that the ridesharing companies will be forced to halt their services in Dubai, but both the companies said that they will ferry the customers in the Emirates despite the oppositions.

Pressure on the Uber’s service

The deal of the Dubai based ridesharing service with the Roads and Transport Authority (RTA) puts pressure on the San Francisco based ridesharing company. Because the local rival is gaining more popularity among the riders and they have also released from the suspension of their service in Abu Dhabi. The company faces many regulation issues and disputes in the United Arab Emirates for the past few months.

Ridesharing competition

The deals regarding the agreement and the pricing values were not made public either by the ridesharing company, Careem or the Roads and Transport Authority of Dubai. The local ridesharing company launched its service in 2012and became a serious rival for the Uber in the Middle East and North Africa region and it has around four million registered users in the country. The ridesharing company’s Managing Director and Co-founder, Mudassir Sheikha said in an interview that it gives the company the access to expand their fleet of cars to a bigger range and give the competitors a significant advantage.

Uber’s spokesperson said to the reporters that the ridesharing company is in talks with the Roads and Transport Authority for the past two years and they have taken several steps to reach the riders and customers in Dubai. However, there are no significant chances for the company to sign a deal with the Roads and Transport Authority, but they complained that the regulation agreement released by the RTA requires them to increase the cab fares to about thirty percent higher than the normal taxi, which brings about a wide gap among the global standards. Since the ridesharing company operates its service in four hundred and fifty cities, they have to offer the global level of service and long term solutions in all the places.

The sources that are aware of the issues reported that even the ridesharing giant is concerned about the regulations that can lead to privacy issues and security risks in Dubai. The company has $3.5 billion stake in Saudi Arabian sovereign according to last June.

The ridesharing service has its operation world wide in around sixty nine countries in four hundred and fifty cities. The company was founded by Garrett Camp and Travis Kalanick in 2009 and has its headquarters at San Francisco. The company released their mobile app that allows the riders to book the ride from anywhere and they can have the service to even the rural and suburb locations in the country. The riders will receive notification about their ride and they can make their payment through the cards. The valuation of the company is around sixty nine billion dollars.

Author Bio:

Anand Rajendran is the Co-Founder and CEO of Zuket. He is a writer and coffee lover. He has is a graduate in Computer Science and Post Graduate in Entrepreneurship and leadership from Ulyanovsk State University, Russia. He is a passionate blogger & SEO Specialist. Zuket is a Software Development company which has launched Taxily Script which is a Uber Clone Script with Android and iOS apps.

Tags: disputes, giant, regulatory, ridesharing, UAE