Franklin, Andrews, Kramer & Edelstein

[BullNBear52]

Uber Loses License to Operate in London
By PRASHANT S. RAOSEPT. 22, 2017

LONDON — London’s transportation agency dealt a major blow to Uber on Friday, declining to renew the ride-hailing service’s license to operate in its largest European market.

The decision is the latest setback for a company that has upended public transportation across much of the world by using smartphones to connect drivers with passengers. That success has helped it grow into a behemoth worth around $70 billion.

But Uber has faced an array of controversies: allegations of sexual harassment, concerns about its use of software to evade the gaze of the authorities and a reputation — fair or not — that it simply does not play by the rules.

Criticism from customers, unions, regulators and, crucially, investors contributed to the removal of Uber’s founder, Travis Kalanick, as chief executive this year. He was replaced by Dara Khosrowshahi, who had run Expedia, the online travel site.

“Uber’s approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications,” the agency, Transport for London, said in a statement.

A ban on operating in one of its largest markets would certainly hit the company’s bottom line. (Uber says it has 40,000 drivers and 3.5 million customers in London who use its app at least once every three months.) And it could prompt other cities and countries to renew their focus on Uber’s operations.

On Thursday, a Dutch appeals court upheld a ban of an Uber service in the Netherlands, saying the company’s low-cost UberPop ride-hailing offering had been operated illegally. The French authorities brought a similar case to the Court of Justice of the European Union, and last year Uber and two executives were convicted and fined the equivalent of nearly $500,000 in France in relation to UberPop.

The ruling on Friday comes less than a year after a British tribunal ruled that Uber could no longer treat its drivers as self-employed contractors and would have to meet tougher labor standards, including offering holiday pay and pensions.

In issuing its decision, Transport for London, which is responsible for the city’s subways and buses as well as regulating its taxicabs, declared that Uber was not “fit and proper” to operate in the city — a designation that carries significant weight in Britain.

“Fit and proper” is a benchmark applied across different sectors of business and the charitable organizations in the country to ensure that people or organizations meet the requirements of their industry or specialty.

Tests typically assess factors like an individual or company’s honesty, transparency and competence, though there is no formal exam. In Uber’s case, Transport for London said it examined issues of how it dealt with serious criminal offenses, how it conducted background checks on drivers and its justification for a software program called Greyball that “could be used to block regulatory bodies from gaining full access to the app.”

Transport for London had in May extended Uber’s license by four months as it considered whether the company met that threshold.

Uber’s London license will now expire on Sept. 30. But the company has been given 21 days to appeal in Britain’s courts — it immediately vowed to do so — and will be allowed to continue operating in the city during the appeal process.

Tom Elvidge, Uber’s general manager in London, said that the agency and the city’s mayor, Sadiq Khan, had “caved in to a small number of people who want to restrict consumer choice.”

Uber conducted background checks using the same methods as those used for black-cab drivers, he said.

“Our pioneering technology has gone further to enhance safety with every trip tracked and recorded by GPS,” he said, adding that the company had “a dedicated team who work closely with the Metropolitan Police.”

He also said that Greyball had not been used to block scrutiny by regulators or the police in London.

It was unclear how London’s decision would affect any move by Uber to list its shares on a public market. Mr. Khosrowshahi told employees last month that an initial public offering was unlikely to come until 2019, at the earliest.

But clashes with regulators have been one reason big private companies like Uber and Airbnb, which has also faced similar clashes with governments, have taken so long to pursue I.P.O.s. Investors in public companies are often less tolerant of risks than their private-market counterparts, and opposition from governments is among the most significant threats that a company can face.

“Providing an innovative service is not an excuse for it being unsafe,” Mr. Khan wrote in The Guardian soon after the ruling was announced. “The regulatory environment is critical in protecting Londoners’ safety, maintaining workplace standards for drivers and sustaining a vibrant taxi and private hire market with space for a range of providers to flourish.”

Until now, London has been one of Uber’s most notable success stories outside the United States. It debuted in the city in 2012, just ahead of the Summer Olympics, initially with a luxury service. It added UberX, which competes more directly with the city’s storied black taxis, a year later. By 2015, it had driven Londoners almost 100 million miles, and taken them on 20 million trips. The company now operates in more than 40 cities and towns across Britain.

Its arrival here, however, created a clash almost immediately with the black cabs, which trace their roots to 1634.

Black-cab drivers, who earn their licenses by memorizing some 25,000 streets and 100,000 landmarks for a famously exacting test known as The Knowledge, complain that Uber drivers are under-regulated. Many fear that the rivalry will put them out of business: Uber fares are about 30 percent lower than those of black cabs.

The conflict also involves tensions over ethnicity and class — most black-cab drivers are white native-born Britons, while many Uber drivers are immigrants.

Uber has said that it receives hundreds of complaints a month from its drivers about remarks from black-cab drivers. Among the insults hurled are “Uber slave!” and “Go back to your country!”

Many black-cab drivers have now signed up with competing apps like Gett and MyTaxi, which like Uber allow passengers to hail rides via their smartphones. Londoners can also choose from a wide variety of private-hire services, known as minicabs.

Black-cab drivers, and the unions representing them, cheered Friday’s ruling, with Jeffrey Marcus, who has been driving a London taxi for 42 years, describing it as “long overdue.”

“We’ve got a brilliant taxi service here,” Mr. Marcus, 67, said. “You pay a little more for a licensed taxi, but you get the service.”

The reaction online to the Transport for London ruling, however, was generally negative, while a Change.org petition that was started and heavily promoted by Uber within its app and via emails to customers gained tens of thousands of supporters in the hours after the decision was announced. As of noon Eastern time, the petition had received over 200,000 signatures.

Ahmad Shoaib, an Uber driver, said the service was being unfairly targeted.

“I know there have been some problems with drivers, but most of us are good and reliable and play by the rules,” he said. “It is not fair to punish everyone because of the mistakes of one or two people.”

Mr. Shoaib switched to Uber from a minicab company in Croydon, in South London, after he saw how much work friends were getting from the ride-hailing service.

“London needs Uber,” he said, “it’s cheap and easy.”

https://www.nytimes.com/2017/09/22/business/uber-london.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront