US ride-hailing Firm will appeal ruling but the chief executive admits it’s the cost of a reputation
Uber has been stripped of its London licence in a surprise move that dealt a severe blow to one of Silicon Valley’s fastest rising companies and sparked an outcry from a coalition of consumers, government ministers and drivers at the ride-hailing firm.
The firm’s application for a new license in London was rejected on the basis that the company is not a “fit and proper” personal car hire operator.
Uber’s cars won’t disappear as its licence expires on 30 September and it plans to challenge the ruling by London’s transport authority in the courts. The hailing app can continue to function in the capital — where it has 3.5 million consumers — until the company has exhausted the appeals process. Uber has 21 days to launch an appeal but can continue to function until the method expires — which could take months.
Uber chief executive Dara Khosrowshahi wrote to employees on Friday confirming that the company would appeal the ruling. He said he disagreed with the decision but it was based on previous behavior.
“The truth is that there is a high cost to a bad reputation,” he wrote. “It really matters what people think of us, especially in a global business like ours.
“It’s critical that we act with integrity in everything we do, and learn how to be a better partner to every city we operate in. That doesn’t mean abandoning our principles–we will vigorously appeal TfL’s conclusion–but instead building trust through our behavior and our actions. In doing this, we will demonstrate that Uber is not a really great product, but a company that’s meaningfully contributing to society, beyond its bottom line and its company.
Khosrowshahi, who was brought in to conduct the firm after a succession of scandals, also tweeted an appeal to Londoners to “work with us” in solving the matter. “Dear London: we r far from perfect but we have 40k licensed drivers and 3.5mm Londoners depending on us. Pls work w/us to make things right,” he tweeted.
The decision by the London mayor’s transport body, Transport for London, was endorsed by Sadiq Khan, employment rights campaigners, and the trade body for the capital drivers, who have been staunch opponents of the US-based firm.
It drew immediate criticism from Uber users, drivers and Greg Hands, the trade minister. Among Uber’s 40,000 drivers in the capital, James Farrar, who has campaigned for better working conditions at the company, said TfL’s decision was a “devastating blow”.
TfL said it had rejected the provider’s application to renew its license because “Uber’s approach and conduct demonstrate a lack of corporate responsibility” in relation to reporting serious criminal offences, obtaining medical certificates and driver background checks.
The licensing body also said it was worried by Uber’s usage of Greyball, software that could be used to block bodies from gaining access and undertaking regulatory or law enforcement duties.
The decision to eliminate Uber from one of its biggest markets is the latest setback for a US-based business that has taken to a $70bn (#52bn) valuation because it was set in 2009 but has been hobbled by resistance from municipal and national governments around the world — including in Italy and Rio de Janeiro — because of concerns over security or the threat to existing cab companies. Andre Spicer, a professor at Cass Business School in London said that the decision was a “potentially mortal blow” to Uber, adding: “In the past Uber operated at the edge of the law with new technology as an alibi. Now its rogue business model is proving to be a big liability.”
Khan said he fully supported the decision to revoke Uber’s licence, stating all businesses necessary to “play by the rules”.
He said: “I want London to be at the forefront of innovation and new technology and to be a natural home for exciting new companies that help Londoners by providing a better and more affordable service.
“However, all businesses in London must play by the rules and adhere to the high standards we expect — especially in regards to the security of customers.”
But Hands, who is also minister for London, said: “At the flick of a pen Sadiq Khan is threatening to put 40,000 people out of work and leave 3.5 million users of Uber stranded.
“Uber must address safety concerns and it is important there is a level playing field across the private hire market.
“But a blanket ban will cause massive inconvenience to millions of Londoners, all while showing that the Mayor of London is closed to innovation and business.”
Sam Gyimah, a Conservative justice minister and MP for East Surrey, said it was “possible to have effective regulation of Uber without
penalising the customers who benefit from more choice and lower
Steve McNamara, general secretary of the Licensed Taxi Drivers’ Association, which represents black-cab drivers, said the mayor had made the right decision.
“Since it first came on to our streets Uber has broken the law, exploited its drivers and refused to take responsibility for the safety of passengers. This immoral company has no place on London’s streets,” he said.
Uber said in a statement the decision would “show the world that, far from being open, London is closed to innovative companies”.
“3.5 million Londoners who use our app, and more than 40,000 licensed drivers who rely on Uber to make a living, will be astounded by this decision,” the firm added.
The organization wrote to users on Friday asking them to “defend the livelihoods” of its drivers and sign a petition asking the mayor to reverse TfL’s decision.
Farrar, a co-claimant at a employment tribunal decision against Uber and chair of the Independent Workers’ Union of Great Britain’s private hire drivers’ branch, said TfL must have stepped in to protect motorists.
“To strip Uber of its licence after five years of laissez-faire regulation is a testament to a systemic failure at TfL,” he said.
Nearly all Uber users responding to a Guardian request opposed the decision.
Helen, from Walthamstow in east London, criticised the decision and stated TfL should be working with Uber. “With a lack of staff and police visible [on public transport] , I often feel unsafe travelling alone and Uber has given me an affordable alternative to get home safely,” she said.
Leo, a wheelchair user, said buses were slow and less than 30% of the tube network was accessible to him. “Uber has been a lifesaver for me. It has got me to visit family at short notice when the nearest accessible station was miles away and the bus took two hours,” he said.
In London, Uber has faced criticism from unions, lawmakers and traditional drivers. Unions such as the IWGB and GMB predicted on TfL to insist Uber guaranteed fundamental employment rights under the terms of its new five-year licence.
Employment rights campaigners said TfL’s conclusion was a shot to so-called gig economy businesses, which include apps such as Deliveroo and delivery firms such as Hermes who argue riders and their drivers are self-employed.
Frank Field, the Labour MP who led a parliamentary inquiry which discovered that Uber drivers were treated as Victorian-style “sweated labour” said: “This is a gamechanger for the gig economy. Uber must now respond to TfL’s decision by totally resetting its business model.”
Read more: http://www.theguardian.com/us