California regulators say Uber, Lyft and Sidecar's car-pool services are illegal

Drivers can't carry multiple passengers while charging individual fares, the Public Utilities Commission said

New car-pool services sold by ride-sharing companies including Uber and Lyft are illegal in California, according to state regulators.

Recently Uber, Lyft and Sidecar began rolling out a new type of service that lets their customers share their rides with strangers picked up along the way to their destination, then split the fare. Each company has its own brand name -- UberPool, Lyft Line and Sidecar's Shared Rides -- but essentially they work the same way. Right now, they're only available in San Francisco.

They may not be for long. This week the California Public Utilities Commission sent essentially the same warning letter to each of the companies, telling them that the new service violated state law. Charging individual fares to passengers when multiple people are being transported in the same car is against the law, the letter said.

None of the companies approached the Public Utilities Commission before rolling out the services, according to Denise Tyrrell, director of the agency's safety and enforcement division. "The commission lacks the flexibility to allow a transportation service that is contrary to the statute as approved by the legislature," she wrote in the letter.

Uber, Lyft and Sidecar may petition the California legislature to change the law, but otherwise the agency must enforce it, the letter said.

Each of the companies told the IDG News Service it would be working with the commission to address the issue. None of them said it would be suspending the new service, at least for now.

These companies are no stranger to regulatory roadblocks, including an outright ban on Uber's UberPop service in Germany, as they launch into new markets. But Uber responded with aplomb to the California commission's letter.

"We thought we had seen it all, and then the CPUC decided they would try to shut down app-based car-pooling," said Uber spokesman Lane Kasselman. "The only conclusion we can come to is that the CPUC doesn't like technology, environmental progress, or anything that might make California a better place to live."

That might be putting it a bit strongly. Late last year, California authorities approved new regulations allowing companies such as Uber and Lyft to operate legally. However, those new regulations apparently don't apply to car-pooling.

A spokesman for the CPUC did not say how the agency would respond if it was not able to reach an agreement with the companies.

However, the agency's action could throw a wrench into the companies' plans to grow the use of their services in new areas.

Uber CEO Travis Kalanick, during a talk earlier this week at the TechCrunch Disrupt conference in San Francisco, admitted that car-pooling is tough, partly because it requires that other passengers request the ride at just the right place at a certain time. And not every user, even in today's connected digital age, wants to share their ride with a stranger.

But Uber, which now operates in 45 countries across the world, expects regulatory challenges. The company recently hired David Plouffe, a former campaign manager for President Barack Obama, partly to help it fight all manner of regulatory battles. In California now, a new one apparently awaits.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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