Uber Pulls Taxi-Hailing App Out Of New York After 'Roadblocks' From City Officials

10/16/2012 02:11 pm ET | Updated Oct 16, 2012

A tech startup that connects taxi drivers and passengers said Tuesday it was pulling its app out of New York City after a prolonged fight with city officials.

Uber, a San Francisco startup, allows riders to hail taxis via iPhones, text messages or the company's website. Users pay for cabs using a credit card that the company keeps on file. The app also makes it easier for taxi drivers to locate customers during off-peak hours, the company says.

Uber has been controversial, however, sparking opposition from regulators and taxi companies in several cities. Earlier this month, taxi companies in Chicago sued Uber, accusing the startup of violating laws meant to protect consumers and public safety.

In early September, the company launched its taxi-hailing app in more than 100 New York City cabs. But in a blog post Tuesday, Uber chief executive Travis Kalanick said the company had decided to pull the app from New York, saying the city’s Taxi and Limousine Commission had "put up obstacles and roadblocks in order to squash the effort around e-hail which they privately have said is legal under the rules."

"We'll bite our tongues and keep our frustration here to ourselves," Kalanick said.

Last month, David Yassky, chairman of the commission, said New York taxi drivers could not accept payments through Uber because it violated contracts the city has with two companies that provide the technology that allows passengers to swipe credit cards in the backseat.

TLC Spokesman Allan Fromberg said the commission was moving toward rule changes that will open the taxi-hailing market to app developers and other innovators, but those changes can't take place until the city's existing contracts expire in February.

"We are committed to making it as easy as possible to get a safe, legal ride in a New York City taxi, and are excited to see how emerging technology can improve that process," Fromberg said in a statement.

Taxi officials also argued that Uber violated city rules that bar cab drivers from accepting pre-arranged rides, from using electronic devices and from refusing fares. Yassky said taxi drivers who accepted payments through Uber or other payment processors could be fined and have their licenses suspended or revoked.

In the past six weeks, Kalanick said, 160 New York City taxi drivers used Uber, including one driver who made $168 in additional fares in a single day. He said the taxi-hailing app will still exist "in more innovation-friendly cities," including Boston and Toronto, and the startup will continue to offer an app that allows New Yorkers to hail livery and black-car operators.

"New York City's TLC will hopefully get things moving, and let UberTAXI back out in the wild next year," Kalanick wrote.

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