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Uber, Lyft Drivers Need Business Licenses to Operate in San Francisco

A Lyft driver’s car in San Francisco in February 3.

In the regulation battle between cities and on-demand ride services like Uber Technologies Inc. and Lyft Inc., San Francisco just played a big trump card: bureaucracy.

Drivers for Uber and Lyft need business licenses to operate in their hometown, according to a letter the city’s Office of the Treasurer and Tax Collector started mailing to drivers Friday. The city has identified 37,000 drivers, and it has given them 30 days to obtain their licenses. For businesses that earn less than $100,000, the license costs $91 a year.

“I take seriously my obligation to fairly implement San Francisco’s business regulation requirements,” San Francisco Treasurer Jose Cisneros said in a statement. The letter wasn’t prompted by a new law, but by the time it took to identify the drivers, according a spokeswoman for the department.

The requirement highlights the legal complexity of Uber’s and Lyft’s business models, which...