Uber’s Future after Losing its License in London

By Natasha Darlington
Natasha Darlington is a fourth year at the University of Warwick studying Law.

On September 22,, 2017, Uber, the most valuable startup in the world, lost its license to operate in London. This move stimulated much controversy and debate amongst trade unions and government ministers as well as customers and proponents of the company. In the shock ruling, Transport for London stated that it was revoking Uber’s license because it is “not fit and proper to hold a private hire operator license.” [1] They argued that the company does not meet the necessary public safety and security implications in the way that it approaches reporting serious criminal offences or in the way it handles medical certificates.

In 2017, Uber’s net revenue rose 17% to $1.75 billion, showing continued demand for the ride company. Nevertheless, after a series of recent scandals related to alleged sexism in the workplace on top of claims that Uber does not provide drivers basic workers’ rights, these setbacks will undoubtedly hurt the company and enhance competition with competitors Lyft Inc. and Didi Chuxing.

Whilst Transport for London rejected Uber’s application for a new license, the firm can continue to operate in the capital city until it has exhausted all appeal processes under the Private Hire Vehicles (London) Act of 1998. This could take up to a year. However, along with concerns that Uber has not been obtaining the necessary background checks, Transport for London stated that the company's approach “demonstrates a lack of corporate responsibility.” [2]
This follows from calls from United Private Hire Drivers, which has insisted that Uber guarantee basic employment rights for its employees, including minimum wage and holiday pay. In addition, two drivers were backed by the GMB Union when they won an employment case against Uber, They stated that the drivers were not self employed contractors, rather workers, and thus required to be paid the national minimum wage. Such rulings have severely damaged Uber’s  reputation, leading competitors to seize the opportunity and increase their own market share.
Uber’s Chief executive Dara Khosrowshahi has publicly stated that the company will appeal the decision, maintaining, “We will show that Uber is a really great company that is meaningfully contributing to society, beyond its business and its bottom line.” [3] While brought in as the incoming Uber CEO recently, Khosrowshahi has already had to manage the company’s reputation and global status following a number of controversies, including allegations of sexual harassment and intellectual property theft.
While Professor Andre Spicer has claimed that the decision was a “potentially mortal blow” to Uber, there are many who believe that Transport for London made the wrong decision. [5] There is now a potential for 40,000 people to be put out of work and for millions of Uber customers to be without a transportation option. It does seem that rather than completely revoking the company’s license, the London regulator ought to have considered an alternative solution to ensure 3.5 million users of the ride-hailing company are not losing out.
The future of Uber in London looks rather negative, due to heightened opposition to the firm by those who accuse it of increasing congestion and ruining London’s established taxi services. On a global level, its reputation has been directly hit several times recently and it is not just London who has revoked its license, but also Italy and several Brazilian cities.
On the one hand, it seems that in this particular decision, Transport for London ought to have more effectively and closely regulated Uber rather than completely revoking the license and penalizing millions of consumers. Though, one would argue that Uber should rethink its business model in order to ensure that it is upholding the standards of integrity that is required by any company operating in cities around the world.

[1] “Uber stripped of London licence due to lack of corporate responsibility.” The Guardian. Accessed October 10th, 2017. https://www.theguardian.com/technology/2017/sep/22/uber-licence-transport-for-london-tfl
[2] “Uber loses its licence to operate in London.” TechCrunch. Accessed October 11th, 2017. https://techcrunch.com/2017/09/22/uber-loses-its-license-to-operate-in-london/
[3] “Uber’s new CEO tells employees there is ‘high cost to a bad reputation’ after London ban.” The Verge. Accessed October 11th, 2017. https://www.theverge.com/2017/9/22/16352666/uber-ceo-dara-khosrowshahi-london-ban-statement-reputation
[4] “Uber stripped of London licence due to lack of corporate responsibility.” The Guardian. Accessed October 10th, 2017. https://www.theguardian.com/technology/2017/sep/22/uber-licence-transport-for-london-tfl
[5] “Cass experts from the Faculty of Management comment on Uber losing its private hire licence in London.” Cass Business School. Accessed October 11th, 2017. https://www.cass.city.ac.uk/news-and-events/news/2017/september/uber-loses-london-licence
[6] “Uber stripped of London licence due to lack of corporate responsibility.” The Guardian. Accessed October 10th, 2017. https://www.theguardian.com/technology/2017/sep/22/uber-licence-transport-for-london-tfl
Photo Credit: Flickr User A♥︎J

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