By Alistair MacDonald and Sam Schechner
LONDON -- Uber Technologies Inc. won an appeal over the
revocation of its operating license in the U.K. capital, securing
for now the ride-hailing company's operations in one of its biggest
The ruling is a step forward for Uber as the company tries to
build trust with regulators after years of tussles in London and
elsewhere. Under co-founder Travis Kalanick, who resigned as chief
executive in 2017 and left the board late last year, Uber regularly
tested the regulatory and legal envelope of countries where it
operated in order to speed growth.
The dispute in England stemmed from the refusal by London
regulators last November to renew Uber's license to operate, after
finding widespread instances of unauthorized drivers using the app
to pick up customers.
Uber said at the time that it had fixed the problem, but London
officials said they wanted to make sure there weren't other
software issues. Uber appealed the decision and was allowed to keep
its drivers on London's streets during the process.
On Monday, a London court found that Uber was now "fit and
proper" to hold a license, despite some continued breaches,
according to the verdict.
In a statement, Uber said it had been granted an 18-month
license that made it subject to a bevy of new conditions. "This
decision is a recognition of Uber's commitment to safety," the
Uber's shares rose 3% Monday on a strong day for the U.S. stock
market. For 2020, the stock is up nearly 20%.
The ruling heads off -- at least for the next year and a half --
a long-running threat by Transport for London, the city's main
transportation operator and regulator, to prohibit Uber from
operating in the U.K. capital. Shortly after entering the London
market, city regulators began accusing the company of safety and
regulatory shortfalls, allegations that Uber fought vigorously at
first before taking a more conciliatory approach. Since taking over
in the summer of 2017, Chief Executive Dara Khosrowshahi has
Uber has clashed with regulators in other parts of the world. In
California, the company is involved in ongoing litigation over
whether it must reclassify its drivers as employees, a move that
would upend the cost structure of its business.
Uber and rival Lyft Inc. have said they believe their drivers
are independent contractors, in part because the companies describe
themselves as digital-app operators that match drivers with riders,
not transportation providers.
The companies are seeking to have California voters weigh in on
the matter using the state's ballot-measure process, which allows
laws to be passed, overturned or amended by popular vote instead of
by the legislature. The initiative, known as Proposition 22, has
become one of the most expensive ballot measures in California
In addition to the regulatory battles, the company's core
ride-hailing business has suffered from a fall demand for transport
services during the Covid-19 pandemic. In August, Uber reported
weak second-quarter results, with ride bookings down 75%
year-over-year and 72% from the previous quarter.
London is one of Uber's biggest and most important markets
globally. As in other cities, the company met stiff resistance from
taxi and licensed-cab drivers, but opposition from groups
representing London's ubiquitous black cabs was particularly
fierce. Many residents have embraced Uber as a middle ground
between the city's extensive and relatively cheap public
transportation and pricier black cabs. The company has said it has
3.5 million riders and 45,000 licensed drivers in London.
The court listed a number of recent breaches of Uber's license
by drivers, including vehicles that didn't have certification that
they were roadworthy, but said the company had reduced the
occurrence of such offenses, according to a copy of the verdict.
The court also said Uber had increased board oversight of the
issues and improved communication with TfL, adding that there was
no evidence that the company had tried to conceal any of the
Uber "does not have a perfect record, but it has been an
improving picture," the court said.
In November 2019, TfL revoked Uber's license, saying it had
found 14,000 instances in late 2018 and early 2019 in which
unauthorized drivers swapped their own photos with those of
authorized drivers on Uber's platform, allowing them to pick up
riders themselves. A TfL spokesman said at the time that in some
cases it believed drivers were using the loophole to allow people
they knew to use their own accounts to pick up riders.
It wasn't Uber's first skirmish with TfL. In 2017, the authority
rejected Uber's application for a long-term license because of
issues regarding safety and its corporate culture and governance.
It pointed to Uber's internal use of an app called Greyball, which
allowed it to evade surveillance by local authorities, as well as
problems with the company's reporting of crime to the police.
Uber appealed that decision and won a 15-month license, which
expired in September 2019. The regulator then gave Uber a two-month
license, which expired last November.
Write to Alistair MacDonald at firstname.lastname@example.org and
Sam Schechner at email@example.com
(END) Dow Jones Newswires
September 28, 2020 16:29 ET (20:29 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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