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Uber Loses Its License to Operate in London Uber Loses Its License to Operate in London
(35 minutes later)
LONDON — London’s transportation agency dealt a huge blow to Uber on Friday, announcing that it would not renew the ride-hailing service’s license to operate in the British capital, the company’s largest market in Europe. LONDON — London’s transportation agency dealt a huge blow to Uber on Friday, declining to renew the ride-hailing service’s license to operate in its largest European market.
“Uber’s approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications,” the agency, Transport for London, said in a statement. The decision is the latest setback for a company that has upended public transportation across much of the world by using smartphones to connect drivers with passengers. That success has helped it grow into a behemoth worth around $70 billion.
The license will expire on Sept. 30, but Uber has been given 21 days to appeal, during which it may continue operating in London. The company immediately vowed to appeal. But along the way, Uber has faced an array of controversies: allegations of sexual harassment, concerns about its use of software to evade the gaze of authorities, and a reputation — fair or not — that it simply does not play by the rules.
The decision is the latest problem to confront a company that has upended public transportation across much of the world by using smartphones to connect drivers with waiting passengers. That success has helped it grow into a behemoth worth around $70 billion, operating in major cities across the globe. Criticism from customers, unions, regulators and, crucially, investors contributed to the removal of Uber’s founder, Travis Kalanick, as chief executive this year. He was replaced by Dara Khosrowshahi, who had run the online travel site Expedia.
But along the way, Uber has faced an array of controversies, from allegations of sexual discrimination to its use of software to evade the gaze of authorities. Those and other issues contributed to the removal of its founder, Travis Kalanick, as chief executive this year, leading to a search that culminated in the appointment in August of Dara Khosrowshahi, the former head of the online travel site Expedia, as its new leader. The decision on Friday by Transport for London, which is responsible for the city’s subways and buses, as well as regulating its taxicabs, illustrates the gravity and severity of the issues confronting Uber.
Uber had hoped that new leadership would help it turn the corner on a turbulent period. The agency took direct aim at Uber’s corporate culture, declaring that the company’s “approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications.”
The decision by Transport for London, which is responsible for the city’s subways and buses, as well as regulating its taxicabs, illustrates the gravity and severity of the issues confronting Uber. And a ban on operating in one of its largest markets — a global city where it has 40,000 drivers and 3.5 million customers use its app at least once every three months — would hit the company’s bottom line. Uber’s London license will expire on Sept. 30. But the company has been given 21 days to appeal — it immediately vowed to do so — and will be allowed to continue operating in the city during the appeal process.
Transport for London said it had concluded that Uber was “not fit and proper to hold a private hire operator license.” A ban on operating in one of its largest markets — a global city where it has 40,000 drivers and 3.5 million customers who use its app at least once every three months — would hit Uber’s bottom line.
Among the issues it raised: how Uber deals with serious criminal offenses; how it conducts background checks on drivers; and its explanation for its use of a software program called Greyball that “could be used to block regulatory bodies from gaining full access to the app.” Transport for London said that Uber was “not fit and proper to hold a private hire operator license.”
Tom Elvidge, Uber’s general manager in London, said that the agency and London’s mayor, Sadiq Khan, had “caved in to a small number of people who want to restrict consumer choice.” Among the issues considered by the agency in reaching that assessment were how it dealt with serious criminal offenses; how it conducted background checks on drivers; and its justification for a software program called Greyball that “could be used to block regulatory bodies from gaining full access to the app.”
Tom Elvidge, Uber’s general manager in London, said that the agency and the city’s mayor, Sadiq Khan, had “caved in to a small number of people who want to restrict consumer choice.”
Uber conducted background checks using the same methods as those used for black-cab drivers, he said.Uber conducted background checks using the same methods as those used for black-cab drivers, he said.
“Our pioneering technology has gone further to enhance safety with every trip tracked and recorded by GPS,” he said, adding that the company had “a dedicated team who work closely with the Metropolitan Police.”“Our pioneering technology has gone further to enhance safety with every trip tracked and recorded by GPS,” he said, adding that the company had “a dedicated team who work closely with the Metropolitan Police.”
He added that Greyball “has never been used or considered in the U.K.” for the purposes cited by Transport for London. Greyball had not been used to block scrutiny by regulators or the police in London, he said.
Uber is used in more than 600 cities around the world, and in more than 40 cities and towns in Britain. According to the company, by 2015 it had driven Londoners almost 100 million miles, and taken them on 20 million trips. It is unclear how London’s decision would affect any move by Uber to list its shares on a public market. Mr. Khosrowshahi told employees last month that an initial public offering was unlikely to come until 2019 at the earliest.
“This ban would show the world that, far from being open, London is closed to innovative companies who bring choice to consumers,” Mr. Elvidge said. But clashes with regulators have been one reason Uber and other big private companies like Airbnb have taken so long to pursue I.P.O.s.
John Colley, a professor at Warwick Business School, said the decision was the latest sign of an erosion in Uber’s corporate image. Holders of shares in public companies are often less tolerant of risks than their private-market counterparts, and opposition from governments are among the most significant threats that a company can face.
“There is a very long list of businesses who have suffered for failing to uphold the level of values necessary,” he said. “Until Uber gets this message, then it will suffer lost trade as a result of its deteriorating reputation.” The ruling on Friday comes less than a year after a British tribunal ruled that Uber could no longer treat its drivers as self-employed contractors and would have to meet tougher labor standards, including offering holiday pay and pensions.
Uber arrived in London in 2012, just ahead of the Summer Olympics, initially with a luxury service, adding UberX, which competes more directly with London’s storied black taxis, a year later. Labor standards are just one facet of a question that has vexed governments: Should Uber be regulated as an online service that merely connects independent drivers with passengers, or as a transportation employer that has to meet tougher standards? The European Court of Justice is considering just that question. How the issue is resolved will be watched closely by many in a wide range of other industries, such as hoteliers grappling with Airbnb.
Its debut here created a clash almost immediately with those black cabs, which trace their roots to 1634. To earn their licenses, black-cab drivers must memorize some 25,000 streets and 100,000 landmarks across the capital for an exam known as The Knowledge, considered among the world’s toughest. “This could be a game changer for the gig economy,” said Frank Field, a Labour member of Parliament. He called on Uber to reset its business model “to be built upon two foundations: a safe and reliable service for every passenger, and a living wage and fairer conditions for every driver.”
Black-cab drivers complain that Uber drivers are under-regulated and that they don’t have to satisfy the same exacting standards. Moreover, Uber fares are about 30 percent lower than those of black cabs, whose drivers fear that Uber will put them out of business. Until now, London has been one of Uber’s most notable success stories outside the United States. It debuted in the city in 2012, just ahead of the Summer Olympics, initially with a luxury service. It added UberX, which competes more directly with the city’s storied black taxis, a year later. By 2015, it had driven Londoners almost 100 million miles, and taken them on 20 million trips. The company now operates in more than 40 cities and towns across Britain.
The conflict also involves tensions over ethnicity and class — most black-cab drivers are white native-born Britons, while many Uber drivers are immigrants who see the service as a means of seeking a better life. Its arrival here, however, created a clash almost immediately with those black cabs, which trace their roots to 1634.
Black-cab drivers, who earn their licenses by memorizing some 25,000 streets and 100,000 landmarks for a famously exacting test known as The Knowledge, complain that Uber drivers are under-regulated. Many fear that the rivalry will put them out of business: Uber fares are about 30 percent lower than those of black cabs.
The conflict also involves tensions over ethnicity and class — most black-cab drivers are white native-born Britons, while many Uber drivers are immigrants.
Uber has said that it receives hundreds of complaints a month from its drivers about remarks from black-cab drivers. Among the insults hurled are “Uber slave!” and “Go back to your country!”Uber has said that it receives hundreds of complaints a month from its drivers about remarks from black-cab drivers. Among the insults hurled are “Uber slave!” and “Go back to your country!”
Many black-cab drivers have now signed up with competing apps like Gett and MyTaxi, which like Uber allow passengers to hail rides via their smartphones. Londoners can also choose from a wide variety of private-hire services, known as minicabs.Many black-cab drivers have now signed up with competing apps like Gett and MyTaxi, which like Uber allow passengers to hail rides via their smartphones. Londoners can also choose from a wide variety of private-hire services, known as minicabs.
The GMB, a trade union that has challenged Uber in court in Britain, described the license decision as a victory. Black-cab drivers, and the unions representing them, cheered Friday’s ruling, with Jeffrey Marcus, who has been driving a London taxi for 42 years, describing it as “long overdue.”
“No company can behave like it’s above the law, and that includes Uber,” Maria Ludkin, the union’s legal director, said on Friday. “No doubt other major cities will be looking at this decision and considering Uber’s future on their own streets.” “We’ve got a brilliant taxi service here,” Mr. Marcus, 67, said. “You pay a little more for a licensed taxi, but you get the service.”
Ahmad Shoaib, an Uber driver, said the service was being unfairly targeted. The reaction online, however, was generally negative, while Ahmad Shoaib, an Uber driver, said the service was being unfairly targeted.
”I know there have been some problems with drivers, but most of us are good and reliable and play by the rules,” he said. “It is not fair to punish everyone because of the mistakes of one or two people.” “I know there have been some problems with drivers, but most of us are good and reliable and play by the rules,” he said. “It is not fair to punish everyone because of the mistakes of one or two people.”
Mr. Shoaib switched to Uber from a minicab company in Croydon, in South London, after he saw how much work friends were getting from the ride-hailing service. He described Uber as “like our family business,” and added, “London needs Uber, it’s cheap and easy.” Mr. Shoaib switched to Uber from a minicab company in Croydon, in South London, after he saw how much work friends were getting from the ride-hailing service.
“London needs Uber,” he said, “it’s cheap and easy.”