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December 3, 2019updated 06 Dec 2019 11:10am

Revocation of London licence may drive Uber out of town

By MarketLine

The recent decision by Transport for London (TfL) not to renew Uber’s license to operate in London comes after TfL became dissatisfied with attempts by the ride-hailing service to address concerns over safety, having previously revoked Uber’s license in September 2017.

Following the news, Uber’s share price fell by almost 6%, taking the firm close to a record low.

TfL said that 43 unlicensed drivers, some of which were banned by Uber, have accessed the platform by uploading photos to different accounts and driven over 14,000 trips.

Uber claims to have implemented technical fixes to resolve these issues and plans to implement facial recognition technology, a feature other London ride-hailing services currently cannot offer.

Despite this, TfL is taking a tough stance potentially damaging Uber’s business and reputation. As it stands, Uber has a 21-day period to appeal and can continue to operate until the process has been finalised.

London is one of the five major cities for Uber, along with Los Angeles, New York, San Francisco and São Paulo. 24% of sales come from these markets alone.

The UK capital is the key driver of revenue for Europe so this ruling will directly impact on the firm’s operating results.

London mayor, Sadiq Khan, came out in support of the ruling citing a “pattern of failure by Uber” and an inability to keep Londoners safe.

Uber CEO, Dara Khosrowhahai, has accepted the importance of regulation for Uber and stressed the firm has fundamentally changed its operations in London to comply with TfL guidelines.

In September 2019, the Chief Magistrate considered Uber had undergone a significant improvement of its operations, and in May 2019, Uber made TfL aware of the identification issues.

Considering these circumstances an outright repeal seems harsh.

The authorities seem intent on upholding this verdict, leaving the courts to make the final decision.

Should the court appeal fail, the departure of Uber from London will open the way for rivals to occupy the market.

Competition from ride-hailing firms, such as Estonian start-up Bolt and French rival Kapten, will look to seize market share but must be wary of potential TfL sanctions. Also if upheld, the verdict could lead to heightened international distrust of Uber.

The other big winner should Uber fall are London’s black cab services.

Jim Kelly, chair of Unite Union’s London and Eastern cab section believed the ruling was in the best interests of drivers, declaring Uber was “driving down standards”. However, James Farrar, of the IWGB Union, highlighted the damaging effects on Uber’s 45,000 drivers, such as unemployment causing difficulty for drivers to meet lease payments.

As black cabs remain extortionately priced, blocking Uber services will also be damaging for the consumer. Taxi unions have previously helped put an end to Uber in other countries, notably Bulgaria and Hungary.
That London will go down this route remains to be seen but Uber’s exit from London would be hugely significant for the industry.

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