Uber runs afoul of regulators in yet another country, temporarily shuts down operations

Key Points
  • Uber suspended its operations in the Philippines after regulators rejected the ride-hailing company's motion to reconsider a cease and desist order
  • The tech giant had filed the motion after the country's Land Transportation Franchising and Regulatory Board suspended its accreditation for a month
  • Authorities in the Philippines have been cracking down on ride-hailing drivers operating without permits as they figure out how to regulate the industry better
Is Uber in trouble?

Uber said Tuesday evening that it would comply with an order from the Philippines' transport regulator to temporarily stop operations after a motion for reconsideration was denied.

The U.S.-based ride-hailing company had briefly ignored a cease and desist order issued Monday by the country's Land Transportation Franchising and Regulatory Board (LTFRB). Instead, Uber filed a motion for regulatory reconsideration of the regulator's decision to suspend the platform's accreditation for a month.

Uber said it filed the motion because of "overwhelming rider and driver demand." In a Facebook post at the time, Uber said operations would continue until the motion was resolved.

But local media reports said the regulators rejected the appeal and that Uber drivers were still not allowed to pick up passengers. The regulators were not immediately available for comments when contacted by CNBC.

Uber yielded to the ruling in a new Facebook post on Tuesday evening, where it said it was "disappointed with the LTFRB's decision" to deny the appeal. It also said it was looking to resolve the matter as soon as possible.

Meanwhile, Asia-based Uber rival Grab said its operations were still up and running after it complied with the regulators' July 26 order to stop accepting and accrediting new drivers. The regulators had ordered both Grab and Uber to deactivate new drivers who came on board after June 30.

"In light of the recent order of the Land Transportation Franchising and Regulatory Board, we find ourselves in a unique situation. We ask the patrons of ride-sharing to bear with us as there has naturally been an increase in bookings made on the Grab platform," said Brian Cu, head of Grab Philippines in a media statement.

With Uber drivers out of commission, it is likely that Grab could see a surge in demand from its ride-hailing services.

The decision to suspend Uber's operations came amid an ongoing dispute between the LTFRB and ride-hailing services. Reuters reported that the regulatory disputes have prompted investigations by both chambers of the Philippine Congress.

In July, media reports said the regulators fined both Uber and Grab 5 million pesos ($97,570.50) each for letting some drivers operate without permits.

Last year, the regulators suspended the processing of applications of ride-hailing services that included Uber and Grab in order to review existing policies on how to regulate the industry better. That meant new drivers who signed up with either operator would not have a legal permit from the authorities.

LTFRB Tweet: ADVISORY to all Uber TNVS

In its Monday advisory, the LTFRB said it "strongly recommended" Uber to extend financial assistance to "its affected peer-operators during the period of suspension." The notice called it an "expression of good faith" toward competitors that suffered due to Uber's "predatory actions."

In April, Uber resumed its ride-hailing services in Taiwan after a two-month suspension that followed fines from the government.

— Reuters contributed to this report.