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Is Uber’s London Ban Really Shunning Innovation?

With TFL revoking Uber's license, are they saying no to innovation?

25Sep

On Friday September 22nd TFL (Transport For London) ruled to remove Uber’s operating license for London, throwing 40,000 drivers and millions of users in the UK capital into a tailspin. In the 5 years since it began operating in the city, Uber has become ubiquitous with quick journeys around the city, even becoming a verb for travel amongst many of its users. It is also considerably cheaper than its competitors in the city, with a study by the Daily Telegraph finding that a trip from Marble Arch to Westminster was around £6, compared to £10 for a Black Cab and £9 for Addison Lee (the largest traditional private taxi company in the city). It is little wonder then that the potential ban on the company has caused such uproar amongst the city’s population.

Reasons for London banning Uber are many, but the 4 points outlined in the press release from TFL are:

- Its approach to reporting serious criminal offences.

- Its approach to how medical certificates are obtained.

- Its approach to how Enhanced Disclosure and Barring Service (DBS) checks are obtained.

- Its approach to explaining the use of Greyball in London, software that could be used to block regulatory bodies from gaining full access to the app and prevent officials from undertaking regulatory or law enforcement duties.

Although these are certainly some of the clearer issues that TFL have with the service, there are many that are not mentioned, such as working conditions, the employment status of Uber drivers, and even claims the success of the app has led to an increase in congestion in the city. However, the impact goes beyond Uber and its users - many claim that the optics are a hinderance to innovation.

A headline in the Daily Telegraph read ‘In revoking Uber's licence, Khan's message is that London is shut to innovation and business’ and this kind of sentiment has been common throughout the media since Friday’s decision. However, is the decision really limiting innovation or is it simply controlling innovation to make it safer for the public?

One thing that has become clear over the past year is that Uber is an innovative company, but its innovation has clearly been at the expense of CSR. It has frequently bent or bypassed the rules in order to ‘push innovation’, but in reality this has been to crush the competition and maximize their profit whilst driving down their costs by putting the burden on individual drivers. There is little doubt that this is a boon to consumer pricing, with fares considerably lower than their competitors due to the decreased cost of leasing the cars needed, the wage paid to drivers and the economies of scale with the number of drivers available. However, much of this has impacted on customer safety as their vetting process is purposefully kept lax in order to get people started as quickly as possible. With 32 allegations of rape and sexual assault against its drivers between February 2015 and 2016 by Uber drivers in the UK alone, it is clear that this isn’t working.

The company has also frequently failed to follow rules from regulators across the world, bringing them into conflict with local authorities. For instance, Uber began testing self-driving cars on California public roads without seeking the relevant permits, which led to widespread condemnation. Other companies like Mercedes, Google, and Ford had all needed to pass extensive tests and checks to gain these permits, but Uber believed that they could just do it without them. Anthony Levandowski, vice president of Uber's advanced technologies group, argued that ‘Tesla's autopilot technology does not need them’ so why should Uber? Which is slightly disingenuous. They also flouted a ban in Germany and continued to operate despite the service being barred. When the company is willing to break fairly important laws like these, it should not be a surprise that the eyes of other regulators falls more harshly on them than other companies.

The key to their success has been innovation, doing things before others. However, much of the early adopter advantage they’ve held has come from ignoring the rules and giving themselves the best opportunity to build a following that meant stopping would have a negative impact on those making the decisions. In London it is clear that Uber has done a large number of questionable things, such as the Greyball software and a lack of effective driver vetting, which for most companies would cause uproar, but due to the prevalence of Uber most customers don’t care or their concern doesn’t outweigh the benefits. This is why over 750,000 of Uber’s London customers have signed a petition against the ban - the service is great for them, even if its bad for many others. This kind of public pressure makes it difficult for regulators and government leaders to come out against Uber, they’re so popular they could easily sway elections. Given that Sadiq Khan’s winning margin in the last Mayoral election was 315,529 the number of people signing this petition is more than double and could therefore be a decisive issue in a mayoral election in the future.

Although regulations do often exist purely to protect industry incumbents, this is not the case in many of the situations that Uber finds itself, where regulations exist for important reasons. They are not anti-innovation, they are pro-safety. Innovation and disruption are a positive force in the world, but only when they’re done properly and obey the rules in place to make sure they have a positive outcome. This decision has not been made to tell the world London is closed to innovation, what is saying is that companies cannot run free. They are saying innovate, but don’t cut corners.

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