Lukasz critically assesses Uber's policies and corporate behaviour including their recent TfL debacle.
Whether you are a regular or occasional Uber user (or just a follower of current affairs) you will probably have heard - with despair or jubilation, depending on your viewpoint - about Transport for London’s recent decision to reject Uber’s license renewal due to a lack of corporate responsibility.
For those that don’t know, Uber, launched in 2012, is a smartphone-based alternative to a traditional taxi service, in which Uber drivers use their personal vehicles to offer discounted fare rides to paying passengers. There are 3.5 million registered users that regularly travel via Uber in London alone, and the 40,000 Uber drivers in the capital may soon be out of a job unless they move to a competing service.
The saga started when TfL stated that Uber is not a “fit and proper” private car hire operator, while Uber’s initial retort was that London “has closed to innovative companies”. Media channels have since had a field day and a public petition was started with the catchy hashtag #saveyouruber, which has already amassed 853,000 signatures. The petition will be sent to the Mayor of London, Sadiq Khan, once it hits 1 million, adding to the 20,000 emails he has already received from vulnerable Uber drivers. Uber is still able to operate until their legal appeal has gone through its full course, but how long that will take depends on many different aspects.
What actually intrigues me about this story is the legal, ethical and social consequences of Uber, and the new wave of ride-sharing apps.
In the United States, Uber operates in 180 cities, but what about the many other cities and towns it doesn’t exist in, or has existed in and then has subsequently departed? Let’s take Austin, Texas as an example. Uber had operated there since 2014, and in May 2016, ‘Proposition 1’ was put through the polls. This local law would remove the requirement for ride sharing companies to collect fingerprints as part of their background checks on drivers and also remove the need to share as much of their data with the city officials – a bill that Uber and Lyft (a similar ride-sharing app) heavily pushed to get passed, as it would mean one very time-consuming step being removed from the sign-up process for new drivers.
Under the guise of making it less time-consuming, less expensive – and not to mention easier - to recruit new drivers, Uber could also increase profits significantly in the Austin area if the bill was passed. Hence both Uber and Lyft spent an estimated $10m on fighting the dispute. However, the residents of Austin fought against Uber’s perceived unethical corporate social responsibility and voted against them, stating, “They showed up and basically ignored the city’s rules”. So Uber and Lyft upped and left Austin, which – more positively - paved way for alternative apps.
In the post-Uber world, one such app, ‘Ride Austin’, locally developed by co-founder Andy Tryba, promotes a new, some might say more ethical, approach to ride-sharing. The company is a ‘notfor-profit’ and only takes a fixed $2 booking fee, unlike Uber or Lyft, which takes a percentage of a passenger’s final fare. As well as being able to offer lower fares for riders, safety is also a primary focus with full background checks for drivers. They also gave riders an option to round up their fare and have it donated to a number of charities, which so far has raised over $250,000.
There were many other players that came along to take advantage of the demise of Uber and Lyft such as Fasten, GetMe, Wingz, Fare and InstaRyde, but not for very long, as the state power of Texas overruled Austin’s decision and essentially did away with enforced fingerprint checks for ridesharing companies. Uber and Lyft came back with a vengeance just one year later in 2017, and within a week or so, some of the new ride-sharing apps started to fold, although Ride Austin seems to have survived for now, despite the lift-sharing giants’ financial incentives to lure drivers back.
Uber actively provides free rides, driver incentives and promotions, something the new, or notfor-profit, apps can’t easily compete with. This, combined with access to user data, gave them the logistical advantage over start-ups, making them ruthless competitors. Many drivers went back to Uber due to the volume of potential customers they were offered, even though they knew they were getting a better deal per ride with ‘Ride Austin’. The more loyal Austin residents tried to stick to local apps and boycott Uber, however with the strong brand recognition and market penetration that Uber holds internationally, they are often the first choice for visitors.
Back in London, apps like Uber have demoted safety concerns, with passengers choosing low prices, and ease and speed at the tap of a finger. You need only to go online to see the registration process for an Uber driver in London. All they need to provide is basic personal details, a scan of their driver’s license and a DVLA check. Then an application is made, aided by Uber, to the local council for a private hire driver’s licence – and that’s it.
The lack of any personal contact with your ‘employer’ does raise red flags for some, especially compared to the requirements for a black cab driver, which are significantly more complex, expensive and detailed. They need to provide medical reports, character and criminal record checks, one to one examinations and a complete knowledge test of London’s streets, which has been deemed as the most difficult in the world. Some may say all this is a rather excessive regulatory process but I think it demonstrates just how serious the role is. After all, if you are jumping into the back of a stranger’s car you want to know that you not only going to arrive at your destination without detour but more importantly that you are going arrive in one piece! The drivers in London, until recently, were classed as self-employed (they won a key employment case) rather than being employed by Uber. The company favoured this approach as they avoided having to pay minimum wage, paid holiday and rest breaks. On top of that, Uber drivers have to pay all of their own expenses and insurance which absolves the company from a responsibility towards their drivers.
Uber has been criticised not only for their lackluster approach in carrying out background and medical checks, but also their apparent reluctance to report serious criminal offences. Painting the regulator as anti-innovation is a predictable way to try to gain public support, but let’s not forget a regulator’s job is to literally uphold a set of standards on behalf of the public and not to bow down to those behaving like bullies.
I’d like to think that, before long, none of this will matter as we will soon be living in Elon Musk’s world of automated, driverless cars with built in ride-sharing capabilities – or even travelling from London to New York in under an hour by rocket, as he recently announced - but maybe that’s a subject for another article...