Uber only has itself to blame for London license loss

The tech industry’s over-processed supply of irony might not be enough to service all the ramifications of Uber being stripped of its London license by the city’s transport regulator.

Uber advocates were immediately scrambling to bust out the reactionary clichés — painting the regulator as “anti-innovation” and claiming London is now ‘closed for digital business’. (A point that might have more substance if they were talking about Brexit.)

Guys. Spare us. Please.

NB: A regulator’s job is literally to uphold a set of standards on behalf of the public, not to bow down before your shiny app.

The old ‘They’ve caved to the taxi cartels and/or the unions!’ refrain was also wheeled out and waxed off. Harder to spot: Any mention of how much Uber spends on lobbying lawmakers to influence regulatory decisions in its commercial favor.

Nor how Uber mobilizes its app infrastructure to create thousands-strong lobbying armies to apply pressure to city authorities at key moments of regulatory threat.

So — quelle surprise! — there’s already a petition with hundreds of thousands of signatures against TfL’s decision. A petition set up and promoted by, er, Uber, of course…

At the same time, some genuinely outraged London Uber users, who have become accustomed over the past five+ years to a VC-subsidized regime of unsustainably cheap cab rides, have taken to social media to cry that it’s simply not fair!

And to wonder aloud how they’ll be able to go anywhere without Uber. This in a city that has one of the most extensive and accessible public transport networks in the world — not to mention a large number of private hire vehicle companies other than Uber, some of which can also be summed by an app (such tech! much innovation! wow).

How will we get home safely now, fretted others — apparently untroubled by the fact that London’s Met Police had informed the regulator Uber was failing to report sex attacks by drivers on its platform. TfL cited Uber’s “approach to reporting serious criminal offenses” as a contributing factor to its decision to withdraw licensing.

The deepest irony of all is that Uber can continue to operate in London while it appeals the regulator’s decision. Which will, at very least, take months. It could take years.

Being told you’re not “fit and proper” to operate a service yet allowed to keep operating your service? Tell me again exactly how London is ‘closed for digital business’?

Uber for a laundry list of scandals

Corporate social responsibility? Uber’s company fabric has demonstrably been cut from a very different kind of cloth. That’s why its new CEO is right now having to triage a laundry list of scandals — from dealing with an internal culture of sexism and bullying; to privacy and security failings so massive Uber just had to agree to two decades of oversight by a US regulator; to what appears to be a disturbing habit of building software tools that aim to blur the line of legality — such as by helping it evade regulators or slurp data from rivals.

Meanwhile Uber intones that TfL’s decision will “put more than 40,000 drivers out of work”. And claims it’s going to court to “defend the livelihoods of all those drivers”.

Yes, this really is the same company that studiously avoids ’employing’ any of those thousands of platform dependents — rather it categorizes them as ‘self-employed contractors’. Being ‘in work with Uber’ means accepting the risk and responsibility of being precariously managed by a technology entirely beyond your control.

Uber has even tried to monetize that insecurity by selling personal injury and illness insurance to its drivers. How very innovative indeed! Such a shame it doesn’t provide sick pay in exchange for sweating toil in the first place.

In a test case last year, a UK employment tribunal disagreed with Uber’s classification of drivers as self-employed contractors — ruling the company must pay the individuals in question the national minimum wage, as well as cover holiday pay and provide adequate work breaks.

Uber’s business has of course been structured to try to avoid the expensive rights of millions and millions of workers landing on its balance sheet. Despite the fact that, without the labor (and possessions) of all those drivers it wouldn’t be able to deliver its service.

Displaying a very black sense of humor, Uber calls its powerless platform precariat “partners”. Even as it routinely instructs its lawyers to appeal decisions seeking to expand drivers’ rights. And even though it fought for so long against adding a tips option to its platform. (It routinely challenges any moves by cities trying to raise safety standards for Uber users too.)

But politicians are waking up to gig economy regulation. As indeed are gig economy workers. That Uber employment tribunal ruling looks like both warning klaxon and tip of a titanic iceberg.

So if you’re an entrepreneur, and circumventing employment regulation is your benchmark for ‘innovation’, it’s really time to get a new playbook.

In Europe, governments are as un-fond of seeing their tax bases shrinking as workers are their rights evaporating. While legal minds do appear to have grokked how a tech business which replaces human managers with an app that barks orders is still, er, managing workers.

Europe also appears to be approaching a consensus legal view that a tech platform whose primary business is the delivery of transport services is — wait for it — a transportation company. And should therefore be regulated as a transportation company.

The legal mists Uber has exploited for so long look to be clearing.

And so if your ‘innovative’ business model is intent on siphoning ‘disruptive fuel’ from the tightly managed labor of thousands of people who you won’t classify as workers, you might find VCs aren’t as elated by your pitch as you imagined.

Mark Tluszcz, CEO at VC firm Mangrove Capital Partners, had this cautionary warning following the Uber decision: “There are fundamental issues with the business models of many gig economy companies. While they offer great services and excellent value for money, they are often dependent on not paying salaries, taxes and insurance.”

Oops!

But no matter — none of that stuff is a barrier to Uber using the precarious livelihoods of its non-employees as an emotive cry for a brake on the TfL regulatory decision right now, and as the claimed justification for what could be years of legal action and uncertainty as it seeks to force the regulator into reverse.

Now don’t get me wrong. TfL isn’t perfect by any means. You can certainly — and people have — call out the regulator for letting Uber operate for more than five years in the face of mounting concerns. (Or, well, you could say it was demonstrating that London is open for digital business?)

Arguably it could and perhaps should have stepped in sooner to investigate issues being raised. Although it would surely have faced the same or an even more fierce cry of ‘anti-innovation’ had it moved to strip Uber’s license earlier.

The most biting response to TfL’s decision came from James Farrar, co-claimant in the Uber employment tribunal decision, who described it as “a devastating blow for 30,000 Londoners who now face losing their job and being saddled with unmanageable vehicle related debt”.

Although his assessment does also underline exactly how precarious it is for anyone to put their faith in a rights’ less platform to be their forever reliable non-employer.

I mean, this is also a company that has publicly stated its ambition is to remove human drivers from its business equation entirely — and replace them with autonomous machines. So its ‘partnership’ offer has always come with plenty of caveats.

But Farrar’s suggestion that TfL should have sought to “strengthen” its regulatory oversight earlier does have some merit. Specifically he says it should have curbed Uber’s “runaway licensing” and sought to protect “the worker rights of drivers”.

It’s the best critique I’ve seen of TfL’s ruling. However it does risk eliding the public safety issue.

As indeed do many of the male voices that have been so quickly raised to speak up for Uber and to brand TfL as ‘anti-innovation’.

Perhaps that’s unsurprising, given it’s women who are disproportionately the victims of sex crimes.

For most men a ride home with a stranger probably sounds like a welcome convenience. For most women the first consideration before getting into a car alone is: Is this going to be safe?

And on the topic of safety, did you hear the story of how an Uber user in the U.S. who was raped by an Uber driver in India is now suing the company for privacy violations after it emerged Uber’s president of business in AsiaPac had accessed, and was carrying around, her medical records? It’s hard to imagine a more textbook example of failing on all counts at corporate social responsibility.

The bottom line is a regulator’s responsibility is to ensure the entities it grants licenses to are up to its accepted standard. And TfL evidently believes it’s seen enough bad stuff attached to Uber’s business operations in London to merit revoking its pass to operate.

Given how tattered Uber’s corporate reputation is, who can blame them?

Even Uber’s new CEO has conceded this point — in an internal letter to staff about the London license loss, which was leaked to a journalist, he writes: “The truth is that there is a high cost to a bad reputation.”

The end of the road for antisocial?

Regulators are also, as a rule, underfunded and overworked. These public bodies don’t enjoy the kind of VC largess that allows an entity like Uber or Facebook to aspire to ‘move fast and break things’. So it’s unrealistic — and more than a little ridiculous — to demand that a small public body like TfL funds lengthy interventions aimed at educating far better resourced corporate giants on being socially responsible and on ensuring public safety.

The massive asymmetry between the understaffed regulatory overseers of civic society and the elite techno disruptors, stuffed to the gills with the finest engineers money can buy (but apparently no one who passed a course in ethics), has clearly enabled certain tech entities to accelerate their business growth at the expense of responsibility.

At times some are essentially dispensing with legality.

Uber grew by ignoring extant transport rules. Indeed, in the past, it was proudly and loudly breaking such rules. Told by a German court in 2014 to cease operating nationwide, Travis Kalanick era Uber told the judges to stuff their injunction and pressed the pedal to the metal.

So there’s another rich irony to Uber’s new CEO now pleading with the London regulator not to apply its rules, and calling for it to “work with us to make things right”… But hey, at least he’s gaslighting nicely.

While, in the case of another platform giant — Facebook — the result of being powered by a business logic that’s 100% geared towards commercial optimization at massive scale is currently being liberally painted across U.S. political headlines.

And across the prematurely aged visage of its remorseful-in-retrospect founder…

Facebook is a content-curating company that, until very recently, resisted being classified as a media company. For as long as possible it sought to eschew any kind of editorial responsibility for the user generated content flowing across its platform — even as its fleet of engineers worked to tune algorithms to distribute content at an unprecedentedly vast scale and with an invasively exact degree of interest-targeting.

‘But we didn’t think of that’, it bleats now, in response to the revelation that its ad system allowed the micro-targeting of ads to users with a stated preference for ‘burning Jews’.

‘We just didn’t imagine this vast anyone-can-advertise-to-anyone platform might be used by Kremlin agents — even though, well, they paid us in Rubles and hailed from a known pro-Putin troll farm,’ it now finds itself having to say.

It’s a vastly disingenuous response to a crisis entirely of Facebook’s own making.

Social responsibility? Oh hell no! We’re just engineers.

Here’s the postmortem on Facebook’s antisocial fuck-up: If your business is building powerful tech tools that you make freely available to almost anyone who wants to use them, and yet you also refuse to accept responsibility for ensuring those tools are not also misused at scale, then don’t be too surprised when the monster you’ve unleashed comes back to bite your personal political ambitions in the ass, Zuck.

Turns out if you’re truly fixated on moving fast and breaking stuff — and you have enough VC cash behind you to fuel your one-way rocket — you actually can end up breaking some really, really, REALLY big stuff — like, er, democracy…. Thing is, no one is clapping now are they Facebook? (Well, no one outside Russia.)

Uber’s bending of the transport rulebook might seem to pale in comparison beside Facebook’s insistence that ads on its platform are just another type of ‘user content’ to be inserted into anyone’s eyeballs so long as you hand it a little bit of fiat currency.

But the harm is actually more immediately obvious.

Those thousands of London Uber drivers who bought into its platform on the vague promise of a ‘partnership’. Who took out loans to fund the shiny vehicles that Uber’s business relies on. They’re the ones saddled with horrible uncertainty and terrible risk.

They have all the responsibility, and none of the rights.

And let’s not forget all the unseen risk being absorbed by individual Uber users getting into cars with strangers and taking at face value the company’s claims it is be safe for them to do so.

The regulator’s verdict is that no, actually, we are not convinced it is safe for you to get in the car.

Frankly this has nothing to do with innovation. And everything to do with how poorly Uber has operated as a company to have reached such a very low pass.

“We wouldn’t say that a car with no speed limits or seat belts is an innovative car. Innovation is precisely about coming up with new solutions to problems. Solutions that create more problems than they solve are not really solutions,” says Gemma Galdón, founder and CEO at data consultancy Eticas Research commenting on TfL’s Uber verdict.

“While Uber is free to design its business model, regulators need to ensure that the framework they operate in protects fundamental rights and values, including workers rights… If Uber cannot come up with a business model that, is both innovative and compliant with the law, this may say more about Uber‘s innovation capacity than about the regulator, who is just doing its job.”

“Not all tech innovations try to thrive regardless of their impact on labor rights, the environment or social inequalities,” she adds. “In the future, non-civic tech should be as unthinkable as cars without speed limits or belts.”

There’s yet another irony here: By failing to apply its ride-hailing technology in a socially responsible way Uber has made it more possible for fast-following competitors to elbow in and address those corporate failures — such as by offering a better ‘partnership’ package for drivers. Or by finding ways to make London’s more rigorously regulated black cabs more affordable for people to use.

Although Uber’s main weapon to stave off competition thus far has been to drive down fare prices. But even Uber can’t burn VC cash forever. It will have to raise prices to turn a profit or it can’t hope to deliver the necessary return to its many investors.

Analysis suggests its investors are subsidizing the cost of rides to the tune of around 60 per cent. Which means that that Uber trip which cost you £8 actually cost £20. Not so ‘price disruptive’ now, eh.

And given how many of the London Uber users complaining about TfL’s decision to strip the company of its license say it’s Uber’s “affordability” that they love, I’d wager that an Uber that charged fares far closer to the rates of London’s black cabs wouldn’t find itself half so popular.

On demand ride-hailing apps? They aren’t as innovative as they used to be. The question now is: What else does your business offer us?