Put on Probation, Uber Wins London License to Avoid Ban

June 27, 2018 Last Updated: June 27, 2018

LONDON—Uber won a probationary license to operate in London on June 26 in a partial victory for its new chief executive after it made changes to ease strained relations with city authorities.

The new license was subject to strict conditions, however, and came with a warning to prove it had changed to retain its right to operate in London, the heart of its biggest European market.

Uber overhauled its policies and personnel in Britain after Transport for London (TfL) refused to renew its license in September for failings in its approach to reporting serious criminal offenses and background checks on drivers.

The ruling has been a test of Uber’s new senior management, with CEO Dara Khosrowshahi, who took charge the month before TfL’s decision, pledging to “make things right” in London.

Judge Emma Arbuthnot said that changes made by its London subsidiary in light of the ruling were sufficient for Uber to be considered “fit and proper” to operate as she granted a 15-month “probationary” license.

The license is much shorter than the five-year license it was denied in September, and London Mayor Sadiq Khan was clear that the court ruling was no carte blanche for Uber in London.

“I believe everyone must play by the same rules, no matter how big or powerful they are,” he said in a statement.

“Uber has been put on probation—their 15-month license has a clear set of conditions that TfL will thoroughly monitor and enforce.”

London Mayor Sadiq Khan, speaks during an interview with AFP at the Francis Crick Institute in London, on June 11, 2018. (Daniel Leal-Olivas/AFP/Getty Images)

TfL said it was considering the court’s decision and that the conditions would let it take action if Uber failed to meet standards.

The license conditions for Uber London Limited (ULL) include implementing a new governance structure, giving TfL notice of what Uber is doing in areas that may be a cause for concern, reporting safety-related complaints, and having an independent assurance audit report every six months.

ULL must also be notified by its parent firm of any matters that could be relevant to its obligations as an operator.

With backers including Goldman Sachs and BlackRock and valued at more than $70 billion, Uber has faced protests, bans, and restrictions around the world as it challenges traditional taxi operators, angering some unions.

Dara Khosrowshahi, CEO of Uber, speaks at the 2018 NOAH conference on June 6, 2018, in Berlin, Germany. (Michele Tantussi/Getty Images)

Uber, which has about 45,000 drivers in London, introduced several new initiatives in response to the ruling, including 24/7 telephone support and the proactive reporting of serious incidents to police. It has also changed senior management in Britain, though it was allowed to continue operating in London while the appeal process was ongoing.

Uber’s work with London authorities is part of a broader shift by the company to engage with regulators rather than bulldoze them. It has also started discussions with regulators in New York City about a cap on the number of cars the service is allowed, which previous chief executive Travis Kalanick had resisted.

Mayor Khan said that as a result of the initial London ruling, “Uber has been forced to overhaul the way it operates not just in London but across the world.”

‘Uber in Sheep’s Clothing’

Uber had originally reacted with indignation at TfL’s decision last year, saying authorities had “caved in” to its critics.

But officials struck a more conciliatory tone at the court hearing, accepting both that TfL’s original decision was right and that a shorter license was appropriate. Tom Elvidge, General Manager of Uber in the UK, welcomed Tuesday’s ruling.

“We will continue to work with TfL to address their concerns and earn their trust,” he said.

Western Europe is an increasingly important market to Uber. It has pulled out of China, Russia, and Southeast Asia, and its future in India, where it battles local rival Ola, is in question.

But Uber’s presence in London has angered the drivers of the city’s iconic “black cabs,” who have previously blocked London’s streets in protest at the app.

The Licensed Taxi Driver’s Association (LTDA), whose lawyer in court warned about the prospect of an “Uber in sheep’s clothing,” said it was disappointed with the decision.

“Uber’s blatant disregard for TfL’s regulations and public safety was laid before the Court,” said Steve McNamara, General Secretary of the LTDA.

“The justice system has failed Londoners today and let an aggressive multinational corporation win.”

By Alistair Smout

 

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