Uber Loses its London Licence

After declining to renew the licence for Uber to operate taxis in London in 2017 – a decision which was overturned by a Magistrate - Transport for London (TfL) has repeated that action today and refused to extend the firm’s licence beyond a 15-month extension (with an extra 2-month probationary period added on) that was granted to it in 2017. As the news broke today, the potential ramifications are yet to be decided, but we shall examine what may happen and the legal processes that are likely to forthcoming.

In September 2017, TfL declined to renew Uber’s licence to provide taxi services in London on account of the company’s failure to carry out background checks on its drivers, and also for failing to report serious offences. TfL later granted the firm a 15 month extension, but only on the condition that a number of its practices were improved. A number of those practices focused upon consumer safety and, in today’s announcement, the TfL refused to extend the firm’s extension again (after the extra 2-month probationary period) on the grounds of failing to protect their passenger’s safety. TfL cited a ‘pattern of failures’ that have been identified, including but not limited to drivers found to have distributed indecent images of children still being allowed to drive, drivers being dismissed or suspended but then manipulating Uber’s systems to continue driving, and drivers uploading their pictures to other people’s accounts. TfL stated that they acknowledge there have been improvements made but, ultimately, ‘while we recognise Uber has made improvements, it is unacceptable that Uber has allowed passengers to get minicabs with drivers who are potentially unlicensed and uninsured’. This decision was cheered by certain parties, including the Mayor of London who declared that ‘keeping Londoners safe is my absolute number-one priority’ and the Licensed Taxi Drivers Association (which represents London’s Black Cab Drivers) who said ‘it is all about public safety and the mayor has taken the right decision’. Going further, Steve McNamara of the Association stated that Uber’s business model is ‘essentially unregulatable’. The Unite Union agreed, arguing that ‘Uber’s DNA is about driving down standards and creating a race to the bottom which is not in the best interests of professional drivers or customers’. However, Uber have countered these claims, stating that TfL’s decision is ‘extraordinary and wrong’. In confirming that the firm will be appealing and, as such, the company’s services will still be available to all during the hearing of that appeal, Uber defiantly declared that ‘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’. It will be now for a Magistrate to decide on whether to uphold Uber’s appeal, or side with TfL.

However, there are a number of developments which hint at the power dynamics in the relationship between Uber and the cities within which they operate. It was reported last week that ‘Uber could soon be required to force their drivers to scan their fingerprints and faces in order to continue operating in London’. It is more than likely that this determination that biometric data be collected before every shift starts was rejected by Uber, which has now led to the removal of its licence. A representative for Uber drivers has labelled this licensing condition as ‘disproportionate and discriminatory’ and Uber has form in terms of rejecting licensing conditions imposed on them – Uber pulled out of Denmark in 2017 because they were mandated to install fare meters and seat sensors. However, whilst the firm can walk away from a market of 300,000 riders in Denmark, walking away from London is not an option for the firm. Uber recently declared through its regulatory filings that almost 25% of its sales came from just five cities – London, Los Angeles, New York City, San Francisco, and São Paulo. Losing London from that list would have a massively damaging effect on the company’s fortunes; the market in London is 3.5 million riders, and even just the news of the loss of licence led to a 5% drop in their stock on pre-trading in New York.

The legal arguments will likely be complicated and lengthy, which works in Uber’s favour as it will continue to operate as normal during the appeal process. What happens next is hard to tell, though it is likely that Uber will secede in its defence and TfL may soften in its approach – the impact of losing Uber in the British capital will be felt widely, both in terms of loss of employment and availability of private taxis. Uber is certainly not ‘too big to fail’, but it is not far off it seems.

Keywords – Uber, business, London, licence, @finregmatters