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How being banned in London could force Uber to become a better company for everyone

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‘Uber may be forced to change its practices to ensure this doesn't spread’

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There are a lot of immediate winners and losers from today’s news that Uber lost its license to operate in London. Obvious winners: London’s black cab owners and drivers who lobbied hard for the decision, as well as second-tier ride-hail apps like myTaxi and Gett. Clear losers: the perpetually scandal-tossed Uber, thousands of drivers who will now be scrambling to find work with less reliable services, and devoted customers who prefer the ride-hail app over the dozens of other transportation options available in London (the Tube, bike share, double-decker buses, etc).

The app will still be operational in London while Uber appeals the decision to the courts. In the meantime, Uber will likely be engaged in intense negotiations behind the scenes with Transport for London, the city’s transportation authority, to get its license back. Uber is unlikely to abandon its largest UK market without a fight, but the ramifications of that battle could force Uber to change its ways beyond the borders of London — especially as it relates to safety and the way the company classifies its drivers.

“London is a giant market and its actions also could be influential to other cities,” Michael Ramsey, an analyst at Gartner, told The Verge. “Uber may be forced to change its practices to ensure this doesn't spread and that may also put the company in a position where it gets harder to claim it isn't ‘employing’ these drivers.”

The company classifies its drivers as independent contractors, arguing they are in business for themselves and thus ineligible for traditional benefits like overtime and health insurance. Most critics have given up on efforts to pressure Uber to reclassify them as full-time employees, acknowledging there will likely need to be some new status created that encompasses the flexibility of driving for Uber that attracts some drivers, but also provides more job security and benefits than what currently exists.

Labor groups are already organizing around the TfL decision to revoke Uber’s license, in the hopes they will be able to win some modicum of improved working conditions for drivers. “We are not opposed to new technology in transport, but we are opposed to a return to Victorian working conditions,” Paddy Crumlin, president of the International Transport Workers Federation, said in a statement. “We want good jobs, and strong regulation."

To be sure, not all labor groups see the TfL’s decision as a victory. The drivers’ group of the Independent Workers Union of Greater Britain, which won a landmark lawsuit against the company last year that could force Uber to treat its drivers as employed workers, urged the city to rethink its ruling. A union leader called it “a devastating blow for 30,000 Londoners who now face losing their job.”

Safety is another big issue that factored into the TfL’s decision. Uber has been accused by London’s Met Police for systematically failing to report sexual assault, placing the company’s reputation before public safety. There has also been broader concern about the company’s handling of the 32 rape and sexual assault claims it received in the 12 months prior to 2016. And recent reports about Greyball, the tool used by Uber to avoid law enforcement, and its executives’ handling of a medical report of a rape victim in India, will also need to be addressed.

Regulators in Uber’s other large markets will no doubt be watching these negotiations closely for instructions on how to rein in the company’s excesses. Of course, what works in London doesn’t necessarily translate to midsized or smaller cities in Europe and the US. Like New York City, London is one of the most highly regulated taxi markets in the world. Fares are higher along with earnings, and TfL requires an extra layer of background checks for drivers. TfL was able to shut down Uber because it’s empowered by the law to do so. The same isn’t true for most other markets.

In fact, Uber is usually the one doing the breaking up with city officials, not the other way around. The company lit out of Austin, Texas, after city officials there passed a law requiring finger printing for drivers. (Uber has since clawed its way back to the city.) In Scandinavia, the careful regulation of Uber and other ride-hailing services (a process which saw the UberPOP service scrapped in Sweden and Denmark) shows that a compromise that allows Uber to continue operating under tighter regulation might well be possible.

Uber has faced stiffer regulatory hurdles in Europe over the last few years than anywhere else. In France, two Uber executives were arrested in 2015 after a nationwide strike by that country's taxi drivers. A judge in Milan ordered the discontinuation of Uber in Italy, calling the service "unfair competition." The company suspended its service in Spain after a judge ruled that Uber didn't comply with the country's laws. And Uber pulled out of three German cities — Hamburg, Frankfurt, and Düsseldorf — after a judge in Frankfurt ruled that Uber drivers were required to obtain the same licenses required of normal taxi drivers.

Uber has managed to restart its service in many of these markets. It’s unclear whether these serial crackdowns by European regulators will force Uber to become a more egalitarian service. The company is still reeling from a series of self-inflicted scandals that resulted in the resignation of CEO Travis Kalanick and many other top executives. Labor advocates in the US are trying to use the company’s string of misfortune this year to push its executives to adopt more progressive standards.

But Uber hasn’t gotten to where it is today by acquiescing to anyone’s demands. Uber’s defenders criticized the TfL decision in the strongest possible terms. “I’m not a Trump supporter in any way, but the similarities between Trump’s vision and actions and those of UK and EU regulators are remarkably similar,” said Bradley Tusk, an outside advisor who’s been called “Uber’s political genius.”

Tusk argued that “when Trump tries to roll back the clock and reinstate policies that are clearly outmoded or just plain dumb, European leaders love nothing more than to scoff, make snide remarks, and assert their moral superiority. But when it comes to protecting their own local entrenched interests, they act exactly like Trump and try to put the genie back in the bottle, regardless of logic, economics, or fairness. They’re no better than Trump. In fact, in some ways, they’re worse because they don’t even acknowledge the backwardness or hypocrisy of their actions.”

No doubt European officials would recoil at being compared to the controversial American president, but as long as they hold sway over Uber’s access to their markets, the company will have little choice but to play by their rules.

“I think UK regulators will have more success changing some of Uber's fundamental practices because labor has typically been much stronger in Europe than it has in other countries like the US,” said Harry Campbell, a former Uber driver and blogger. “I don't see the regulations in UK cascading all the way to the US but could definitely be a leader for other European countries where Uber is facing similar issues.”