Uber Loses License In London Over Safety In 'Shocker' Decision

London's transit authority on Monday refused to renew Uber's license to operate, putting the ride-hailing company's future in the British capital in doubt. Uber vowed to appeal what analysts called a "shocker" statement from London authorities.

It's the latest chapter in Uber's rocky history with London transport officials, who have been subjecting the San Francisco-based company to ever tighter scrutiny over concerns about passenger safety and security. Uber shares declined about 5% in pre-marketing trading on Monday morning.

Uber vowed to appeal the decision, which it called "extraordinary and wrong." The company, which has 21 days to file an appeal, can continue operating while the appeals process is underway. Transport for London cited "several breaches that placed passengers and their safety at risk" in its decision not to extend Uber's license, which expires at midnight Monday.

The transit authority, known as TFL, said that despite addressing some issues, it "does not have confidence that similar issues will not reoccur in the future."

As a result, it deemed Uber "not fit and proper at this time."

The statement is a "shocker," wrote Wedbush analysts Ygal Arounian and Daniel Ives in a Monday report. 

"If Uber ultimately was not able to operate in London it will be a 'seismic blow' to the company's European operations as London is the company's biggest city in Europe with 3.5 million riders and 45,000 licensed drivers," they wrote. 

Losing business in London could depress Uber's ridesharing revenue by as much as 4%, they estimated.  

"Changed our business"

The company fired back, pointing out that TFL had found it to be fit and proper in September, when it was given a two-month license renewal.

"Over the last 2 years we have fundamentally changed how we operate in London," Uber CEO Dara Khosrowshahi wrote on Twitter. "We have come very far — and we will keep going, for the millions of drivers and riders who rely on us."

TFL had already been keeping Uber on a tight leash following concerns about aggressive corporate tactics and passenger safety. It had revoked Uber's license once before, in 2017, but a court later granted it a license lasting only 15 months, which TFL then extended for two more months in September, while also imposing a set of 20 stricter conditions.
In the latest decision, the transit authority said it was concerned that Uber's systems "seem to have been comparatively easily manipulated" by drivers.

"Safety is our absolute top priority, " said Helen Chapman, director of licensing, regulation and charging at TfL, in a statement. "While we recognise Uber has made improvements, it is unacceptable that Uber has allowed passengers to get into minicabs with drivers who are potentially unlicensed and uninsured."

Uninsured trips

One key issue was a change to Uber's systems allowing unauthorized drivers to upload their photos to other driver accounts.

This let them pick up passengers as though they were the booked Uber driver on at least 14,000 trips, which means all those journeys were uninsured, TFL said.

The change also resulted in some passengers traveling with unlicensed drivers, including one whose license was previously revoked by TFL.

TFL also faulted Uber for another "failure" that allowed dismissed or suspended drivers to create a new account and carry passengers. And it cited other "serious breaches" involving unspecified insurance-related issues.

First published on November 25, 2019 / 8:16 AM

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