Uber and Lyft Hail Trump’s Transportation Pick

(Bloomberg) -- Uber Technologies Inc. and Lyft Inc. reacted favorably to President-elect Donald Trump's decision to nominate Elaine Chao for U.S. Transportation Secretary, viewing her as an experienced regulator who has publicly supported their labor model.

"We have the utmost respect for Elaine Chao, an accomplished public servant and highly capable leader," Adrian Durbin, a spokesman for Lyft, wrote in an e-mail. "We congratulate her on the nomination and look forward to working with her on an array of transportation issues."

Niki Christoff, head of federal affairs for Uber, said in an e-mail that "Chao's knowledge of transportation issues is extensive and we look forward to working closely with her."

Uber adviser Bradley Tusk called Chao a friendly appointment for the technology industry. "In many ways, she may be the cabinet member with the most interesting and important tech policy issues out there," he said, citing the department's involvement in regulating autonomous vehicles to drones to the technology that decides how cars communicate with each other.

Chao, who served as Labor Secretary for eight years under President George W. Bush, has voiced support for companies in the sharing economy like Uber and Airbnb. At a talk at the American Action Forum in November 2015, Chao said that "many of the government’s workplace regulations were created during an era when workers spent the majority of their lives in one establishment or one profession. That’s no longer the case today. So it is legitimate to ask if the regulatory solutions of the past—crafted by big government for big business—are appropriate for a peer-to-peer economy that is fluid, flexible and filled with workers who prefer independent arrangements. I believe there is room in our economy for a variety of approaches."

Uber and Lyft are fending off lawsuits that accuse them of violating the law by treating their drivers like independent contractors rather than providing them the benefits of full-time employees. But Chao's remarks indicated that she had a favorable impression of the industry's labor practices.

"The digitally enabled, peer-to-peer economy has provided an important safety net for many families during difficult times," Chao said in her talk last year. "At a minimum, government policies must not stifle the innovation that has made this sector such an explosive driver of job growth and opportunity."

As Transportation Secretary, it's unclear how much sway Chao will have over independent contractor regulations. But the ride-hailing industry took her nomination as a sign that the new Trump administration wouldn't attempt to crack down on Uber or Lyft's employment model. One former senior Uber employee said a reduced risk of federal intervention in the labor situation would remove a potential regulatory hurdle and may speed the company's move toward an initial public offering.

Tech companies and automakers alike should benefit from the way Chao would likely approach regulation for autonomous vehicles, said Mike Ramsey, an analyst at Gartner.

"This technology will go unimpeded by the new administration," he said. "It's something that the industry is fully behind. My expectation is that Elaine Chao will be a supporter."

The prospects are less clear for President Obama's pledge to spend $3.9 billion on paving the way for driverless cars over the next decade, Ramsey said. If that proposal survives, Ramsey said the Trump administration could direct that money toward infrastructure, such as a smart highways with embedded sensors for vehicles to communicate, and that Chao may be able to influence the debate in Congress with help from her husband Mitch McConnell, the Kentucky Republican and Senate majority leader.

As the Trump administration plans an infrastructure bill that is expected to include a number of public-private partnerships, there is hope within the ride-hailing industry that the proposal would favor them. The Federal Transit Administration has launched a grant program, called the Mobility On-Demand Sandbox Grant, which helps to fund partnerships between transit agencies and private sector companies. A project involving the Los Angeles County Metropolitan Transportation Authority and Lyft received one of the first 11 grants awarded in October.

Pete Gould, a consultant and former senior policy development associate at Uber, said he hoped that program would see increased funding in a Trump administration. "I'd really hope that going forward they take that baton and really run with it," he said. 

Gould said he was glad to see an experienced government official nominated for the transportation Cabinet position. "She knows the system, how to advance her priorities," he said. "That's always a win for a broad range of interests."

—With Keith Naughton

To contact the author of this story: Eric Newcomer in San Francisco at enewcomer@bloomberg.net.

To contact the editor responsible for this story: Andrew Pollack at apollack1@bloomberg.net, Mark Milian