LONDON -- London's transportation agency dealt a blow to Uber on Friday, declining to renew the ride-hailing service's license to operate in its largest European market.
Uber's London license will expire on Sept. 30. But the company has been given 21 days to appeal -- it immediately vowed to do so -- and will be allowed to continue operating in the city during the appeal process.
The decision is the latest setback for a company that has upended public transportation in many cities around the world by using smartphones to connect drivers with passengers. That success has helped it grow into a behemoth worth around $70 billion.
But along the way, Uber has faced an array of controversies, including allegations of sexual harassment at its headquarters and concerns about its use of software to evade the gaze of authorities.
Criticism from customers, unions, regulators and investors contributed to the removal of Uber's founder, Travis Kalanick, as chief executive this year. He was replaced by Dara Khosrowshahi, who had run the online travel site Expedia.
The decision Friday by Transport for London, which is responsible for the city's subways and buses, as well as regulating its taxicabs, illustrates the gravity and severity of the issues Uber faces.
The agency took direct aim at Uber's corporate culture, declaring that the company's "approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications."
A ban on operating in one of its largest markets -- it has 40,000 drivers in greater London and 3.5 million customers who use its app at least once every three months -- would hit Uber's bottom line.
Transport for London said Uber was "not fit and proper to hold a private hire operator license."
Among the issues considered by the agency in reaching that assessment were how it dealt with serious criminal offenses; how it conducted background checks on drivers; and its justification for a software program called Greyball that "could be used to block regulatory bodies from gaining full access to the app."
Tom Elvidge, Uber's general manager in London, said the agency and the city's mayor, Sadiq Khan, had "caved in to a small number of people who want to restrict consumer choice."
Uber conducted background checks using the same methods as those used for black-cab drivers, he said.
"Our pioneering technology has gone further to enhance safety with every trip tracked and recorded by GPS," he said, adding that the company had "a dedicated team who work closely with the Metropolitan Police."
Greyball had not been used to block scrutiny by regulators or the police in London, he said.
It is unclear how London's decision would affect any move by Uber to list its shares on a public market. Khosrowshahi told employees last month that an initial public offering was unlikely to come until 2019 at the earliest.
But clashes with regulators have been one reason Uber and other big private companies such as Airbnb have taken so long to pursue initial public offerings.
Holders of shares in public companies are often less tolerant of risks than their private-market counterparts. That and opposition from governments are among the most significant threats that a company can face.
The ruling Friday comes less than a year after a British tribunal ruled that Uber could no longer treat its drivers as self-employed contractors and would have to meet tougher labor standards, including offering holiday pay and pensions.
Labor standards are just one facet of a question that has vexed governments: Should Uber be regulated as an online service that merely connects independent drivers with passengers, or as a transportation employer that has to meet tougher standards? The European Court of Justice is considering just that question. How the issue is resolved will be watched closely by many in a wide range of other industries, such as hoteliers grappling with Airbnb.
"This could be a game changer for the gig economy," said Frank Field, a Labor member of Parliament. He called on Uber to reset its business model "to be built upon two foundations: a safe and reliable service for every passenger, and a living wage and fairer conditions for every driver."
Until now, London has been one of Uber's most notable success stories outside the United States. It debuted in the city in 2012, just before the Summer Olympics, initially with a luxury service. It added UberX, which competes more directly with the city's taxis, a year later. By 2015, it had driven Londoners almost 100 million miles and taken them on 20 million trips. The company now operates in more than 40 cities and towns across Britain.
Its arrival in London, however, created a clash almost immediately with the city's cabs, which trace their roots to 1634.
Black-cab drivers, who earn their licenses by memorizing some 25,000 streets and 100,000 landmarks for a famously exacting test known as The Knowledge, complain that Uber drivers are under-regulated. Many fear that the rivalry will put them out of business. Uber fares are about 30 percent lower than those of black cabs.
The conflict also involves tensions over ethnicity and class -- most black-cab drivers are white native-born Britons, while many Uber drivers are immigrants.
Uber has said it receives hundreds of complaints a month from its drivers about remarks from black-cab drivers. Among the insults hurled are "Uber slave!" and "Go back to your country!"
Many black-cab drivers have now signed up with competing apps like Gett and MyTaxi, which like Uber allow passengers to hail rides via their smartphones. Londoners can also choose from a wide variety of private-hire services, known as minicabs.
Black-cab drivers, and the unions representing them, cheered Friday's ruling, with Jeffrey Marcus, who has been driving a London taxi for 42 years, describing it as "long overdue."
"We've got a brilliant taxi service here," Marcus, 67, said. "You pay a little more for a licensed taxi, but you get the service."
Business on 09/23/2017