Uber Are Suffering For Being First-Movers
There was more bad news for Uber shareholders yesterday as regulators in London stripped the company of their license over passenger safety risk.
Noting “a pattern of failures”, TfL (Transport for London) said the company was “not fit and proper at this time”. Of course, this won’t affect the company immediately as they have 21 days to appeal, which they most definitely will, and they will continue to be able to operate throughout what will be a long and drawn-out appeals process.
What has worried regulators was a weakness in the Uber authentication systems, which effectively allowed unauthorized drivers to accept fares — some of these drivers had previously had their license revoked. Not only is this putting rider safety at risk, but it meant at least 14,000 journeys that TfL identified were completely uninsured.
We’ve actually been here before but in very different circumstances. Back in 2017, TfL also refused to renew Uber’s license, with one of their main issues being the use of Greyball, a piece of software that prevented law enforcement officials from identifying drivers. Greyball helped the company operate in cities where regulators had promised to crack down on any ride-hailing services by fining drivers who were caught.
From 'Super Pumped: The Battle for Uber' by Mike Isaac:
Greyball was consistent with one of Uber’s fourteen company values: Principled Confrontation. Uber was protecting its drivers while confronting what they saw as a “corrupt” taxi industry that had been protected by bureaucracy and outdated regulations. Concepts like “breaking the law” weren’t applicable, they believed, when the laws were bullshit in the first place.
When looking at the two cases, it’s clear that there has been a change in Uber’s tone. Greyball was an effort by the business to openly flout the rules, whereas yesterday’s announcement appears to focus on more of a technical mistake that the company will surely address.
I fully suspect that Uber will have its license renewed eventually, particularly because having lived in London, I’ve seen how important the company is. However, I think the more pressing issue is how regulators decide to deal with the company after years of poor relations. There are other ride-hailing businesses operating in London, but I suspect that Uber is more scrutinized than most, partly because they are the biggest, but also because regulators don’t like being messed around — which Uber did a lot.
I sometimes find myself feeling sorry for Uber in situations like these. There is no doubt in my mind that without Kalanick’s tenacity in the early days, Uber, and ride-hailing as we know it would have been dead on arrival. However, they burned a lot of bridges on their journey to this point. First-mover advantage is something we always look for in a great investment. However, being the first one through the wall can leave you pretty bloody.