NYC Ban on In-Uber Advertising Survives Challenge

MANHATTAN (CN) – While annoying “Taxi TV” isn’t going anywhere, the Second Circuit sided with New York City on Tuesday that it can ban advertisements in Uber and Lyft vehicles.

A driver displaying Lyft and Uber stickers on his front windshield drops off a customer on Jan. 12, 2016. (AP Photo/Richard Vogel, File)

“The city’s asserted goal is to protect its citizens from the offensive sight and sound of advertisements — not their content — while they are traveling through the city by car,” Chief U.S. Circuit Judge Robert Katzmann wrote for a three-judge panel. “That interest is clearly substantial. City governments have a substantial interest in cultivating ‘esthetic values’ and preventing ‘undue annoyance.’”

Digital-media company Vugo initiated the court battle in 2015 when the city’s Taxi and Limousine Commission denied advertising to ride-hail vehicles despite permitting some such media in the city’s traditional for-hire vehicles — the iconic medallion-bearing yellow taxis that roam Manhattan, and the green livery cars that can be hailed down in the outer boroughs.

Taxi TV, Katzmann explained, is the city’s notable exception to the ban it otherwise imposes on taxi advertising. The programming was implemented several years ago to help drivers offset the costs of installing a new technology system that included credit card readers, allowed users access to fare information, and could transmit route data to the Taxi and Limousine Commission. 

Vugo seized on this exception, contending that the city should allow Vugo’s equipment as long as the Taxi TV exception to the no-ad ban exists.

But the city swayed Katzman that it has a good reason for banning ads: a 2011 survey found that a full third of passengers found Taxi TV annoying.

“Passengers have complained that the screens are difficult to turn off and cause motion sickness,” the ruling states. “They have singled out the advertisements on Taxi TV as especially irritating.”

Katzman said the exception for Taxi TV advances the city’s interest in improving the overall taxi experience, but Vugo made no such showing.

“The Taxi TV exception reflects the city’s reasonable decision that the costs of permitting advertisements in taxicabs were outweighed by the benefits of compensating taxicab owners for the expense of installing new equipment that facilitated credit card payment and improved ride data collection,” Katzmann wrote.
Vugo’s business model is recounted in the ruling as well: a driver buys a tablet, mounts it on a front seat headrest, and downloads the company’s app, which then automatically plays video advertisements. Passengers cannot mute or turn off the advertisements, though they can turn the volume down. Advertisers pay Vugo, which then gives drivers a share of the income. 

The Taxi and Limousine Commission regulated 94,000 vehicles as of 2016, more than 75 percent of which were for-hire vehicles like Uber and Lyft. As such cars accounted for over a third of all passenger trips, that means a third of passengers were spared Taxi TV.

U.S. Circuit Judges Debra Ann Livingston and Christopher Droney concurred.

The New York City Law Department said it was happy with the ruling.

“We are pleased that the Circuit upheld the TLC’s rules restricting advertising in for-hire vehicles, which directly advance the City’s strong interest in promoting passenger comfort for its residents,” said a spokesperson Tuesday.

Representatives for Vugo and the New York City Law Department did not immediately return a request for comment Tuesday. 

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