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True. But they did that. Anyway. That is technically Anti-Trust. Thus in essense illegal. That is why uber tried shilling that they are not an employer but merely a service as to seem that they were skimming the Law that they knew they were breaking in Spirit. They aren't stupid. But know many are, so why not exploit them? If we are smart, they thought, they could drive Taxis out of business, be the big dog in the sector and surge price their way into profit. At will. It is not like this type of shit has not been attempted before.
Also, Uber simply transfered the costs of running its fleets, upkeep, maintenance, including most liability and litigation to its drivers. Not to mention that love it or hate it Taxi drivers need to pass some basic level of proficiency, for uber you could be a blatant rapist and as long as you can click on a form for 5 minutes, you are good to go.
They do actually do a background check. Whether it works or not is another question, but I think it works pretty well at keeping out most crazies. Plus the customer reviews and GPS monitoring work decently for keeping drivers on their best behavior.
Those are not present in taxis, and there's very little recourse against a creepy taxi driver. Some cities make Uber drivers get the same license as a taxi driver.