The Reason Uber's License To Operate In London Is Not Being Renewed

While the cause was termed 'passenger safety' the underlying reason is failure to manage its drivers, as those who are suspended - or not even authorized - can easily create new accounts through manipulation of the app. Since having enough drivers is the key to revenue growth,  the implication is that Uber was aware of the problem but turned a blind eye to it.

Since London is one of Uber's top five global markets, it will appeal - and do whatever it can to fix the problems, at least superficially.

The larger issue for gig economy companies is that after an initial inability to deal with such enterprises, government entities are asserting themselves. JL


Tom Burridge reports in the BBC:

A "pattern of failures" placed passenger safety and security at risk. These included a change to Uber's systems which allowed unauthorised drivers to upload their photos to other Uber driver accounts. There were at least 14,000 fraudulent trips in London in late 2018 and early 2019. Dismissed or suspended drivers had been able to create Uber accounts and carry passengers. London is one of Uber's top five markets globally, and it has about 45,000 drivers in the city. Uber  lost its licence in 2017 but was granted two extensions, the most recent expired on Sunday. The firm will appeal and can operate during that process.

Uber will not be granted a new licence to operate in London after repeated safety failures, Transport for London has said.

The regulator said the taxi app was not "fit and proper" as a licence holder, despite having made a number of positive changes to its operations.
Uber initially lost its licence in 2017 but was granted two extensions, the most recent of which expired on Sunday.
The firm will appeal and can continue to operate during that process.
London is one of Uber's top five markets globally, and it has about 45,000 drivers in the city. There are 126,000 licensed private hire and black cabs in total in the capital.

If its appeal is unsuccessful, some think Uber drivers would move over to rival ride-sharing firms such as Bolt and Kapten."There would be competition that would fill that void quite quickly," Fiona Cincotta, a market analyst at City Index told the BBC.

Why won't Uber get a new licence?

TfL said it had identified a "pattern of failures" that placed passenger safety and security at risk.
These included a change to Uber's systems which allowed unauthorised drivers to upload their photos to other Uber driver accounts.
It meant there were at least 14,000 fraudulent trips in London in late 2018 and early 2019, TfL said.The regulator also found dismissed or suspended drivers had been able to create Uber accounts and carry passengers. In one instance, a driver was able to continue working for Uber, despite the fact his private hire licence had been revoked after he was cautioned for distributing indecent images of children.
Helen Chapman, Director of Licensing, Regulation and Charging at TfL, said: "While we recognise Uber has made improvements, it is unacceptable that Uber has allowed passengers to get into minicabs with drivers who are potentially unlicensed and uninsured."London Mayor Sadiq Khan said: "I know this decision may be unpopular with Uber users, but their safety is the paramount concern. Regulations are there to keep Londoners safe."
Is this the end of Uber in London? Uber lovers in London, fear not! The company's cars will not suddenly disappear from the capital's streets.
Uber is going to appeal this decision so a magistrate will have to decide whether Uber is fit to hold a licence in London, or not.
A decision from a magistrates court could take weeks or months and unless the court decides otherwise, Uber will retain its licence during this period too.
When TfL decided not to renew Uber's licence back in 2017, the company addressed some of the issues raised by TfL back then and then a magistrate later granted Uber a new licence.
On the face of it TfL is standing tough against perceived failings by Uber. But in effect it is letting the courts decide, at a later date, whether Uber should have a licence, or not.

What does Uber say?

Uber said the decision was "extraordinary and wrong". It said it had audited every driver in London over the last two months and strengthened its processes.
Boss Dara Khosrowshahi tweeted: "We understand we're held to a high bar, as we should be. But this TfL decision is just wrong. Over the last 2 years we have fundamentally changed how we operate in London."

Image Copyright @dkhos @dkhos

Report

According to Uber, 24% of its sales come from just five cities, including London. The others are Los Angeles, New York City, San Francisco and São Paulo in Brazil.
In a public filing, it said: "Any inability to operate in London, as well as the publicity concerning any such termination or non-renewal, would adversely affect our business, revenue, and operating results.
"We cannot predict whether the TfL decision, or future regulatory decisions or legislation in other jurisdictions, may embolden or encourage other authorities to take similar actions even where we are operating according to the terms of an existing licence or permit."

What do others say?

Business lobby group the CBI said Uber's popularity showed customers valued the service.
"We'd encourage both sides to continue the dialogue to determine what changes are required in order that Uber's customers can continue to enjoy the service in the long term," said chief UK policy director Matthew Fell.
But the Unite union - which believes Uber has unfairly taken business from black cab drivers - welcomed the news.
"Uber's DNA is about driving down standards and creating a race to the bottom which is not in the best interests of professional drivers or customers," said Jim Kelly, chair of Unite's London and Eastern cab section.

Where else has banned Uber?

Uber has faced pressure from regulators around the world over the way it treats its drivers, competition concerns, and fears about passenger safety.
The US firm pulled out of Denmark in 2017 because of new taxi laws that required drivers to have fare meters and seat sensors.
Bulgaria and Hungary both stripped Uber's right to operate following pressure from local taxi unions.
And in May, the ride-hailing firm pulled its UberXL service in Turkey without saying why.

What happened in London in 2017?

TfL first declined to renew Uber's licence in September 2017, again over safety concerns. Back then it cited Uber's approach to carrying out background checks on drivers and reporting serious criminal offences.
Uber's use of secret software, called "Greyball", which could be used to block regulators from monitoring the app, was another factor, although Uber said it had never been used in the UK.
However, TfL granted Uber a 15-month licence extension - later extended by two months - conditional on it making improvements to its business.
TfL can offer licences of up to five years, but it has been more stringent of late.
In July, Indian ride-hailing company Ola got a 15-month agreement for its entry into the London market, while ViaVan got a three-year licence renewal.

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