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October 2017

City of London threatens to pull Uber’s licence, declares it is not a ‘fit or proper operator’

by Mike Beggs

The world was watching at press time, as the City of London, England, grappled with whether or not to renew Uber’s licence to operate.

In the third week of September, London took possibly the most principled stand to date amongst any of the world’s big cities, with Transport for London (TfL) stripping Uber of its licence saying it is not a, “fit and proper operator.” Uber’s current licence expired on September 30, but the company immediately announced plans for an appeal, and is allowed to operate until that is dealt with.

An Uber spokesperson stressed that, “3.5 million Londoners use Uber to get reliable rides in the capital. More than 40,000 drivers rely on our app to a make a living with average fares from last year of 15 pound an hour, after our service fee.”

London Mayor Sadiq Khan threw his full weight behind the TfL decision -- initially -- stating that, while he wants London to be at the forefront of innovation and new technology, “all companies must play by the rules, and adhere to the high standards we expect, particularly when it comes to the safety of customers.”

But – in what has now become a familiar pattern in the Uber growth arc – later the same day, the Mayor suggested TfL officials should meet with Uber, on the heels of an apology from the company’s new CEO Dara Khosrowshahi, and a petition to save Uber signed by a whopping 500,000 Londoners.

In an open letter to Londoners, Khosrowshahi said Uber would appeal the TfL decision, but acknowledged that the company, “must change”.

“While Uber has revolutionized the way people move in cities around the world, it’s equally true that we’ve got things wrong along the way,” he wrote.

“We won’t be perfect, but we will listen to you; we will look to be long-term partners with the cities we serve; and we will run our business with humility, integrity, and passion.”

At Taxi News press time, it remained to be seen whether London would stand firm on the Uber ban, or cave to the pressure of the company’s massive lobbying efforts (as has been the case in countless cities).

The TfL’s shocking edict comes after a year for hell for Uber -- with the departure of founding CEO Travis Kalanick amid a myriad of scandals, allegations of bullying and sexism at head office, several serious outstanding legal actions, and a steady loss of market share to the rival Lyft (which, to make matters worse, has made preliminary overtures to move into the London market!).

Upon hearing of this potentially, game-changing news, Mississauga plate owner Mark Sexsmith requested that his city’s Licensing Staff monitor the outcome of the events in London.

“The central question would seem to be whether the criteria of evaluation used in London has any validity for your ongoing evaluation of Uber’s services in Mississauga, and whether the high bar set by London should be matched by our licensing department, and whether there should be a reconsideration of the continuance of the (ongoing 18-month) Pilot Project,” he wrote to the City.

Sexsmith also suggested the City of Toronto should investigate the circumstances of the revocation, and report back to its Council on whether a re-evaluation of Uber’s licence to operate should be considered.

However, several sources agreed that, if banned from London, Uber will just keep right on operating regardless, as has been its m.o. in many markets.

Fellow Mississauga plate-holder Peter Pellier emphasized that the jury is still out in London.

“With pressure from the highest levels of government, not to mention the general public, aimed at keeping Uber in business, it will be interesting to see how this unfolds,” he observes. “Quite frankly, it’s premature for London’s real cabbies to be dancing in the streets.”

When asked whether his Town should reconsider its licensing of Uber X, in light of the company’s questionable corporate culture, and transgressions the world over, Oakville Mayor Rob Burton responded that Transportation Network Companies (TNC’s) have become the way of the future, full stop.

“I’m not sure what’s going to happen with Uber (in light of its problems). But as a category,

all of these companies are onto something, or Ford wouldn’t have invested in Lyft,” he tells Taxi News. “We’re waiting to see what they can do to transform transportation.”

Long-time Toronto owner/operator Gerry Manley was dismissive of the prospects of Uber being shut down in London.

“It is my belief that London will end up putting tougher controls in place on Uber – which, of course, will end up being useless, as there is virtually no way to enforce them,” he says.

“Uber X is so entrenched in our city, and generally in societies all over the world, that they are here to stay and there is really no way to get rid of them.”

Manley notes that Uber is paying municipalities around the world millions of dollars in licensing fees in order to gain a strong foothold.

“So when serious issues arise, a little nonsensical p.r. is brought forward (by the City), where they threaten to remove the licence. But they, of course, do not want to kill the goose that lays the golden eggs,” he adds.

The Canadian plot thickened with Uber’s September 26 announcement that it is leaving the Province of Quebec, due to the heavier restrictions being placed on it by government, which it claims, “significantly threaten the company’s ability to continue to operate.” (That includes stipulations that Uber drivers undergo 35 hours of training, and have criminal background checks done by Police). While this could amount to a victory for the licensed taxi industry, Quebec Taxi Coalition spokesman Guy Chevrette suggested Uber could be using its threat to leave town as a, “bargaining chip” (as it has apparently done elsewhere).

It was back in July that a cross-party of 10 London MP’s first called for Transport for London to strip Uber of its licence, by signing a letter written by Labour MP Wes Streeting. They alleged that Uber has not been doing enough to protect the safety and security of the public (“not least by failing to report all alleged offences to Police, so that they can be properly investigated”), take issue with the way Uber drivers are treated (maintaining that some take home as little as two pounds an hour), is increasing road congestion and pollution with its fleet of 40,000 cars, and is avoiding paying its fair share of U.K. taxes by basing itself in The Netherlands.

The company counters that its drivers are licenced by Transport for London and have been through the same enhanced background checks as Black Cab drivers, and that its technology “goes further” to enhance safety with every trip tracked and recorded by GPS.

Bowing to the pressure of tougher emission standards, on September 8 Uber announced that it was planning to make its entire London Uber X fleet hybrid, or electric by 2019, and will not allow any gas or diesel cars on its app at that point.

According to the TfL, the number of TNC’s in London has climbed from 65,000 in 2013-’14, to more than 116,000 today.

The company already having left China, and facing a serious challenge in Singapore and neighbouring countries, the possibility of Uber losing its London presence stirred widespread interest and speculation. A Professor at Wharton School of Business at the University of Pennsylvania, Kartik Hosanagan told money.com, “(If the TfL decision stands), it might set a precedent for other cities that are of two minds about Uber.”

Khosrowshahi signed on as Uber’s new CEO in late August, after building Expedia into one of the world’s leading travel and technology platforms.

“We’re really fortunate to gain a leader with Dara’s experience, talent and vision,” Uber’s Board of Directors wrote in a note to employees.

“I couldn’t be happier to pass the torch to such an inspiring leader,” chipped in Kalanick, who retains a seat on the Board.

Said to have “a strong moral compass”, Khosrowshahi has stepped into a hornet’s nest, having to find a new COO and CFO, brace for the impending law suit with Google over Uber’s autonomous car research, and a federal investigation into the company’s alleged use of its Greyball software to thwart regulators.

He will also have to come up with a new set of core principals after the Board tore up parts of the original list of 14 corporate values.

Numerous Uber executives have been forced out, or left over the past nine months. And on September 13, Reuters reported that Uber’s chief legal officer and general counsel Salle Yoo is planning her exit after five years.

In a note, she said her stay at Uber has been “exhilarating, but incredibly hard work.”

However, Bloomberg notes her departure follows that of global head of compliance Joseph Spiegler, and that, “Uber’s legal challenges have continued to grow.”

In August, came reports that the Justice Department has taken preliminary steps to investigate whether managers at Uber had violated a U.S. law against foreign bribery.

And on September 8, TechCrunch reported that allegations that an internal Uber software program (known as “Hell”) was used to track and target Lyft drivers between 2014 and 2016, are being investigated by the FBI.

So, in what state of health does this leave the $70 billion ridesharing company?

While Khosrowshahi hinted at a public stock offering (IPO) in 2019, the Harvard Journal predicts that Uber won’t make it to that point. And City Taxi account manager Neil Shorey suggests, “what’s really going on” is, Uber executives are bailing because of this.

“In San Francisco, every company does a startup, and then all of the senior management hang around for the public stock offering (to get their shares, but that may not happen here),” he suggests.

“Their company is not making money. It’s just moving money around, so long-term it’s unsustainable. One day, we will see them die,” he predicts. “In putting in a new CEO, they’re just putting lipstick on a pig.”

For his part, veteran Mississauga plate-holder Frank Leong alleges, “Everybody knows Uber is bad. You open up the paper every day, you see how many things are going on all over the world. But because they have the money, Uber will keep going strong.”

“The money keeps coming in . They will have the money. Goldman Sachs kicks the money in. These are venture investors.”

Toronto Uber X driver Louis Seta maintains that, “Uber is doing just fine. The number of people trying to get into Uber (as drivers) is huge. My knowledge of the situation is, they’re expanding at a record rate and they’re going to continue to expand.”

 

© 2017 Taxi News

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