Uber loses London licence over safety fears
UBER TECHNOLOGIES INC
$61.56
11:05 26/12/24
Uber has been stripped of its licence to operate in London over persistent safety concerns, in a significant blow to the taxi hailing app.
New York-listed Uber initially lost its licence in 2017. It was granted a 15-month extension, however, which was then further extended by another two months.
Transport for London said on Monday Uber had made "a number of positive changes and improvements to its culture, leadership and systems" during that time.
Despite that,TfL said it was not confident similar issues would not reoccur in the future and as such, Uber was not a "fit and proper" licence holder.
In particular, TfL highlighted a change to Uber’s systems that allowed unauthorised drivers to upload their photos to other driver accounts and pick up passengers as though they were the booked driver.
This had happened on "at least 14,000 trips", all of which would have been uninsured and some of which would have been with unlicensed drivers.
"TfL recognises the steps that Uber has put in place to prevent this type of activity," it said. "However, it is a concern that Uber’s systems seem to have been comparatively easily manipulated."
Shares in the company slumped on the news, and were trading 6% lower in pre-market trading by 1100 GMT. Neil Wilson, chief markets analyst at Markets.com, said the shares were now only a couple of dollars away from their all-time low and it could be a “rocky session” for the stock.
He added: “Uber has suffered a big blow with this ruling. London, with about 3.5m users, is the largest market in Europe for Uber; London is one of the group’s ‘fab five’ cities that account for around a quarter of global revenues. There is a clear and obvious hit to revenues if the ruling is upheld, which it seems likely it will.
“More broadly, it betrays the scope and depth of the legal and regulatory problems faced by Uber. The list of legal issues is long and broad in its scope and geography. These present ongoing overhang for the stock as, while there have been problems about corporate culture, largely the run-ins with the regulators and policymakers pertains to the very structure of the business itself and how it operates: taxation, labour laws and consumer safety are the milking stool of regulatory instability.”
Around 45,000 drivers work for Uber in the capital, all of whom are now at risk of losing work.
Helen Chapman, director of licencing, regulation and charging at TfL, said: "As the regulator of private hire services in London, we are required to make a decision on whether Uber is fit and proper to hold a licence.
"Safety is our absolute top priority. While we recognise Uber has made improvements, it is unacceptable that Uber as allowed passengers to get into minicabs with drivers who are potentially unlicensed and uninsured."
Sadiq Khan, mayor of London, said he supported TfL’s decision. "Keeping Londoners safe is my number one priority and TfL have identified a pattern of failure by Uber that has directly put passengers’ safety at risk," he said.
"At this stage TfL cannot be confident that Uber has the robust processes in place to prevent another serious safety breach in the future.
"I know this decision may be unpopular with Uber users, but their safety is the paramount concern."
Uber now has 21 days to appeal and may continue operating during any appeal.