Uber loses its license to operate in London

In a huge blow to Uber in the UK London’s transport regulator has rejected its application to renew its license to operate in the city.

In a statement today TfL said it has concluded that Uber is “not fit and proper to hold a private hire operator licence”.

“TfL’s regulation of London’s taxi and private hire trades is designed to ensure passenger safety.  Private hire operators must meet rigorous regulations, and demonstrate to TfL that they do so, in order to operate.  TfL must also be satisfied that an operator is fit and proper to hold a licence,” it said.

The regulator added that 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” — including for the following issues:

• Its approach to reporting serious criminal offences
• Its approach to how medical certificates are obtained
• Its approach to how Enhanced Disclosure and Barring Service (DBS) checks are obtained — which relates to carrying out background checks to ensure workers do not have a criminal record
• Its approach to explaining the use of Greyball in London — software that could be used to block regulatory bodies from gaining full access to the app and prevent officials from undertaking regulatory or law enforcement duties

TfL notes that the Private Hire Vehicles (London) Act 1998 includes provision to appeal a licensing decision within 21 days of it being issued, and confirmed that Uber can continue to operate until any appeal processes have been exhausted.

Uber is expected to appeal. A statement by the company is also expected shortly — we’ll add it when we have it.

Update: In a statement, Tom Elvidge, general manager of Uber in London, said:

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.

By wanting to ban our app from the capital Transport for London and the Mayor have caved in to a small number of people who want to restrict consumer choice. If this decision stands, it will put more than 40,000 licensed drivers out of work and deprive Londoners of a convenient and affordable form of transport.

To defend the livelihoods of all those drivers, and the consumer choice of millions of Londoners who use our app, we intend to immediately challenge this in the courts.

Drivers who use Uber are licensed by Transport for London and have been through the same enhanced DBS background checks as black cab drivers. Our pioneering technology has gone further to enhance safety with every trip tracked and recorded by GPS. We have always followed TfL rules on reporting serious incidents and have a dedicated team who work closely with the Metropolitan Police. As we have already told TfL, an independent review has found that ‘greyball’ has never been used or considered in the UK for the purposes cited by TfL.

Uber operates in more than 600 cities around the world, including more than 40 towns and cities here in the UK. This ban would show the world that, far from being open, London is closed to innovative companies who bring choice to consumers.

TfL said it will not be commenting further on the decision pending any appeal.

In a statement, London’s mayor Sadiq Khan backed the regulator’s decision, writing:

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. Providing an innovative service must not be at the expense of customer safety and security.

I fully support TfL’s decision – it would be wrong if TfL continued to license Uber if there is any way that this could pose a threat to Londoners’ safety and security.

Any operator of private hire services in London needs to play by the rules.

Uber’s current license to operate in London is due to expire on September 30. The company claims to have some 3.5 million users in London and around 40,000 drivers operating on its platform.

Its prior license expired in May but was extended by TfL for four months as the regulator continued to deliberate over whether it should grant Uber another full five year term in the face of rising criticism against its business — including on issues such as workers’ rights and public safety.

Earlier this month a cross-party group of MPs wrote to TfL urging it to strip the company of its license to operate in the UK capital, arguing the company has not shown itself to be a “fit and proper operator”.

This followed accusations made this summer by London’s Met Police that Uber has been failing to report sex attacks by drivers on its platform.

While, last year, the GMB Union helped bring two test cases to a UK employment tribunal accusing Uber of acting unlawfully by not providing drivers with basic workers’ rights like holiday pay and the minimum wage.

In October the tribunal delivered its verdict, rejecting Uber’s argument that the drivers in question were self-employed contractors — instead judging them to be workers, setting a legal precedent for other Uber drivers to challenge the company. (Although Uber has appealed the ruling.)

The GMB union handed a petition to TfL this month urging it to insist on limits to Uber driver hours as a condition of renewing Uber’s license.

It welcomed the regulator’s decision today, describing it as a “historic victory”.

“It’s about time the company faced up to the huge consequences of GMB’s landmark employment tribunal victory — and changed its ways,” said Maria Ludkin, GMB legal director, in a statement. “No company can be behave like it’s above the law, and that includes Uber.

“No doubt other major cities will be looking at this decision and considering Uber’s future on their own streets.”

The regulator has also been under pressure from London’s black cab drivers over perceived inequality in the regulatory regimes of private hire vehicles vs traditional taxis.

London’s Licensed Taxi Drivers Association (LTDA) pressed TfL to reject a full renewal of Uber’s license — arguing that its model is unlawful and risks public safety, while also pointing to rising numbers of private hire vehicles (PHV) in London as contributing to the city’s congestion and pollution problem.

It has also welcomed TfL’s decision today. In a statement, Steve McNamara, general secretary of the LTDA said: “The Mayor has made the right call not to relicense Uber. Since it first came onto our streets Uber has broken the law, exploited its drivers and refused to take responsibility for the safety of passengers. We expect Uber will again embark on a spurious legal challenge against the Mayor and TfL, and we will urge the court to uphold this decision. This immoral company has no place on London’s streets.”

Also supporting TfL’s decision to strip Uber of its license, rival ride-hailing firm mytaxi — which works exclusively with licensed black cabs in London and has a driver network of over 17,500 — urged Uber passengers “back to black cabs”, and said it will be undercutting UberX prices until the end of the month with a minimum 30% discount off the meter fare.

“Customers deserve a seamless, technology-enabled fleet of professional taxis with drivers who are proud to offer a superior service and have devoted the equivalent of a degree to their trade. That’s what mytaxi is proud to offer in London,” said Andy Batty, UK general manager at mytaxi in a statement.

However James Farrar, co-claimant in the landmark employment tribunal decision against Uber, and chair of the Independent Workers’ Union of Great Britain’s United Private Hire Drivers (UPHD) branch was highly critical of the regulator, saying its decision in 2012 to grant Uber a license and only now, more than five years’ later, revoke it shows a “systematic failure”.

“This is a devastating blow for 30,000 Londoners who now face losing their job and being saddled with unmanageable vehicle related debt,” he said in a statement. “To strip Uber of it’s license after five years of laissez faire regulation is a testament to a systemic failure at TfL.

“Rather than banish Uber, TfL should have strengthened its regulatory oversight, curbed runaway licensing and protected the worker rights of drivers. The Mayor must call for an urgent independent review of TfL to identify the causes of failure and prevent something like this from ever happening again.”

Earlier this week TfL announced a new pricing system for PHV licenses, inflating fees for obtaining authorization to operate in the city. TfL said price rises are necessary to cope with dramatic increases in the numbers of PHVs on London’s roads, noting that it had not reviewed prices since 2013.

According to TfL, there are more than 116,000 PHV licensed drivers today, up from just 65,000 in 2013/14, while it said the number of PHVs has increased from 50,000 to 88,000 over the same period.

The new pricing regime brings in many more tiers, depending on the size of the fleet being operated. The most expensive tier — for the largest operators (such as Uber), which have more than 10,001 vehicles — has risen from around £3,000 under the prior regime to £2.9M going forward.

Last year, Uber steered off what could have been a more major impediment to its business in London when TfL dropped a series of proposed changes to PHV rules — including imposing a five-minute minimum wait period between ordering and obtaining a ride. Although the regulator did push on with other new measures, such as a formal English language requirement for drivers.

Uber went on to challenge the requirement that drivers gain an English qualification in court — a challenge that was rejected in March (though Uber said it intended to appeal).

Zooming out to the European-wide level, Uber is also awaiting what will be a highly significant ruling by Europe’s top court on the classification of its business — to provide clarity to regulators on whether it’s a transportation company or just an enabling tech platform as Uber tries to claim.

Earlier this year an influential advisor to the court deemed Uber’s activity is indeed to provide transportation services, rather than merely being an intermediary platform. A final ruling by the court is expected three to six months after the AG’s opinion — so likely by November.

While, over in the U.S., Uber’s use of proprietary software to try to evade regulators has also drawn the attention of US regulators — and is reportedly being investigated by the Department of Justice. It’s also under investigation by the FBI for use of another software program designed to target rival ride-hailing startup, Lyft.

Its business has also been rocked by a series of additional scandals in recent times — from accusations of an internal culture of sexism and sexual harassment, to accusations of IP theft from rival Alphabet, to an FCC investigation into privacy and security failures that resulted in Uber agreeing to two decades of external audits.

While founder Travis Kalanick has only just been replaced as CEO, by Dara Khosrowshahi, though apparently remains a disruptive influence on Uber’s board.

Khan’s statement supporting TfL’s decision to strip Uber of its license, which was posted to his Facebook page, has drawn plenty of comments — with many self-professed Uber users attacking the decision as “backward” and complaining of how it will deprive Londoners of “a cheap and convenient way to move around the city”.

However others point out that Uber’s VC backed business is subsidizing its current “affordable” prices — arguing that as pressure for the company to turn a profit cranks up then prices for an Uber ride are sure to rise.

There are also comments criticizing Uber for its treatment of drivers. While others accuse the company of not paying its fair share of tax — and therefore undermining the publicly funded transport services it competes with.

It’s worth noting that Uber is not the only ride-hailing startup to fall foul of TfL. Earlier this month a European startup called Taxify was told by the regulator to cease operating in the city almost immediately after it had launched — after the startup had sought to fast-track the licensing processing by acquiring an existing cab firm (yet apparently without gaining approval for a change in the licensing conditions). The GMB union had written to TfL flagging concerns over Taxify’s license status.

The startup immediately complied with TfL’s order to cease operating. And says now it still plans to launch in London once it has completed TfL’s regulatory approval process.

Taxify pitches its model as more driver-friendly than Uber, and had hoped to win drivers in London by taking a lower commission on rides than Uber and offering some other measures such as the ability to define a radius for pick ups so they don’t have to stray too far from home.

This post was updated with additional comment

Featured Image: Carl Court/Getty Images