Andrew Zaleski is a journalist in Philadelphia.

On January 31, 2013, Uber was celebrating in Charm City. This was the formal launch of the smartphone-enabled car service in Baltimore, the company’s 24th city, and Uber had reserved the second-floor dining area of City Café, a stylish restaurant in the popular Mount Vernon neighborhood, to host an intimate event, balls of crabmeat and free drinks included. Several Uber employees attended, along with a handful of reporters and a few excitable early adopters—those granted first access to Uber’s app so they could link up with a driver and arrive in one of the company’s signature black town cars or SUVs. A map projected onto a white screen—what Uber called “God View”—displayed where the company’s small but growing fleet of cars was dispersed around the city. The message was clear: Rejoice, fair folk of Baltimore, for your transportation deliverance had come.

“When you look at transportation in Baltimore, there’s room for us here,” Rachel Holt, then general manager of Uber’s Washington, D.C., office, told the Baltimore Sun.


But before Uber even hit Baltimore’s streets, the company already had enemies out to stop it. Exactly three months before the launch event, Baltimore’s largest taxicab company, Yellow Transportation, sent a letter to the Maryland Public Service Commission (PSC), the state agency responsible for regulating taxis and cars working as passenger-for-hire “common carriers,” warning it to stop smartphone apps like Uber “before the camel’s nose is under the tent.” Founded more than 100 years ago and now a hallmark of Baltimore’s public transportation system, Yellow Transportation was plainly gunning for the Silicon Valley-based startup—the first shot fired in a legal battle that has lasted almost two years.

And isn’t over yet: In August, with a new PSC order, Maryland became the first state in the country to rule that Uber is a common carrier transportation company—not just a technology company allowing passengers to find drivers. That means that if Uber wants to continue operating its UberBLACK and UberSUV services in Maryland (for luxury sedans and SUVs, respectively), it must adhere to the same rules as limo and sedan companies. “Unprecedented,” is how Holt, now Uber’s East regional general manager, characterized the ruling to me. “They came out with a legal finding that hasn’t been substantiated anywhere else in the country.” According to Uber spokesman Taylor Bennett, the company has yet to decide whether to appeal the state’s ruling by its September 6 deadline. Asked after last month’s ruling whether Uber—still available in Baltimore, Baltimore County and Annapolis—would leave Maryland, Bennett said, “I don’t have an answer to that.”

But that answer could be a sign of how Uber—which is valued at $18 billion and has grown to 190 cities—fares around the country and the world. Since the company’s founding five years ago, local, state and national governments, often backed by the taxi industry, have pushed back against a company they see as disrupting transportation markets and operating outside the government’s eye; just last week, a Frankfurt court ruled to ban the company’s ridesharing service from Germany altogether (though Uber is appealing the decision and will continue to operate there in the meantime). Not surprisingly, some of the company’s biggest opponents are cabbies, who have taken to the streets claiming that Uber drivers get a leg up on business by dodging local regulations, from commercial licenses to background checks.

Uber is suiting up for battle. “We’re in a political campaign, and the candidate is Uber and the opponent is an asshole named taxi,” the company’s CEO, Travis Kalanick, said at a tech conference in May. Kalanick’s comments foreshadowed the recent hiring of Barack Obama’s campaign guru, David Plouffe, to help the company “change the point of view of established politicians … who want to protect the status quo,” as Plouffe told Politico.

Which means what happens next in Maryland—where so far the regulators are winning—will be a test of how hard Uber’s new campaign-like operation can fight back across the country.

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What does the new war on Uber look like? Retracing the interpretations of Maryland laws that brought the state’s Public Service Commission to its final ruling might sound unappetizing, but proponents of Uber, especially the more than 10,300 people who signed a “Save Uber Maryland” online petition in March, might be asking how this happened and what’s at stake.

In Maryland, instead of taxi drivers protesting in the streets, opposition has come from the topmost levels of the state’s cab industry, which from the beginning has cast Uber’s drivers as outlaws. In its October 2012 letter to the PSC, Yellow Transportation, which runs three cab associations in Baltimore, argued that ridesharing companies “are not necessarily complying with the laws and regulations governing legally operating transportation companies.” Specifically, the letter warned that vehicles dispatched by such companies could get away with being uninsured, that their drivers might not pass criminal background checks and that the rates they charge would not have to be filed and approved by the PSC, a requirement of all for-hire transportation companies in Maryland. The letter—which didn’t mention Uber by name but enclosed a copy of a news article about the company’s expansion into Baltimore—concluded with a call to action: Order ridesharing companies in Baltimore and Baltimore County to cease operating.

The month after Uber launched last year in Maryland, the PSC—a quasi-judicial, utilities and transportation agency headed by five governor-appointed commissioners—began an inquiry into the company’s operations, concluding several months later that Uber is a common carrier “engaged in the public transportation of individuals for hire … subject to the authority of the Public Service Commission” and in need of a motor carrier permit for the company to operate legally in the state—in other words, a transportation company, not just an app. By May’s end, Case 9325 was docketed for Maryland’s Public Utility Law Judge Division, which primarily hears matters relating to taxicab permits, setting off a fight that would involve two state agencies and yield a convoluted abundance of letter-orders, hearing briefs, stipulations of fact and appeals—104 documents in all.

That fight boiled down to Uber vs. the taxis. In Maryland, both taxis and for-hire carriers (which offer pre-arranged and pre-paid rides) follow a long list of regulations stipulating the rates they must charge, the insurance they must have, the types of vehicles they are authorized to drive, the licenses their drivers must carry and so on. When it launched in Maryland last year, Uber was subject to virtually none of those regulations. Its drivers, Holt says, instead “run and operate their own businesses” and merely “partner” with Uber through its app. What’s more, Uber insists its drivers for UberBLACK and UberSUV are already individually licensed as common carriers by the PSC and therefore are legally allowed to pick up and drop off passengers according to state law.

Still, Uber has refused to release a list of its drivers to the PSC for verification that they are licensed, and in return, the PSC subpoenaed Uber last summer for a list of its drivers, a matter that remains unresolved in Maryland’s Court of Special Appeals. And even if Uber’s individual drivers are licensed by the PSC, Maryland law also requires common carrier transportation companies—not just their drivers—to hold permits, which Uber does not.

As such, the company is “operating in a regulated environment without regulations,” alleges Dwight Kines, the vice president for the Mid-Atlantic region of Transdev, the North American transportation conglomerate that owns Yellow Transportation. “Uber will tell you that all of their partners on the UberBLACK side are licensed and registered as common carriers,” he says. “I know plenty of guys who have left [Yellow Transportation]—that we got rid of—who had PSC issues and are now UberBLACK drivers.” (Holt says this is nothing but an allegation: “The taxi industry is going to spit out those kinds of things.”)

Concerns for public safety are ultimately why Yellow Transportation—and the PSC—wants Uber to register as a common carrier, according to Kines. Yellow Transportation’s drivers, he says, have undergone comprehensive background checks, drive regularly maintained cars that are commercially insured and can’t hide if they run afoul of PSC regulations. Uber cries foul over alleged safety concerns, calling them a smokescreen for the taxi industry’s efforts to stamp out the service in cities where it operates. Uber’s website explains the screening process for Uber drivers, which include checking would-be drivers against county and federal courthouse records, a multi-state criminal database and the national sex offender registry, as well as conducting a driving record check. But if the company also had a PSC-issued common-carrier permit, Kines says, any time a driver with a suspended license or lapsed insurance tried to partner with Uber, it would be notified directly by the PSC, the same way Yellow Transportation is notified of any of its drivers’ misbehavior.

Yellow Transportation’s concerns about safety seem genuine, but Maryland’s taxicab industry also has a history of making sure business competitors follow the same rules as it does. In 1997, the Maryland General Assembly passed a bill making the administrative review process for taxicab drivers—including fingerprinting, criminal record background checks, driving record checks and commercial insurance requirements—applicable to for-hire drivers operating limo and sedan services. The bill also mandated that for-hire drivers receive authorization from the PSC, in the form of a special for-hire license, to be able to operate legally in Maryland. A summary PSC document notes the taxi industry’s role in pushing the law: “The regulated taxicab industry has complained to the Commission that drivers for such carriers are not regulated by the Commission … and pose a greater risk to the public than taxicab drivers who are regulated.”

There is also, clearly, an economic imperative for Yellow Transportation, whose power in Maryland has grown measurably since the 1970s, when Transdev CEO Mark Joseph started his career there. Today, Yellow Transportation (formerly known as Yellow Cab) is the largest taxicab operator in Maryland, Virginia and Washington, D.C., and its taxi associations now own roughly 550 of the 1,150 permits distributed by the PSC in Baltimore. Transdev, which operates 200 transit contracts in cities across the United States and Canada, reported $1.6 billion in revenue in 2012, the same year that Joseph was honored as Taxicab Large Fleet Operator of the Year by the Taxicab, Limousine, and Paratransit Association, a trade group representing more than 1,000 public transit companies around the globe. The Rockville, Maryland-based organization also happens to be the originator of the “Who’s Driving You?” campaign, whose website aggregates news articles, fact sheets and testimonials seeking to discredit ridesharing companies including Uber, Lyft and Sidecar.

Sure enough, on top of Yellow Transportation’s letter to the PSC before Uber’s arrival, a coalition of more than 30 Maryland cab companies, a majority of which Yellow Transportation owns, filed a lawsuit in July against Uber in Baltimore City Circuit Court, alleging that Uber engages in price-fixing and evades Maryland’s transportation regulations. “It’s hard to quantify the monetary damages [we’re seeking],” Kines says. “We’re trying to get them to stop what they’re doing, obviously.” Uber spokesman Bennett vowed the company would “vigorously defend the rights of riders to enjoy competition and choice, and drivers to build their own small businesses.”

“Skimming the cream” is the way Kines describes what Uber does to taxi competitors. With Uber around, cab drivers don’t get the “high-end trips” from people willing to pay more for a private black Uber car, which means Baltimore’s cab drivers—who pay around $5,000 a year to join a taxi association but only make between $18,000 and $23,000—“are feeling the squeeze on their income.” Data corroborating taxi companies’ assertion that Uber siphons away drivers’ wages are hard to come by, but Veena Dubal, a post-doctoral fellow at Stanford University, has studied the effects of ridesharing companies on taxi drivers’ wages in San Francisco. After informally surveying about 45 taxi drivers in 2012, two years after Uber first started operating in San Francisco, she found the cabbies’ wages were unaffected. But now Dubal is hearing otherwise. “The same drivers tell me that they’re making 50 percent less,” she says. “What once was a profession that people could earn a living off of … that reality is completely gone.”

Despite the public comments of Uber CEO Kalanick, spokesman Bennett says the company is “absolutely not trying to replace the taxi industry [and] take away those jobs” but instead is providing more options in Maryland’s public transportation market. (Uber doesn’t appear to want competition either, it should be noted, given reports by the Verge that “brand ambassadors” for the company are trying to recruit drivers away from competitor Lyft, in addition to hiring and then abruptly canceling Lyft rides. Uber maintains that its “marketing tactics” don’t involve intentionally canceling rides with competitors.)

“The taxi industry has systematically been in the business of trying to maintain a monopoly and limit competition,” Holt says, adding that the PSC’s new ruling “is completely disempowering drivers. It’s literally like saying to Orbitz: Go buy an airplane. You can’t own your own motor carrier business and work for someone else.”

***

The final act in the PSC’s look into Uber began in April of this year, when the presiding judge in Case 9325 issued a proposed ruling that PSC commissioners would affirm unanimously in August, after a failed appeal by Uber: Because 20 percent of an Uber passenger’s fare goes to Uber itself, the company does receive pay for passenger-for-hire services; because Uber provides drivers with an iPhone loaded with the Uber app and sends requests to drivers to accept or decline rides, it exercises enough influence over drivers to be considered the “owner” of each car, even though it doesn’t hold the titles to the vehicles; because Uber hasn’t released a list of its UberBLACK and UberSUV drivers to the PSC, the commission has no way of knowing whether the company is using PSC-licensed drivers; and because Uber can change its rates at will through its surge-pricing policy during peak hours, it escapes PSC protocol that requires for-hire drivers to file their rates, which cannot be changed without 30 days’ notice.

“I find that Uber is a common carrier … offering passenger-for-hire services, and is therefore a public service company, subject to the jurisdiction of the commission,” wrote the chief judge on the case. (The PSC commissioners weren’t available for interviews; according to PSC communications director Regina Davis, commissioners “do not discuss matters that are pending before the agency or recent rulings.”)

In other words, if Uber doesn’t change its ways to adhere to the PSC ruling, it can’t operate in Maryland anymore. “It would be impossible to operate under the current model that we have,” Bennett says, explaining that being a transportation provider rather than a technology company would mean Uber would have to own a fleet of cars and hire the drivers as employees.

“The law is on the books,” says Paula Carmody, head of the Office of People’s Counsel, an independent state agency that represents the public’s interest. “And the law can’t be ignored just because this is an $18 billion company coming out of Silicon Valley.”

What happens next in Maryland is something of a puzzle. The Office of People’s Counsel has already asked the PSC to investigate Lyft and uberX, the ridesharing program whereby any driver with a car and Uber’s blessing can ferry people for payment. (UberX wasn’t considered in the original case because it didn’t launch in Baltimore until after the PSC investigation into Uber began.) Meanwhile, with the deadline for an appeal of the PSC’s order approaching in the coming days, Uber has only doubled down: At the end of August, it announced the Baltimore launch of uberXL, the company’s ridesharing equivalent of UberSUV, meaning that for a minimum fare of $7, everyday drivers can now shuttle groups of six or more through the Uber app.

But the possibility of Uber’s exit from the state has some lawmakers worried Maryland is driving innovation away. “Companies take notice of these types of skirmishes in the regulatory realm, and we would be sending a terrible, terrible message nationwide about Maryland’s willingness to embrace new ideas,” State Sen. Bill Ferguson, a 31-year-old Democrat who represents southwest Baltimore, said in an interview.

His argument: Ridesharing companies like Uber force taxicab companies to keep prices lower for riders and to upgrade their services. In July, for instance, the PSC rejected an 18 percent cab fare increase in Baltimore after taxi companies, Yellow Transportation included, dropped their support for the hike because “illegal transportation apps” were squeezing cabbies’ revenue, as Kines told the Baltimore Sun. The PSC also ordered taxis in Baltimore and Baltimore County to install electronic, backseat meters that take credit cards (like Uber’s app does now) by the end of 2014.

There are signs the state might eventually make room for Uber’s business innovation. In April, a bill to put Uber and other ridesharing companies in their own class—“transportation network services”—that would be exempt from PSC regulation failed in the state legislature. But the PSC is currently drafting new proposed regulations for non-taxicab, for-hire services—ones that would take into account how ridesharing companies operate, with apps and smartphones, and provide ways for companies like Uber to report to the PSC about rates, insurance, vehicle safety and driver qualifications. It’s still unclear how exactly these proposed regulations would differ from existing Maryland law. But the commission says they will include input from Uber, and Holt says the company is “hoping to work with the PSC in educating them in the process and explaining to them what’s worked elsewhere.”

And if Uber succeeds in pulling Maryland and other resistant states and cities over to its side? It might consider thanking the taxi industry. In the 1970s and 1980s, when cab companies across the United States began converting their workers from full-time employees with salaries and benefits to independent contractors who were paid out of their fares, they created a blueprint for how to maximize profits: Flood the streets with drivers. Give anyone the tools to be their own micro-entrepreneurs. Glorify the art of the hustle. Take the company’s cut. Protect your piece of the industry. And when the competition gets in the way, be prepared to wage war.

Correction (Sept. 3, 2014): An earlier version of this article mischaracterized Maryland State Sen. Bill Ferguson's district. He represents southeast, not southwest, Baltimore.