In May 2015, Vugo, a technology startup company, wanted to bring advertising to for-hire vehicles (FHVs) in New York City (NYC). Vugo operates by connecting local, regional, and national advertisers with passengers in FHVs by directing interactive ads to tablets in those vehicles. The company’s targeted algorithm selected ads for any given trip based on trip signals and other data, including City, pickup location, drop-off location, and route. Passengers can interact with ads that interest them by clicking on the screen of the tablet. Drivers had an incentive to sign on with Vugo, as it provided them with additional income by paying drivers a percentage of the revenue it received from paid ads.
Vugo’s ability to enter the NYC market was stymied by the rules of the NYC Taxi & Limousine Commission (TLC), which at the time permitted advertising in medallion taxis only. On the other hand, national advertisers wanted to expand their campaigns into NYC, as well as include advertising to potential companies on the Vugo platform.
Back in October 2015, over a decade ago, Vugo, Inc. filed a lawsuit against the City of New York, alleging that the TLC rule imposing an absolute ban on advertising in FHVs was violative of the First Amendment to the Constitution.
The TLC contended that it allowed advertising in medallion taxi cabs and street-hail liveries solely to offset the cost associated with technology systems that must be installed in those vehicles. Despite allowing advertisements in medallion taxicabs, the TLC sought to justify the ban in other FHVs to protect passengers from annoying advertisements. According to the TLC, the City had an interest in – and the right to oversee and enforce – the improvement of the passenger experience.
In February 2018, the U.S. District Court for the Southern District of New York granted Vigo an injunction prohibiting the City from enforcing the rules banning advertising in FHVs because the City’s ban violated the First Amendment to the Constitution. In 2018, the City appealed the decision of the U.S. District Court to the U.S. Court of Appeals for the Second Circuit, one court below the Supreme Court of the United States of America.
I was fortunate to have been one of the individuals who wrote the brief on behalf of Vugo, in an attempt to have the U.S. District Court’s decision upheld on appeal. Unfortunately, the Court of Appeals for the Second Circuit issued an order in July 2019, reversing the district court’s judgment and directing the entry of judgment in favor of the City. Hence, the city won the lawsuit, and FHV drivers were prohibited from earning extra money by placing simple tablets in the back of their vehicles.
Now, fast-forward six years. In December 2024, New York’s City Council passed a bill allowing NYC TLC-licensed drivers and fleets to display electronic advertising tablets in their FHVs. In January 2025, the TLC held a public hearing to discuss the implementation of a local law and amendments to the Administrative Code of the City of New York regarding interior advertising in FHVs. The initiative was meant to permit qualified vendors to offer information, news and entertainment for passengers via tablets installed in FHVs, while enabling drivers to be paid a share of the revenue and facilitate the payment of gratuities through the tablets. The TLC eventually approved interior advertising in “non-yellow cab” FHVs, promulgating rules relative to the regulation of such advertising.
Currently, one vendor, T-Mobile’s Octopus Interactive, has officially been granted the TLC’s first FHV Interior Advertising Provider (IAP) License. To ensure IAPs pay TLC-licensed drivers correctly, the TLC will require companies behind the advertising tablets to identify drivers who operate an in-vehicle ad device during trips and submit certain information to the TLC.
Unless tablet advertising delivers an additional $50-$100 per week, most drivers will see little reason to bother. While every extra dollar matters in today’s tight margin environment, if payouts from advertising don’t materially help their bottom line, drivers will be less motivated to put ad tablets in their vehicles.
For TLC rental and leasing operators, ad revenue can be a huge boost. A direct deal that earns a fleet $40 per vehicle per month across a 1,000-car fleet equates to roughly $40,000 in near-pure profit revenue. This is a meaningful boost for a low-margin, capital-intensive business.
In a driverless future, digital cabin screens could become the centerpiece of passenger interaction, not just for ads, but for navigation, entertainment and commerce. Without a human driver, those screens would effectively become the vehicle’s primary interface, shaping how riders experience and engage with the car.
In 2015, according to the TLC, advertisements in non-medallion FHVs were annoying. Are they not annoying today, or is there some other benefit to the TLC, the City, and/or the riding public? The stated purpose of amending the rules in 2025 – to allow advertising in FHVs – was to enable drivers to receive a share of revenue and facilitate the payment of gratuities through tablets… no different than what was slated to occur in 2015. So, what changed the TLC’s mind since then?
Ten years have passed since FHV drivers were denied the chance to earn extra income through ads on tablets in their vehicles. In that time, we witnessed an explosive growth in the number of FHVs on the road, to the point where a cap had to be instituted on FHV licenses. Drivers could have used that extra income, but the City has offered no real explanation for its about-face on in-vehicle FHV ads.
I recently rode in an FHV that had ads on a tablet for passengers in the rear seating area. I didn’t find it annoying. In fact, it was a delightful distraction from the trip to my destination. If for some reason I did find it annoying, I could have either turned it off or turned it all the way down.
I suppose the TLC is permitted to change its mind and see the errors of its ways. On the other hand, the idealist in me would like to see the TLC admit that they were wrong in 2015, by denying drivers the opportunity to earn additional income.
Sometimes the TLC has a difficult time balancing the needs of the riding public with the opportunities for drivers to earn a decent income. I am happy that the City and the TLC finally saw the error of their ways and have permitted drivers the chance to earn extra income, all while allowing the riding public to determine for itself whether or not it wants to have ads and other entertainment in FHVs when they are being transported throughout the City of New York.
