As you may have heard Uber has recently been handed a ban notice in London. After the 30th of September the company will no longer be able to operate in the British capital.This comes after months of scrutiny across Europe about their hiring practices and near endless scandals rocking the company. Uber’s London ban comes at a key moment for the ride hailing giant. The next moves made by its new CEO will define the future of Uber and other companies like it.
Recent events have tarnished Uber’s reputation. The decision of the London Mayor is the culmination of months of concerns about Uber’s hiring practice and the business model that the company operates. The city has previously ruled that Uber’s workers are in fact full time employees, rather than contractors. Taxi firms are also involved in a long-running dispute with Uber. Many different firms have argued that Uber has not been held to the same levels of accountability as they have and that the firm has not been playing by the same rule-book as everyone else. Instead choosing to hide behind the fact that they are a “disruptive” business and that any dissent is merely vested interests angry that they are being challenged.
Transport for London has ruled that Uber London is not meeting its required standards
In the end it was not controversies about undercutting local services or controversial employment practices or even tax avoidance that threaten to end Uber’s London presence. It is the fact that at the end of the day they are a minicab operator that falls under the remit of Transport for London (TFL). Unfortunately for Uber TFL has decided that Uber London Limited (ULL) has not been meeting many of its most basic obligations as a minicab operator in London.
All of the drivers and cars that Uber uses in London operate under Uber London Limited. ULL is a mini-cab firm like any other in London and is supposed to keep to the same standards as others in the industry. Concerns were raised earlier in the year by Transport for London that ULL might not be meeting all of the requirements. Uber were given a four month extension on their license in order to allow investigations to take place.
After the investigations Transport for London came to the conclusion that Uber London Limited was not meeting the basic requirements of a mini-cab operator. They argued that Uber’s London subsidiary was not meeting minimum standards in the following areas:
- Their approach to reporting serious criminal offences.
- Their approach to how medical certificates are obtained.
- Their approach to how Enhanced Disclosure and Barring Service (DBS) checks are obtained.
- Their approach to explaining the use of Greyball in London – software that could be used to block regulatory bodies from gaining full access to the app and prevent officials from undertaking regulatory or law enforcement duties.
Uber has been accused of failing to report six sexual assaults, two public order offenses and one assault to the police. This led to serious delays in investigating the crimes and is a serious breach of basic corporate responsibility. Uber have also been accused of using “Greyball” to avoid picking up regulatory officials and thus avoid official oversight. The result of these failures has led to Uber’s London ban.
Transport for London is in a unique position to say no to Uber
Despite the decision being primarily regulatory it was rapidly politicized. Uber users rapidly mobilized under #saveyouruber and at time of writing over 772,000 users have signed it. Conservative MPs said that it was a sign that London, and by extension its Labour mayor, was closed to innovation. Uber itself has done everything in its power to frame the argument in this way. They argue that the ruling is a result of TFL caving into pressure from London black cabs rather than being about Uber London Limited failing to meet regulator requirements. In essence the company wants the argument to be that Uber’s London ban is about vested interests stifling innovation. Not about a company refusing to play by the same rules as everyone else.
This is a tactic that Uber routinely falls back on. They exploit weaknesses in local legislature in order to force through legislation that benefits their end game. Uber have used petitions to successfully reverse legislation in both London and New York in 2015. Unfortunately for them these tactics will most likely prove ineffective against TFL.
The problem for Uber is that Transport for London is not answerable to the electorate. TFL is one of the largest regulatory bodies in the world with a budget of over 10 billion pounds (13 billion dollars). It only answers to a single person, the mayor of London. In this particular case that mayor happens to be Sadiq Khan. Both Transport for London and Mr Khan have proven themselves to be unsympathetic to Uber’s argument and they have the muscle to ignore public opinion if they feel that the ride hailing giant isn’t playing by the rules.
Uber’s new CEO seems to have recognized that the only way around the ban is to get the mayor of London on his side. Mr Khosrowshahi issued an open letter apologizing for Uber’s past conduct and promising to do better. Despite the fact that this letter did not directly address any of the concerns raised by TFL it seems to have worked. While previously Mr Khan stated that neither he or TFL would be meeting with Uber he has now softened his position. The mayor has requested that TFL make itself available to discuss Uber’s London ban, offering them an olive branch and a chance to redeem themselves.
Uber need this appeal to succeed or they risk being pushed out of Europe
That being said it seems unlikely that any appeal will succeed unless Uber takes serious steps to address the authorities concerns. TFL is large enough not to succumb to pressure and Mr Khosrowshahi knows it. Europe has long been skeptical of the ride hailing operator and losing access to London could be the last nail in Uber’s coffin.
Luckily for Mr Khosrowshahi the immovable nature of Transport for London may turn out to be a blessing in disguise. He has been given an opportunity to prove that Uber really has changed under his leadership. If he can convince the powerful TFL to reverse Uber’s London ban then it will be a sign that they have taken real steps to address the authorities’ concerns and that his company will comply with regulators in the future.
Uber’s London ban has the potential to make or break the company’s European presence. If they can convince Transport for London that they will comply with regulations going forward then it may make other European cities think twice about their own ban. It will all depend upon whether Mr Khosrowshahi is serious about making a break with Uber’s dubious past or not.