Uber’s running global battle with taxi drivers, politicians and legal authorities moves to London next week with a court hearing that could deal a blow to the ride-hailing app in one of its most successful markets.
The San Francisco-based company has 18,000 registered partners, or drivers, in the UK capital. But that growth could be checked in the high court on Monday when London’s transport regulator, Transport for London (TfL), asks a judge to decide whether Uber is breaking the law.
TfL, controlled by the London mayor, Boris Johnson, has been an ally of Uber in the past but it stepped up the pressure before the hearing this week by launching proposals to curb its business.
The development has been welcomed by black-cab drivers, who have staged protests against a smartphone app that they claim operates as a surrogate metering system. This undercuts black-cab operators who must adhere to a metering tariff set by TfL.
Warren Cresdee, 52, says: “I’ve been driving a black cab in London for 29 years and I’ve definitely noticed a bit of a downturn with the advent of Uber. At first I did wonder whether it was a bit of a fad for youngsters with that app. But if you don’t have to obey all the regulations, you can undercut everybody.”
Uber, whose financial backers including Goldman Sachs have invested nearly $10bn (£6.5bn) in the firm, views TfL’s recent moves as an assault on its growth in Europe’s largest city. However, London is far from the only metropolis to take against Uber.
Its services were banned in Rio de Janeiro in Brazil this week while drivers in New South Wales, Australia, have had their licences suspended. Other cities where taxi drivers have staged protests, or authorities have challenged Uber, include Amsterdam, Delhi and Vancouver.
In London, Uber quickly launched a petition against the TfL proposals, asking its customers to let the regulator know they felt “riders and drivers come first”. Within hours, about 100,000 supporters had signed their names appealing to TfL not to make life any harder for Uber.
TfL’s proposals include: insisting on a five-minute delay for bookings; preventing operators from showing vehicles that are available for instant hire via an app; and new controls on ride-sharing that could threaten Uber’s plans to introduce a car-sharing service.
That petition will carry little weight in the high court on Monday, when TfL will ask a judge to decide whether the way Uber’s app calculates fares breaks the law.
Addison Lee, Europe’s biggest minicab company with 4,000 drivers in London, has called on the courts to stop what it says is Uber’s “unchecked, unregulated and unlawful taxi metering system”.
The Uber system, which was provisionally approved by TfL, “gives Londoners the worst of all possible worlds with untrained drivers choosing any route they want to maximise fares”, says the minicab firm. Black-cab operators use TfL-regulated meters, which protect drivers from losing money in the event of being held up in congestion or roadworks, a frequent occurrence in London. As the taxi ticks over in a traffic jam, so does the meter. Black cab operators argue that Uber should not be afforded this protection because it is not regulated as onerously and therefore does not deserve such a privilege. Cab firms such as Addison Lee are not metered and they offer fixed fares ahead of a journey.
With the Uber app, passengers request a ride which drivers accept; the driver then shows the route and destination. The fare is calculated by the app as well, which makes it similar to a meter. Uber’s rivals argue that this method incentivises the drivers to take longer routes since they will produce bigger fares.
Addison Lee’s chief executive officer, Liam Griffin, says he is in favour of a two-tier regulatory system, that distinguishes black-cab operators from others. “The regulations should be designed to make the private hire experience an efficient one but not the same as a black-cab one.”
Griffin says the court case “could potentially have a devastating effect on Uber’s London business”, if it goes the wrong way.
Griffin believes TfL has found itself in a dilemma by not sticking to its regulations all along and allowing a fudging of the rules that has let Uber on to the capital’s street. “If TfL had wanted to enforce the rules and had the inclination and foresight to do so, we would not be in this position now,” Griffin says.
Uber has always argued that an app on a smartphone is not a meter and does not have the physical equipment or processes to replicate a black-cab meter system. It thinks the case highlights the challenges with detailed regulations, but feels it will be able to operate whatever the outcome, although with a potentially less customer-friendly app in the future.
“All these regulations and requirements – and this court case – are designed to protect the black-cab industry,” says Uber.
News that TfL was even considering such a clampdown on some of Uber’s practices took many by surprise since Johnson has usually appeared sympathetic to Uber and even recently described the black-cab drivers as “luddites”.
The head of the Institute of Directors lobby group, Simon Walker, called on the mayor to stand by his free market principles and leave Uber alone. A number of Conservative councillors have written to the mayor, urging him to think again over a possible crackdown.
Not surprisingly, the proposals do not go down well with most Uber drivers. “You shouldn’t be punished for doing something that makes life cheaper and more comfortable,” says Uber registered partner Ali Alnasari, who is writing a thesis on the taxi market at Middlesex University when he is not driving a car.
“I admire the black-cab operators and they are an iconic symbol of London. They have studied hard and I respect that, but this is 2015 and we need to evolve,” he says.
