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Posted by on Oct 11, 2017 in Economy & Trade, Europe, Featured | 0 comments

London Bans Uber, Opposing Its Post-Brexit “Open for Business” Message

London Bans Uber, Opposing Its Post-Brexit “Open for Business” Message

Uber, the San Francisco-based ride-hailing service, is set to lose its license to operate in London, following its expiry on September 30th. The government regulator, Transport for London (TfL), deemed the company “not fit and proper” to hold a private hire license, citing “public safety and security” concerns. In a statement, Uber responded by saying, “Far from being open, London is closed to innovative companies”. Uber has confirmed plans to appeal the decision.

In a report, TfL outlined its reasons for the ban. It expressed concerns that Uber is failing to report criminal offences effectively – recently, it was found that three assaults between Uber drivers and passengers in the UK went unreported in 2017. The report goes on to denounce the lack of background checks imposed on drivers, as well as Uber’s planned use of a new software called Greyball, which can block regulators from accessing data on the app (echoing the infamous FBI-Apple Encryption dispute). 

The decision to ban Uber has not been taken lightly by the public. An online petition called ‘Save Your Uber’, attracted 500,000 signatures within 24 hours of being launched. The company employs over 40,000 drivers – all of whom are set to lose their jobs under the ban. Theresa May, the UK Prime Minister, expressed her own concerns about the ban, on the grounds that it “risked” jobs and has “damaged the lives” of Uber users. 

Not all reactions were in favour of Uber, however. One twitter user, @JaneHornick, said “Uber allows anyone to pick up your son or daughter without a sufficient background check […] I agree Ban Uber”. Similarly, writer Rosamund Urwin wrote in the New Statesman that Uber has flouted the rules applying to normal businesses for too long, calling for more regulations on the company to ensure passenger safety.

The ban on Uber fails to consider a key issue – namely those relying on the service to get home safely at night. Hailing an Uber is generally cheaper than the alternative: black cabs. For some, this makes Uber the only affordable transport late at night. The Uber-less London proposed by the regulator could see higher rates of crime, because people such as vulnerable young men and women would be forced to walk alone during lonely night hours in an effort to save money, thus exposing them to violent attacks. In spite of the regulator’s concerns,  assaults in Uber rides are rare – occurring at an average rate of one in every 3.3 million trips. This small number of cases is seemingly outweighed by the number of assaults that occur through other taxi services. 

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Uber offers a cheaper alternative to traditional black cabs. flic.kr/p/nZu6sr

There is also the angle to consider that Uber is a genuinely innovative company. As a ‘Digital Disrupter’, it has revolutionised the taxi industry by linking demand and supply of taxis on one platform, which anyone with a smartphone can access. With its card payment system, it is no longer an issue when passengers do not have the exact change to pay for their ride – or worse, when drivers ‘run out of change’, forcing the passenger to surrender their entire 10 or 20 dollar bill. Thus, by banning Uber, London is sending a signal that its doors are shut to innovation, clearly at odds with its desire to be ‘open for business’ post-Brexit.

This is not the first clash between the UK regulator and the company. In October 2016, a London employment tribunal ruled that Uber drivers would be classed as workers for the platform, rather than self-employed contractors. It was a subtle distinction, but had huge implications: it meant that drivers would be legally entitled to the national living wage, in addition to benefits like holiday and sick pay. The decision came as a huge blow to Uber – one which it is still appealing against.

The latest attack on Uber, however, is a more serious affair. That is why the company’s new CEO, Mr. Dara Khosrowshahi, made a special visit to London to meet the regulators. He has an incentive to play by their rules: London is Uber’s biggest European market, and one of its top three cities worldwide. In comparison, when Quebec, a minor market for Uber, revealed plans to introduce new regulations on taxi firms, the company simply announced it would be withdrawing all operations from the province. 

The London ban marks a turning point for the regulation of Uber. Under Travis Kalanick, the company’s previous CEO, its strategy was focused on rapid, unregulated growth. As a result, the business had a rocky year, suffering a string of PR disasters which prompted Kalanick’s resignation in June. But this approach was part of a race to beat the regulators: by becoming too big and strategically important, Uber hoped, and still hopes, to gain immunity from public control. Whether this strategy will pay off remains to be seen: Uber is – or is soon to be – banned in Denmark, Italy, Hungary, Australia’s Northern Territories, and Vancouver, where ride-sharing apps are not legal under provincial law.

Uber’s appeal against the London ban will last around three months. It will likely regain its license and is still allowed to continue operations during the court process. Even so, the message from the regulator is clear: “We are watching you”. The company’s arrogant belief that it is above the regulations governing businesses in society, along with its toxic corporate culture, has pushed on for too long. On the other hand, it is still the world’s most valuable tech startup. If London, whose digital economy is already under threat as a result of Britain’s exit from the European Union, is bold enough to boycott Uber, every such digital disrupter in the market can expect to set off their alarm bells soon. 

 

Zachary Nanji is an undergraduate student studying International Development at McGill University, with interests in European politics, business, and technology.

Editor: Shivang Mahajan

 

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