Uber stripped of London licence due to lack of corporate responsibility
US ride-hailing company will appeal ruling but the new chief executive admits it is the cost of a bad reputation
Uber has been stripped of its London licence in a surprise move that dealt a serious blow to one of Silicon Valleys fastest rising companies and sparked an outcry from a coalition of customers, government ministers and drivers at the ride-hailing company.
The firms application for a new licence in London was rejected on the basis that the company is not a fit and proper private car hire operator.
Ubers cars will not disappear immediately as its current licence expires on 30 September and it plans to challenge the ruling by Londons transport authority in the courts immediately. The hailing app can continue to operate in the capital where it has 3.5 million users until the firm has exhausted the appeals process. Uber has 21 days to launch an appeal but can continue to operate until the process expires which could take months.
Uber chief executive Dara Khosrowshahi wrote to staff on Friday confirming that the company would appeal the ruling. He said he disagreed with the decision but it was based on past behaviour.
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.
Its 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 doesnt mean abandoning our principleswe will vigorously appeal TfLs decisionbut rather building trust through our actions and our behavior. In doing so, we will show that Uber is not just a really great product, but a really great company that is meaningfully contributing to society, beyond its business and its bottom line.
Khosrowshahi, who was brought in to run the firm after a series of scandals, also tweeted an appeal to Londoners to work with us in solving the issue. 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 mayors transport body, Transport for London, was backed by Sadiq Khan, employment rights campaigners, and the trade body for the capitals black-cab drivers, who have been staunch opponents of the US-based company.
However, it drew immediate criticism from Uber users, drivers and Greg Hands, the trade minister. One of Ubers 40,000 drivers in the capital, James Farrar, who has campaigned for better working conditions at the firm, said TfLs decision was a devastating blow.
TfL said it had rejected the companys application to renew its licence because Ubers 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 concerned by Ubers use of Greyball, software that can be used to block regulatory bodies from gaining full access to its app and undertaking regulatory or law enforcement duties.
The decision to remove Uber from one of its biggest markets is the latest blow for a US-based company that has shot to a $70bn (52bn) valuation since it was founded in 2009 but has been hobbled by opposition from national and municipal governments around the world including in Italy and Rio de Janeiro due to concerns over safety or the threat to existing taxi businesses. Andre Spicer, a professor at Cass Business School in London said 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 Ubers licence, saying all companies needed 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 companies in London must play by the rules and adhere to the high standards we expect particularly when it comes to the safety 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 business and innovation.
Sam Gyimah, a Conservative justice minister and MP for East Surrey, said it was possible to have effective regulation of Uber without
penalising the consumers 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 Londons 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 company added.
The company wrote to users on Friday asking them to defend the livelihoods of its drivers and sign a petition asking the mayor to reverse TfLs decision.
Farrar, a co-claimant in a landmark employment tribunal decision against Uber and chair of the Independent Workers Union of Great Britains private hire drivers branch, said TfL should have stepped in earlier to protect drivers.
To strip Uber of its licence after five years of laissez-faire regulation is a testament to a systemic failure at TfL, he said.
The majority of Uber users responding to a Guardian request for comment opposed the decision to revoke the companys licence.
Helen, from Walthamstow in east London, criticised the decision and said TfL should be working more closely 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 less than 30% of the tube network was accessible to him and buses were slow. 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 black-cab drivers over working conditions. Unions including the IWGB and GMB called on TfL to insist Uber guaranteed basic employment rights under the terms of its new five-year licence.
Employment rights campaigners said TfLs decision was a warning shot to so-called gig economy companies, which include apps such as Deliveroo and delivery firms such as Hermes who argue their drivers and riders are self-employed.
Frank Field, the Labour MP who led a parliamentary inquiry which found that Uber drivers were treated as Victorian-style sweated labour said: This is a gamechanger for the gig economy. Uber must now respond to TfLs decision by totally resetting its business model.