Has Uber finally hit a regulatory wall? - Macleans.ca
 

Has Uber finally hit a regulatory wall?

Uber’s swift expansion has pitted it against governments for years. Most of the time, it wins. Now, things are different.


 
Adam Berry/Getty Images

Adam Berry/Getty Images

Just days after its license to operate was revoked in London, Uber may now cease operations in Quebec—this time, of its own accord. The problem for Uber is a new fleet of regulations Quebec is set to introduce, including: subjecting drivers to background checks performed by police (rather than by a private company); requiring drivers to undergo the same training as regular taxi drivers (35 hours, as opposed to Uber’s 20); and requiring Uber vehicles to be inspected every year.

Uber’s clash with Quebec was somewhat inevitable, as the province only granted it a one-year operation license last October as part of a pilot program. Its pending departure from the marketplace will likely come as less of a surprise to Quebecers than it did last week to Londoners, many of whom came to rely on the service as an alternative to the expensive black cabs or the city’s public transit system.

MORE: Uber set to cease operations in Quebec, reports say

But recently it has felt as though something like this was bound to happen, whether it was London, Quebec or elsewhere. Uber has spent years aggressively expanding in major centres without giving much mind to whether or not its platform—after all, Uber is really just the app—would contravene local regulations or not (usually it did). The thinking for years has been that if only Uber can force its way into a market and prove itself as a low-cost and efficient alternative, its users will then act as the company’s public relations branch, knowing that for a politician of any level, it is infinitely more difficult to remove a service than to sell a new one. 2017 appears to be where that strategy has finally hit a snag.

Recently, the gloss has begun to wear off the glowing story of Uber’s transportation revolution, and the reasons given for Transport for London’s revocation of Uber’s license are representative of what’s gone wrong for the tech company more generally. Among the reasons for revocation TFL cited in its announcement were concerns about how Uber reported serious criminal offences, and its failure to explain its Greyball tracking mechanism, which Uber has reportedly used to evade official oversight in some cities.

Back in April, London’s Metropolitan Police issued a letter to TFL, citing instances where Uber drivers were reportedly involved in criminal acts but Uber failed to notify police. One involved a driver who pulled pepper spray from his glove compartment, and the other, more serious, involved a driver who was accused twice of sexual assault. “My concern is twofold,” Neil Billany, of the police’s taxi and private car enforcement team, wrote. “Firstly it seems they are deciding what to report (less serious matters / less damaging to reputation over serious offences) and secondly by not reporting to police promptly they are allowing situations to develop that clearly affect the safety and security of the public.”

MORE: Uber loses operating license in London

Uber has struggled with this aspect of its operation for years, despite promoting itself—somewhat justifiably, due to the ability to track a ride via GPS—as a safer alternative to taxis. It has faced numerous headlines from around the globe about women who have found themselves harassed or assaulted by Uber drivers, and closer to home, Uber has suffered more directly from negative accounts of its corporate culture. Its former CEO and co-founder, Travis Kalanick, was forced to step down from his post in the spring under pressure from investors unhappy with, among other things, ugly accounts of sexual harassment within Uber’s head office, and allegations that Uber officials personally obtained medical records of a woman who claimed to have been raped by an Uber driver to, allegedly, sow doubt about her credibility. (The company eventually fired 20 employees after launching an internal investigation into sexual harassment.)

As it happens, investors were also unhappy about Greyball, a software tool Uber used to evade municipal regulators when it entered cities that were resistant to its service or where it had been banned. Greyball was part of a program that allowed Uber to tag particular users—in this case, city officials—so Uber cars would not pick them up, then also show those targeted users a fake version of the app. After The New York Times revealed the Greyball technique earlier this year, Uber became the subject of a federal inquiry. Whatever information TFL wanted from Uber regarding Greyball—i.e. whether it was used in London—was obviously not sufficient if and when it was produced.

As it has when other legislation that affects its operations has come up for discussion, Uber might yet issue an appeal for support to its Quebec riders. Though, it might not have to push the issue on its own. A petition in the U.K. that claims to “defend the livelihood of 40,000 drivers—and the consumer choice of millions” and demands a reversal of the Uber license revocation has already over 780,000 signatures since Friday. The U.K. Conservative Party has also latched on to the story, siding with consumers (and thus Uber) and against Labour leader Jeremy Corbyn and London mayor Sadiq Khan, who happens, handily, to also be one of the nation’s most prominent Labour politicians.

RELATED: Uber wants in to public transit. Cities should proceed with caution.

It is exactly the kind of battle in which Uber has been engaged for years, and is one from which, so far, it has usually emerged victorious—either gaining outright victories or enough concessions or ground on which to fight the next stage of its endless expansion. Its business model, which still relies heavily on venture capital subsidies, has only worked because it has won those fights. But, despite all of its success, things for Uber have changed. Considering its business model used to mean merely assessing the convenience of its associated cars versus other, more established and historically problematic options, like transit. Now, considering Uber’s business model means thinking about a lot of other things, too—including how it treats its employees (not just the drivers who use it), and its regard for conventional rules, be they formally legal ones or just socially accepted.

That’s not ground Uber has yet to fight a major battle, and the factors now at play appear to be capable of handing it some significant territorial losses.


 

Has Uber finally hit a regulatory wall?

  1. The way Uber deals with legal situations has been a big part of their success. Most other companies would see these setbacks as being insurmountable but Uber knows that there’s value in being strategic about legalities. Of course that’s to be expected when you’re trying to replace an entire industry, but even down to their trademark registration lawsuite with Uber Promotions, they always seem to come out on top.