BUENOS AIRES, Argentina—Most Porteños, or residents of Buenos Aires, know the drill when it comes to hailing an Uber. Change the payment method to cash on the app, memorize the driver’s license plate number, be subtle when trying to match the driver on the app to the waiting car, and sit in the front seat when it arrives to look like a pal, not a fee-paying passenger.
“There’s a risk to driving an Uber,” said Fabian, 50, an Uber driver in Buenos Aires who didn’t want to give his last name. “The cops can grab us, seize the car, make us pay a fine.”
Uber’s operations in the city aren’t legal according to government officials in Buenos Aires, but Uber says Argentina is Uber’s fastest growing market. Confused? You’re not alone. Uber is a taxi service and thus illegally operating, Buenos Aires believes. Uber is a connecting app, and thus doesn’t need to follow regulations for taxi or livery services, Uber contends. This battle over Uber’s identity means that the Uber situation in Argentina is crazy.
Since 2016, Uber has been operating in Buenos Aires, the country’s capital, and rapidly adding drivers who are desperate for work in an ailing economy. Yet the city government has throttled Uber and its profits by: punishing drivers caught using Uber, banning Porteños from paying with Argentine debit and credit cards, and preventing Uber from holding an Argentine bank account thereby making it difficult for Uber to collect credit card fees, pay drivers, and take commissions. Thus, as an Uber representative described the company’s position in Buenos Aires to CityLab: “We are now more in an investing mode in terms of how we want to approach this market.”
AFIP, the Argentine federal public tax administration, has thrown its weight behind its capital city in the fight: In April, AFIP determined that Uber owes $358 million in unpaid taxes and social security: Advantage, Buenos Aires. Then, barely a week later, an Argentine court overruled the sentence on which AFIP’s findings are based. Advantage, Uber. The May 7 ruling by the court of appeals reversed earlier rulings by finding that Uber was not in violation of the specific allegations of “lucrative use of public space without authorization” and acquitted Uber of “violation of closure.”
“If it’s not a crime or a misdemeanor, they cannot say it’s illegal. We’re not violating any law or regulation right now,” Juan Labaqui, Uber’s head of communications for the region, told CityLab.
Uber issued a statement in response to the decision saying that the court ruling means Buenos Aires no longer has legal standing to block credit card payments since the court ruled that they were not guilty of those specific violations. But while this ruling removes some of the penalties owed, Buenos Aires claims that it doesn’t make Uber’s operations legal. And it’s true that the May 7 ruling also stated that while drivers were able to circulate in public space: “if some drivers do it by providing the public taxi service or remises (livery car services), they must do so with the authorization and respective licenses. If they do not do so, they will not be using the public space illegally, but will violate the rules that prevent such activities without a license or authorization.”
Uber is not interested in hearing about the rules for taxi or livery services. It denies categorization as either and says that it occupies a category for which Buenos Aires has not yet created regulation. Labaqui states Uber’s position as, “There can be a lack of regulation and still have something that is perfectly legal under Argentine law. In Buenos Aires, there is no regulation that is specific for our category.” Citing previous court decisions, Labaqui said, “According to all the rulings so far, we are not to be fitted by force into the two categories that exist. Our objection is that we’re trying to be forced into a category that doesn’t apply to us. And that’s why we simply don’t abide by it.”
But the Ministry of Transport in Buenos Aires is holding firm that Uber is a transport service and thus the regulations already exist. “Uber does not consider itself a transport company, but one of services, connecting riders to drivers. But it nonetheless presents the characteristics of a public transport service,” Buenos Aires secretary of transport Juan José Mendez told CityLab via WhatsApp message. According to Mendez, “If Uber complies with the laws and conforms to the city standard, it can circulate without restriction.”
Uber has repeatedly insisted that it is an “information society service” that connects riders with drivers. By classifying itself this way, Uber can be treated as a digital service that can avoid regulations that taxis have to adhere to in many countries.
“It is not an application,” said Mendez. “It is a multinational transport company that uses technology to offer an illegal service, evading all possible taxes. It decided not to respect the law of the city of Buenos Aires, and operate in its total illegality regarding local and national regulations.”
Still confused? This extended stand-off has created confusion and anger that has manifested in violent ways at times. In addition to the steps Buenos Aires has taken against Uber drivers—including imposing steep fines of up to $200,000 Argentine pesos (about USD $5,000), and as the Buenos Aires Ministry of Interior and Transport acknowledges, withholding licenses for seven to 30 days—drivers live in fear of ‘Caza Ubers’ or ‘Uber hunters,’ taxi vigilantes who have attacked Uber drivers and even their passengers over the past months.
Fueled by the stress of rising inflation, spiking electric, water, and heat bills, and a sliding currency, some people, reputedly taxi drivers, have taken to punishing individual Uber drivers for undercutting taxi fares. Last year, Uber reported 750 attacks by Uber hunters, including car fires in some Buenos Aires neighborhoods.
“The taxis usually don’t do anything too bad,” said Fabian, the Uber driver. “They’ll give you dirty looks mostly. They realize that we’re Uber when the passenger is standing on the street looking back and forth at license plates and at their phones. If they’re really angry or violent, they might bump your car to try to hurt or scare you. Or they’ll cut you off in traffic and try to sideswipe you.”
“It’s dangerous but … ” he said with a shrug.
Fabian has only been driving with Uber for about eight months, and he’s doing so out of necessity. He was laid off due to lack of production from his factory job, and “It was either this or the streets,” he said.
“Uber is affecting our work,” said Edgardo Goldman, 56, a taxi driver in Buenos Aires with 25 years in the industry. “You can feel that there’s less work. During the day, it’s not as bad, but at night, especially on the weekends, it’s bad. I’ve always worked on the weekends, usually until three in the morning, but now I finish my shift around one. The young people don’t want to take taxis. They’re all on their phones, so they take Uber.”
“I’m not happy with the Uber drivers, but I understand that it’s a job and people need to work,” he continued. “In reality, it’s the government’s fault. Because Uber isn’t regulated, it’s not paying taxes and so it’s not in competition with the taxis. As it is now, Uber is much cheaper to ride.”
A taxi from Ezeiza International Airport into the city center, for example, might run you about AR $1500 (approximately USD $35). An Uber could cost around AR $700 (USD $15). That’s if you can snag a driver. Due to heightened controls and the presence of more taxi drivers at the airport, Ubers tend to be extra watchful when picking up passengers. Foreign riders often complain of multiple canceled rides, which happens when drivers divine that the nature of their payment won’t be in cash, since, aside from the sanctions and roadblocks the city has imposed on drivers, the Buenos Aires Justice banned Argentine credit and debit card payments to Uber in 2017. This means that most Porteños pay for Uber with cash, a situation that suits the drivers fine for the present moment because there’s no paper trail to their money, and it ensures that they actually get paid for their service.
“We prefer cash payments because if someone pays with an international credit card, for example, that payment stays with Uber,” said Fabian. “They don’t have a way of paying us because they aren’t allowed to have an Argentine bank account. So it’s like I’m doing the job for free.” While Uber claims the May 7 ruling should change this, the murkiness of the decision means that Buenos Aires hasn’t allowed their card payments yet.
Until this is solved, Uber’s finances are effectively being strangled. According to various Uber drivers, in Buenos Aires, it’s difficult for Uber to pay them what’s owed them from international credit card payments, and the drivers can’t pay Uber their commission from cash payments. “The drivers will have a debt to Uber built up if most of their passengers pay in cash, but it’s really the only way I get to keep my commission,” continued Fabian.
“At the end of the day, the problem isn’t us. The problem is that Uber doesn’t want to pay tax to the government. If Uber paid taxes, there would be more competition between the apps and taxis, and the people could decide which they wanted to use,” Fabian said.
“When Uber acts illegally, it denies any opportunity for dialogue,” said Mendez. “We are currently in discussions with other actors, like taxis and Cabify (a legal transport app) to improve regulations and deregulate many aspects of the taxi, and incorporate more technology to the service. If Uber wants to discuss changes, it must first comply with the rules and operate on equal terms with the current actors. But they can’t violate the rules and try to change them by exercising unfair competition in parallel.”
Fabian thinks that Uber isn’t really that concerned with the situation in Buenos Aires, so he doesn’t worry about the debt he’s accruing to Uber for commission from the cash payments.
“When Uber is legal, maybe they’ll reclaim this debt. But I don’t think Uber cares. Why? Because Buenos Aires—Argentina—we’re a little town to them. Nothing. Zero. Uber doesn’t care because it has the whole world. They make a lot of money around the world, but here they accept that they’re just promoting themselves. They don’t care if they’re losing money.”
Uber’s Labaqui concurs with at least part of this man on the street, or rather, man in the car, assessment. At this moment in the battle for Buenos Aires, with Uber drivers stealthily but steadily picking up passengers, dodging angry Uber hunters, and getting Porteños hooked on Uber’s lower fares, it’s not about the money for Uber.
“We are not currently going through collections,” Labaqui said. “That’s not the focus of Uber in this phase.”