A California startup that wants to use ride-hailing companies to connect travelers has been denied permission to roll out its program, despite its $500 million pitch to the federal government.
A panel of federal regulators said in a Friday ruling that the California company, RoboTaxi, failed to show that its plan would help the city’s taxi industry.
The panel said that Robo’s “targeted, competitive, and innovative” program would be a boon for the city, with the goal of bringing in about $100 million over five years.
The government said the program would bring in $40 million annually, but that would not cover the cost of operations or drivers.
Robo has been working on a different project that has raised $100,000 in private funding, and the federal regulators had not granted permission to pursue that, the panel said.
RoboTaxis founder and CEO Dan Sieradski said in an email to The Washington Post that he was disappointed by the ruling and expected to appeal.
He said the company was exploring other options, such as a possible spinoff of its technology into a mobile payment system, a business model that is far from a reality.
“I’m still confident in our mission and our technology, but I’m disappointed in this ruling,” he said.
“I hope the government’s decision reflects that.”
Federal regulators said that while Robo would not require a taxi license or an insurance policy to operate, it would be in violation of federal anti-kickback laws, which are designed to prevent companies from taking money from customers for using the taxi services.
The government said that the company’s approach to the program violated antitrust laws and other rules against anticompetitive conduct.
“We don’t think that it’s fair to have the government impose its own regulations on an existing, well-established and well-regulated market,” said Robert Shiller, who runs the New York office of the Center for Democracy and Technology, a nonprofit research and policy organization.
“That’s a very dangerous precedent that would chill innovation, that would discourage innovation in the taxi industry.”
The panel’s decision comes at a time when the industry is facing competition from Uber, Lyft and other services that allow passengers to request rides using a smartphone app.
In April, the U.S. Supreme Court said the federal ban on Uber was unconstitutional, saying the companies are not as akin to traditional taxi companies as they are to traditional car service providers like cabbies.
In September, a federal judge in Chicago threw out the company, saying that it had not been a public utility, and that it could not be considered a taxi company under antitrust law.
Uber said in its statement that it disagreed with the panel’s ruling and intends to appeal the decision.
“We believe this decision will have a chilling effect on innovation, and we look forward to continuing our fight for a fair, competitive ride-sharing marketplace,” it said.