They're not skirting the laws at all. The hiring of privates cars, limos, or buses is usually not restricted or regulated by cities.

The innovation here, and the reason the cab companies are up in arms about it, is that it's now on-demand hiring of private cars via phone. The cab companies used to have a lock on on-demand hiring via handwave or cabstanding.

"Skirting" was a poor choice of word on my part. I didn't mean to imply they were doing anything unethical or borderline.

I simply wanted to point out that regulating cab companies and selling expensive permits is a source of city revenue. If an innovative new business disrupts that revenue, it may quickly find itself the subject of new regulation.

Now, if their success is based on efficient routing algorithms and higher-class service, then they have nothing to worry about. If it's based on the fact that they don't have one of the cab companies' major expenses, then they're at significant risk of being regulated out of profitability.

These awesome new services are threat to the current monopoly providers, who are in league with the city and protected from competition by city laws. I guarantee that that many jurisdictions will attempt to outlaw, control, or license these services. They will claim the need for "safety regulations" or similar. And a lot of cities do restrict private car and bus services-- try setting up a regular bus route in your hometown. Where I live, the major Dulles Airport even limits outbound cab service to a single provider!

http://greatergreaterwashington.org/post/2920/time-to-ground...

Thats how you push the envelope. Airbnb has at various points run into headlines about similar issues but they have done an outstanding job delivering a product that people want in the real world. If a large number of people find value in the product then mostly governments and regulation come around (recreational drugs are an interesting but offtopic exception).

"It seems like the biggest risk with this company is that they're effectively skirting laws designed to limit the sort of service they're providing."

Personally I'd call that innovation. Clearly they're providing a service where there is demand. The law seems to be inadequate, so at the very least they're highlighting a problem for lawmakers to pay attention to.

Lawmakers do pay attention, existing monopoly arrangements are deals for specific companies and/or unions that support them. You are assuming that lawmakers always have the broad community's best interest at heart.