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Uber's Weak, Cynical Argument for a London License

by Roger Lanctot | Feb 13, 2020

Financial analysts were thrilled with Uber's latest earnings report in spite of ongoing loss-making activity and legal woes. Uber CEO Dara Khosrowshahi's enthusiasm may have gotten the better of him when he projected profitability by the end of 2020, instead of the previously forecasted 2021.

Khosrowshahi conveniently overlooks the obstacles arrayed in Uber's path including regulatory, legal, tax, insurance, competitive, and technological issues none of which will be easily surmounted. Nowhere are these barriers more apparent than in London, site of this week's MOVE 2020 mobility event.

London is one of the five largest metropolitan markets globally for Uber that represent 24% of the company's overall business. From its inception in London Uber has faced challenges over how it treats its drivers as contractors instead of as employees along with other issues that have kept its license to operate in limbo.

The latest threat to Uber's London license related to a combination of a significant increase in reported assaults by drivers and the revelation that 14,000 of Uber trips were made by drivers lacking proper insurance. The company is also facing allegations and an investigation into what is reported to be £1B in unpaid taxes.

In its defense, Uber has claimed to be cleaning up its act regarding driver assaults and lack of insurance and the company has enhanced its driver benefits, though still treating drivers as contractors. But the big argument for Uber's continued operations in London is the company's claim that 45,000 drivers would instantly be put out of work if the comapny's license to operate in London is not renewed.

We've heard this same argument before in other cities such as Washington, DC, and New York. It's a scurrilous and meaningless claim in London where Uber has at least 14 competitors capable of picking up any driver employment slack and all operating apparently free of legal or tax entanglements with local regulatory authorities.

It's time to end Uber's cynical approach to regulatory oversight and hold the company's feet to the fire. Drivers ought to be properly vetted, trained, and insured. The company should be properly taxed.

The playing field ought to be leveled. I am no fan of taxi drivers - whether they be drivers of black cabs in London or yellow cabs in the U.S. - but it's clear that Uber and its ilk are taking advantage of loopholes to screw taxi operators that are playing by the rules. This is particularly onerous in London where regulators control even the type of vehicles that cabbies can drive.

London's black cab fleet is at a particularly delicate turning point with diesel vehicles steadily, but slowly, being replaced with hybrid and, recently, an all electric van supplied by Nissan. The city is driving this fleet-wide shift - now up to 3,000 hybrid and EV taxis out of a total of about 20,000 operating taxis - in the interest of helping clean up the polluted local atmosphere. Traditional taxi operators are therefore arguably entitled to some protection from app-based competition - but I may be in the minority arguing on their behalf.

Regardless of how you feel about black cabs in particular or taxis in general they are entitled to fair treatment and there's no reason newcomers ought to be given the advantage. As for Uber's potential demise contributing to driver unemployment, that is a fantasy and the height of cynicism given Uber's stated goal of ultimately replacing drivers with automated driving technology. Let's get serious.

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