Taxi-booking giant Uber will lose its licence to operate in London at the end of September.
The ruling, made by regulators at Transport for London, was because they deemed Uber was “not fit and proper”. London Mayor Sadiq Khan publicly endorsed the decision.
Uber has had a catalogue of complaints and bad press recently so this decision was not a massive surprise.
Security Concerns
Citing security issues, public safety issues, poor reporting (of serious in-car crimes), poor medical checks (of drivers) and poor background checks (of drivers) it seems the regulators were not short of material to support their decision.
Uber was run until recently by controversial founder and CEO Travis Kalanick. Further to an extended leave, he finally resigned in June of this year (possibly “pushed” by unhappy shareholders). He currently still retains a seat on the board.
Unsurprisingly, the firm hit back by declaring that “far from being open, London is closed to innovative companies” and plans to appeal. It had 21 days to lodge an appeal which could then take a long time to investigate, during which it can continue to operate. Doubtless delaying tactics by Uber’s lawyers could extend this state of affairs for the forseeable future.
Who’s Affected?
In this instance, the directly affected stakeholders appear to be Uber’s drivers, staff and shareholders, London Black cab drivers (who obviously want the ban as well as mini-cab companies), the paying (passenger) public and ultimately, the UK tax office.
In this instance, the directly affected stakeholders appear to be Uber’s drivers, staff and shareholders, London Black cab drivers (who obviously want the ban as well as mini-cab companies), the paying (passenger) public and ultimately, the UK tax office.
Additionally, this decision may well give life-breathing oxygen for the other, lesser-known car-sharing firms, startups and social initiatives.
Meanwhile, there is an online petition on change.org, already signed by circa half a million people, requesting that the ban be reversed. This is not surprising as London has 3.5 million Uber users and 40,000 Uber drivers … around as many as the number of traditional, licensed drivers.
London is Not Alone
Uber’s challenges are by no means limited to London. Cab-drivers in many countries have lobbied hard and protested to stop or slow-down Uber’s impact and threat to their livelihoods.
Given the number of potential legal loopholes and appeals, it is unlikely the car-sharing leviathan will be stopped in the immediate future. For example, Uber was banned
earlier this year in Italy after taxi unions argued their case. However, the ban was appealed and later reversed.
How Does This Affect Your Business?
This decision just goes to show that a company that’s grown to be worth tens of billions of dollars within less than a decade can’t have everything its own way.
There’s a reason these companies are labelled “disruptive” business models. It’s clear that changing an entire industry in such a short period of time will inevitably ruffle a lot of feathers with the incumbent businesses operating in that space. Job displacement will ripple out to other industries.
Whilst this decision was apparently based on issues such as bad practice and security, the impact to the livelihoods of traditional cab drivers will doubtless have been an influence.
This type of business model relies on the sharing of privately owned assets. In this case, it’s cars. In Airbnb’s case, it’s private rooms. The ‘sharing economy’ model has become hugely
successful in recent years due to the obvious scalability (it doesn’t have to buy “stock”) and appeals to individuals that want to supplement or replace their income.
However, the societal costs and effects of these types of businesses (and decisions like the London ban if it sticks) will take a lot longer to determine.