Update: The New York City Council has voted to cap Uber vehicles.
As Uber has grown into a global behemoth, upending urban transportation networks and changing the way people get around, the company has often found itself clashing with local governments or trying to dig itself out of a public relations morass.
On Wednesday, it is likely to suffer one of its biggest blows.
The New York City Council is expected to vote on a cap for Uber vehicles — a move that would be a major setback for the tech giant in its largest American market.
The City Council plans to vote on a package of bills that would halt the issuance of new licenses for Uber and other ride-hail vehicles for a year while the city studies the booming industry. The legislation would also allow the city to set a minimum pay rate for drivers.
Why does the city say a cap is needed?
Mayor Bill de Blasio and Corey Johnson, the City Council speaker, say the bills will address worsening street congestion and improve low driver wages.
The battle over Uber’s future in New York has been prompted in part by growing concerns over financial turmoil among drivers — a problem underscored by six driver suicides in recent months.
“The Uber business model is: Flood the market with as many cars and drivers as possible, gain more market share and to hell with what happens to drivers or anybody else involved,” Mr. de Blasio said in a television interview on Monday.
Mr. de Blasio, a Democrat, tried unsuccessfully to cap Uber in 2015. Since then, the number of for-hire vehicles in the city has surged to more than 100,000 vehicles, from about 63,000 in 2015, according to the city.
What would this mean for Uber?
The new rules would make New York the first major American city to restrict the number of ride-hail vehicles and to establish pay rules for drivers. They could set a precedent for other cities seeking to rein in Uber and potentially set off a ripple effect.
Uber, which has been valued at $48 billion and could be moving toward an initial public offering, has become wildly popular while repeatedly stepping into controversy.
In London, Uber’s most lucrative European market, officials recently allowed Uber to regain its taxi license after the company agreed to stricter regulations, including sharing traffic data with the city. Uber has also faced regulatory battles in American cities, like Austin, Tex., and in countries like Canada, Brazil and Italy.
The company’s new chief executive, Dara Khosrowshahi, has been working to repair the company’s image after a series of controversies, including complaints over gender discrimination and harassment.
How would a cap impact New Yorkers?
Uber has mounted an aggressive advertising campaign against the cap saying that it could raise prices for rides and lengthen wait times for passengers. Uber also argues that New Yorkers need the app more than ever because the subway and bus systems are in crisis.
“A 12-month pause on new for-hire vehicle licenses will leave New Yorkers stranded while doing nothing to prevent congestion, fix the subways and help struggling taxi medallion owners,” Josh Gold, a spokesman for Uber, said in a statement. “It’s unfortunate that the Council chose to tack this on to a thoughtful package, including the living wage proposal.”
Lyft, another popular app, also opposes the cap. Its leaders say that nearly a quarter of its drivers could leave because of routine turnover, leading to a shortage of drivers over the next year.
How would the legislation help drivers?
Many taxi and Uber drivers say they support the cap proposal.
Drivers hope the cap will halt the flood of new vehicles clogging city streets and allow them to complete more trips and improve their earnings. Uber and other ride-hail services could add new vehicles only if they are wheelchair accessible.
If the city sets a minimum wage of $17.22 an hour after expenses, that would increase driver earnings by about 22.5 percent on average, according to a study by independent economists.
About 40 percent of for-hire vehicle drivers have incomes so low that they qualify for Medicaid and about 18 percent qualify for food stamps, according to the study.
What is the city doing to help taxi owners?
The taxi industry has also been decimated by Uber’s rise. The price of a taxi medallion, which is required to operate a taxi in New York, has plunged from more than $1 million to less than $200,000.
Lyft’s leaders say the ride-hail companies offered to establish a $100 million fund to help taxi drivers if the city dropped the cap proposal, but city officials refused the offer.
The City Council is planning to consider a separate set of bills to help taxi drivers, including measures to create a health benefits fund and to study how to assist medallion owners with excessive debt.
On Tuesday, the New York Taxi Workers Alliance, a group that represents drivers, held a vigil outside City Hall to remember the drivers who killed themselves. The group released a video from the brother of Kenny Chow, a taxi driver found floating in the East River in May.
His brother, Richard Chow, asked New Yorkers to support the cap so that “no one else is pushed to financial despair.”
Follow Emma G. Fitzsimmons on Twitter: @emmagf