Uber, the $50 billion-valued ride hailing app company has today seen it license to operate in London revoked by the regulator Transport for London (TfL). It’s the second time in just two years that Uber has been stripped of its license to operate in the capital, with the action taken as a result of what TfL referred to as a “pattern of failures” from the tech company on safety and security. Uber will, however, be permitted to continue to operate its ride hailing app-based service pending an appeal against the decision.
At the heart of the controversial decision is the fact that unauthorised drivers were able to replace the photograph on the account of authorised drivers with their own. That led to users making over 14,000 trips with drivers that had gone through no kind of approval process or background checks.
Uber’s immediate reaction was that it would appeal the decision, a move which will most likely see TfL’s decision go through the courts and would be expected to take months. The company, and its approximately 45,000 approved London drivers, can keep operating throughout that process.
For its part, TfL said its decision to strip Uber of its license for London was taken as a result of several breaches of safety and security requirements that mean some Uber journeys taken have been uninsured and placed passengers at risk. The regulator commented:
“TfL does not have confidence that similar issues will not reoccur in the future, which has led it to conclude that the company is not fit and proper at this time.”
Over the past decade, Uber’s app-based and demand-sensitive ride hailing and pricing model has disrupted the traditional taxi industry in major cities around the world. It insists its systems are ‘robust’ but that it will further tighten them up with the introduction of a new ‘facial matching process’ to prevent the future manipulation of approved driver accounts by switching photographs. Uber’s CEO Dara Khosrowshahi tweeted following the decision earlier today:
“Over the last two years we have fundamentally changed how we operate in London. We have come very far — and we will keep going, for the millions of drivers and riders who rely on us.”
London is not the only city in which Uber operates in which it has experienced a backlash from regulators and lobbyists representing traditional taxi companies and drivers. It has been forced out of Copenhagen in Denmark and Budapest and other major cities in Hungary. In London, black cab drivers have previously blocked streets in protest at Uber being given a license to operate, arguing that Uber’s model unfairly undercuts their pricing structure by offering an inferior service.
Uber’s share price has been on a sharply downward trajectory since a huge IPO in May of this year, with investors worried about the scale of the losses the company is incurring as a result of an aggressive expansion policy. Uber’s Frankfurt-listed shares lost 3% after the TfL decision this morning but have since recovered much of those losses.