Russian Government set to Grab All Taxi Consumer Data

A taxi law giving the Russian government a monopoly over consumer data was passed in December 2022 and is aimed at Russian providers’ many problems such as illegal trips, a lack of responsibility on the part of ride-hailing companies, monopolization and poor working conditions.

It has replaced the previous taxi law which, substantially, is a copy of that in the Soviet era. Since its introduction, the industry has been dramatically changed by the emergence of self-employed drivers and ride-hailing companies with the municipal authorities losing control over the market, said Stanislav Shvagerus, head of competence center at International Eurasian Forum Taxi: “This is because the old regulatory mechanism, based on physical monitoring tools, became obsolete after digital technologies deeply penetrated the industry. Unfortunately, the regional authorities in charge of regulatory tasks often do not have the resources to create modern regulatory tools.”

Federal cloud platform

It has taken the government several years to develop a system that makes efficient use of digital instruments. At its core, the federal government will provide regional authorities with a government-owned cloud platform with the tools they need to regulate taxis. It will hold separate records of ride-hailing companies, fleet operators and self-employed drivers, with data automatically loaded from the databases of ride-hailing companies, the police, insurers and others.

Its general architecture is similar to platforms launched by cities in some developed countries. However, Russia will implement such a system at the federal level, said Shvagerus. He suggested that this approach is more progressive than China’s. In January 2023, the Chinese authorities announced a plan to consolidate the national taxi operations into a state-owned transport super-app, which is currently under development.

Experts are divided on the potential benefits of the new system. “Its only use for the Ministry of Transport is in helping to correct the market’ most general playbook,” said Konstantin Trofimenko, director of smart city research center at HSE University. “The federal platform is just a register of carriers, taxi booking services and cars broken down by regions.”

The law sets the stage for further reduction of illegal trips and growth of services such as telemedicine, said Alexander Ovanesov, managing partner of Arthur Consulting. Nevertheless, he expects only a marginal increase because most of the technologies are already being used by the largest players in the industry: “For example, Yandex collects huge volumes of data from vehicles, including driver health monitoring, and that is 70% of the market. Now everyone is obliged to do it.”

Shvagerus disagreed by saying that the collection of complete data from many sources will dramatically improve the government’s ability to distribute incentives and control monopolies. Technically and mentally, large ride-hailing companies and the majority of fleet owners and drives are ready, said Ovanesov, while some of the smaller players will have to increase their use of digital instruments. “The debate over this law has been going on for more than five years, so the drivers have gotten used to the idea of being monitored,” he said.

“First and foremost, the law will require a major transformation in the authorities themselves,” Shvagerus said. “Nevertheless, I wouldn’t say that it’s a total waste of money for them because the transformation is expected to lead to a decrease in the black market and an increase in tax collection.”

Municipal telematic systems

The law also authorizes local authorities to launch regional information systems to keep an even closer eye on the industry. The Moscow government has been running such a pilot system since August 2021. Local taxi drivers are required to use a municipal mobile app that monitors working conditions and prevents drivers who are not allowed to work in taxis from receiving hail orders and municipal subsidies. The app also tracks the location of vehicles to identify areas where taxis are under or overloaded helping the ride-hailing companies to better distribute cars around the city. More such systems are expected to be rolled out in other regions in the near future.

Trofimenko said: “Unlike the federal platform, Moscow’s system is an effective instrument for controlling each taxi driver and indirectly influencing the quality of transport services, which is right because such projects should be implemented at the regional level. The monitoring of road safety and the organization of transport services are the areas of responsibility of regional authorities while the federal government’s role is to develop national policies and regulations.”

Given the scale of future changes, the law’s entry into force was postponed until September 2023. Shvagerus said: “It will take some time to get the first results and see how fruitful this way is and whether the division of responsibilities is well-balanced. By the year’s end, we’ll know whether the scheme needs to be adjusted.”


Leave a comment

Your email address will not be published. Required fields are marked *