Business

Will Boris Johnson make us give up Uber?

Boris Johnson sitting in a London black cab Image copyright Getty Images
Image caption London's mayor wants to curtail the numbers of cars for hire on London's roads

What's the future for Uber? As the controversial car-sharing service becomes increasingly popular with consumers, regulators seem to be busy putting up roadblocks. So will that put the brakes on the company's expansion?

In the past few years, Uber has turned the process of booking a taxi on its head in many cities around the world.

A mobile phone app, it allows you to check for cars in your area, book one with a click, and have it charged - usually at a cheaper price than a traditional taxi - to your credit card.

But while Uber's user numbers have soared, it's far from universally welcome.

In Paris, Uber has already had to withdraw the cheapest service it provides, after violent attacks on some of its drivers earlier this year.

And last week two of the company's senior executives were hauled before a French court, accused of deceptive commercial practices and complicity in illegal activities.

In Amsterdam, Uber's European headquarters was raided as part of a criminal investigation into whether the company is offering illegal taxi services.

Image copyright Getty Images
Image caption In June traditional cab drivers in Paris protested against UberPop, one of Uber's service

And in the last few days London's transport authority has proposed regulations that, if implemented, could seriously undermine the way Uber operates in the UK capital.

The list of travails goes on and on. Uber has seen its services banned around the world in cities from Seoul, and New Delhi, to next year's Olympic hosts Rio de Janeiro.

On top of all that, the European Commission is examining whether Uber is violating competition rules, and the European Court of Justice is deciding whether it's a transport company or a digital service, which could prompt changes to how it operates.

Meanwhile, a court on Monday in London is due to decide whether the app used to track the driver's route is a taximeter or not, a definition, which again, will determine the path ahead.

Plenty of fight

It makes you wonder that Uber isn't thinking of innovating a cut-price legal service for its own purposes, as it doggedly argues its corner on point after point.

A company with less self-belief and shallower pockets might be deterred by all this.


What is Uber?

  • Uber let's you book a freelance cab using an app on your phone or computer
  • It first launched in San Francisco in 2011 and now operates in 60 countries across the world
  • Customer numbers have risen dramatically. One million Londoners now use Uber
  • Your journey is tracked on GPS and payment is through a pre-registered credit card
  • Uber offers different services in different markets, most using professional cab drivers, but it's the peer-to-peer service, UberPop, which allows private individuals to offer a seat in their own car, that is causing most controversy

But Uber is famous for its shoot first, argue later approach, and accustomed to brazening out criticism.

The company started out with a small investment by its original founders, Garrett Camp and Travis Kalanick, who is now the company's chief executive, and has since raised billions of dollars in venture capital from the likes of Baidu, Google and Goldman Sachs.

Now, with a market valuation of $50bn (£33bn), the firm has good reason to feel invincible.

Stuart Miles, founder of the tech media website, Pocket Lint, says it would take a lot to derail Uber's ambitious plans.

"They have enough fight in them, enough resources to keep pushing and pushing, because they have so much money," he says.

"Their ultimate goal is [that consumers think] - why would you need a car in a city when there's always an Uber a few feet away? They want to stop people buying cars altogether."

London rules

But that vision is some way off. In the meantime the terrain ahead is rough.

Following a sharp rise in the numbers of cabs crowding London roads, Mayor Boris Johnson has been calling for a cap on the numbers. Yet Uber can only work if there are plenty of its cars available at all times.

All the candidates to replace him as mayor, from Sian Berry of the Greens, to Labour's Sadiq Khan, and Mr Johnson's fellow conservative Zac Goldsmith, agree there's a need to curtail the city's taxi free-for-all.

And Transport for London's new proposals, including rules that would mean all cab bookings must be confirmed five minutes before pick up, and would ban the visualisation on the app of available cabs for current hire, are a direct challenge to the company's business model.

TfL says all it wants to do is raise standards across the industry, ensuring drivers are properly insured and their rights protected. And make sure the system is resilient to illegal touting, and unregistered drivers masquerading as licensed cabbies.

Gareth Mead, Uber Europe's spokesperson, says the proposals reflect resistance to change, and vested interests from the black cab industry, and aren't in consumers' interests. But he is undaunted.

"If these regulations were imposed, clearly we'd have to find a way to adapt, and we're very confident in our ability to do so," he says.

"On a European level there's movement to help define this market, put parameters in that would give us, and the public, clear certainty of how to operate. There is a momentum and it's something that is taking time, but the future is a positive one."

A Luddite solution?

Uber users are not impressed either. Since the TfL proposals were published customers have taken to Twitter to demand their service be left alone. More than 120,000 disgruntled users have signed a petition.

And the Institute of Directors boss, Simon Walker, called the measures "a Luddite solution to a problem that doesn't exist", warning they would "damage London's reputation for innovation".

Image copyright Getty Images
Image caption Rio de Janeiro has become the latest city to place a ban on Uber services

Uber's critics say the company has set up a model which circumvents rules protecting both employees and customers.

There's concern that Uber's service amounts to predatory pricing, designed to drive out the competition, and that the company is sidestepping corporation tax by routing business through the Netherlands.

One of the main sticking points across Europe is that some Uber services, rather than providing cars with licensed professional drivers, send you an ordinary car owner - often students or part-time workers with no specific qualifications - who add a bit of cab-driving in to their normal day.

Time for change

Few people would argue that Uber should be blocked altogether however.

"We'd all be driving horse-drawn hansom cabs if we didn't move on," says Professor Tony Travers of the London School of Economics. Even if legal challenges delay Uber's rollout he believes the change is inevitable.

"The truth is, one way or another, these changes will happen because younger, more affluent service buyers are not going to accept not changing their lives, just as tech has changed their lives in other ways."

In the meantime, the delays provided by drawn-out legal challenges do at least allow traditional taxi services to look hard at their own services and see if they can adapt in turn to the lessons Uber is forcing on them.

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