Uber loses licence in London - again! - as global regulatory challenges arise in the gig economy

Profile picture for user slauchlan By Stuart Lauchlan November 25, 2019
Summary:
Uber's failed to clean up its act in London according to the city's transport regulator, despite being given two reprieves.

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If you’re planning to grab an Uber home from your work Christmas party in London this year, make the most of it as time is running out for the ride-hailing firm in the UK capital.

Regulator Transport for London this morning delivered another blow to the gig economy firm by refusing it a licence to operate in the UK capital city, citing an ongoing “pattern of failures” and “thousands of regulatory breaches” backed up by “weak systems and processes”. In its ruling, TFL says:

This pattern of regulatory breaches led TfL to commission an independent assessment of Uber’s ability to prevent incidents of this nature happening again. This work has led TfL to conclude that it currently does not have confidence that Uber has a robust system for protecting passenger safety, while managing changes to its app.

Uber immediately hit out at what it calls an “extraordinary and wrong” decision. Jamie Heywood, Uber’s General Manager for Northern & Eastern Europe, insisted:

We have fundamentally changed our business over the last two years and are setting the standard on safety. TfL found us to be a fit and proper operator just two months ago, and we continue to go above and beyond.

Over the last two months we have audited every driver in London and further strengthened our processes. We have robust systems and checks in place to confirm the identity of drivers and will soon be introducing a new facial matching process, which we believe is a first in London taxi and private hire.

Uber has 21 days to appeal the decision and the firm has confirmed its intentions to do so. It can continue to operate until such time that appeal is heard, so Christmas party goers can still book a ride in the short term. Heywood said:

On behalf of the 3.5 million riders and 45,000 licensed drivers who depend on Uber in London, we will continue to operate as normal and will do everything we can to work with TfL to resolve this situation.

Helen Chapman, TFL’s Director of Licensing, Regulation and Charging, said due appeals process would be followed:

If they choose to appeal, Uber will have the opportunity to publicly demonstrate to a magistrate whether it has put in place sufficient measures to ensure potential safety risks to passengers are eliminated. If they do appeal, Uber can continue to operate and we will closely scrutinise the company to ensure the management has robust controls in place to ensure safety is not compromised during any changes to the app.

London’s Mayor Sadiq Khan backed the TFL decision:

There is undoubtedly a place for innovative companies in London — in fact we are home to some of the best in the world. But it is essential that companies play by the rules to keep their customers safe.

Regulatory challenges 

Uber’s licence in London, the firm’s largest European market, was first taken away back in 2017, with the firm winning two temporary reprieves, the latest of which was a two month permit issued by TFL in September. If this latest ruling is final, it will be a major blow to Uber, as the share price tumble following the news of the TFL decision indicates.

Earlier this month, CEO Dara Khosrowshahi sought to reassure investors that the firm is engaging with regulators around the world in a positive manner:

To ensure the best outcome for riders, drivers and the cities in which we operate, we continue to be focused on positive, productive engagement with regulators all around the world. It's important to remember where we came from. When we launched peer-to-peer ride sharing in 2013, California was the only place in the world with regulations on the books….when I look at the regulatory framework on a global basis, we always have ups or downs, but the teams are making investments.

Uber and other gig economy firms are increasingly looking to get ahead of efforts by regulators and take the initiative on setting standards and Ts & Cs that they determine.

The most notable of late is the alliance formed by Uber, Lyft and DoorDash in California to put down a ballot measure for the November 2020 election to get voters to approve the idea that an “app-based driver is an independent contractor”.

It’s a response to Assembly Bill 5, which was signed into law by California Governor Gavin Newsom in September, the terms of which make it harder for gig economy firms to classify drivers, couriers etc as independent contractors.

The three firms are putting money where their mouths are by committing a total of $90 million to getting on the ballot - they need 623,000 valid voter signatures by early next year to qualify.

The quid pro quo - if that’s not too controversial a term to use in US political circles - comes in the shape of more rights for gig workers, including minimum pay, work-related insurance, healthcare subsidies and protections against on-the-job harassment or discrimination.

Nonetheless the measures by the three firms have already attracted vocal opposition from the likes of the California Labor Federation, which accuses them of funding political campaigns to “rig the rules in their favor”.

For his part, Uber CEO Khosrowshahi insists the firm is trying its best:

We continue to focus on a path that we believe provides a very attractive option for drivers and couriers where they retain flexibility but gain important new protections like healthcare subsidies and minimum earning standards.

And he points to successes in other parts of the world to back up his spin that progress can be made on policy citing:

Positive independent contractor rulings from both the US via the Department of Labor letter in April and the Brazilian Federal Government; the passage of the mobility law in France which includes a reaffirmation of independent classification; and a return to Vancouver after seven years away. Generally speaking, our priorities remain the same - secure regulations that allow the business to grow and enable individuals to find flexible earnings opportunities on our platform.

The Khosrowshahi line remains upbeat in public at least:

I think more and more cities and countries around the world are coming to the conclusion that Uber is a good thing for their country and Uber is a good thing for their city as well.

Unfortunately, London isn’t one of them.

My take

Events in London are only part of a wider set of challenges faced by gig economy firms around the world. In both the US and the UK, these will be issues in the forthcoming national elections with a right v left wing divide on the position to take. For example, the Labour Party in the UK has pledged to end what it called “bogus self-employment and create a single status of ‘worker’ for everyone apart from those genuinely self-employed in business on their own account”, while in the US, would-be Democratic Presidential candidate Elizabeth Warren’s saber-rattling about tech sector regulation has attracted attention.

Whatever the political outcomes, the reality is that there does need to be some sort of order brought to bear on the ‘Wild West’ that is the status quo today. Firms like Uber have been given the chance to clean up their acts; it’s now time to move on to the next phase and that's going to mean third party intervention.