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When Hurricane Sandy battered New York City in 2012, car service Uber sprang into action — by imposing so-called “surge pricing” that cost one user $219 for a seven-mile ride. The company reversed its policy during the subsequent PR fallout, but questions remained over the ethics of how and when Uber should be allowed to raise pricing. On Tuesday, the state of New York provided some answers to that.
Citing a state price-gouging statute, Attorney General Eric Schneiderman announced an agreement with Uber under which the company will agree not to raise prices during “emergencies and natural disasters,” and added that Uber will be adopting a similar policy nationwide. Here is how the disaster-pricing system will work:
“Uber will set a cap on its pricing during ‘abnormal disruptions of the market’ limited to the normal range of prices it charged in the preceding sixty days. In addition, it will further limit the allowable range of prices by excluding from the cap the three highest prices charged on different days during that period.”
In the statement, CEO Travis Kalanik said:
“This policy intends to strike the careful balance between the goal of transportation availability with community expectations of affordability during disasters. Our collaborative solution with Attorney General Schneiderman is a model for technology companies and regulators in local, state and federal government.”
The statement did not specify what types of events would count as disasters or emergencies, suggesting that Uber’s surge-pricing will be in effect on other occasions when the car service is in peak demand — such as New Year’s Eve.
In the past, Kalanick has aggressively defended Uber’s policies, arguing that it is necessary to increase the supply of drivers during periods of high demand. Last Christmas Eve, he taunted his critics, asking why his company’s fare increases on December 24 were any different than what airlines do all the time.