Transportation

Uber loses its license to operate in London

Reuters with CNBC.com
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Key Points
  • "TfL considers that Uber's approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications," Transport for London said on Friday.
  • Uber has the right to appeal the decision within 21 days.
  • Sterling slipped 0.2 percent on the news, before paring some of its losses to trade at $1.3558 shortly after midday.
Uber loses its license to operate in London
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Uber loses its license to operate in London

London stripped Uber on Friday of its license to operate from the end of September in a huge blow to the taxi app that will affect more than 40,000 drivers in one of the world's biggest cities.

"Uber's approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications," Transport for London (TfL) said.

The final day of Uber's license will be on Sep. 30. Uber, which has the right to appeal the decision within 21 days. It is unclear whether Uber will be able to operate in October whilst any appeal is being considered.

In London, Uber has faced criticism from unions, lawmakers and traditional black cab drivers over working conditions.

Uber, which accounts for a third of private hire vehicles on London's streets, said it would contest the decision. Uber's London unit also launched a petition against the decision, saying that regulators were trying to "restrict consumer choice."

"We are sure Londoners will be as astounded as we are by this decision. By trying to ban the app from the capital, the Mayor and Transport for London have caved in to a small number of people," Tom Elvidge, general manager of Uber in London, said in an emailed statement to customers in the U.K.

Globally, Uber has endured a tumultuous few months after a string of scandals involving allegations of sexism and bullying at the company, leading to investor pressure which forced out former CEO and co-founder Travis Kalanick.

The app has been forced to quit several countries including Denmark and Hungary and faced regulatory battles in multiple U.S. states and countries around the world.

'Must play by the rules'

London Mayor Sadiq Khan said he backed the decision.

"All companies in London must play by the rules and adhere to the high standards we expect - particularly when it comes to the safety of customers," he said.

"It would be wrong if TfL continued to license Uber if there is any way that this could pose a threat to Londoners' safety and security."

Uber loses its license to operate in London
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Uber loses its license to operate in London

GMB, the driver's union, and the Licensed Taxi Driver's Association have both been fiercely opposed to Uber's London operations.

"This historic decision is a victory for GMB's campaign to ensure drivers are given the rights they are entitled to – and that the public, drivers and passengers are kept safe," Maria Ludkin, legal director at GMB, said in a statement on Friday.

"As a result of sustained pressure from drivers and the public, Uber has suffered yet another defeat – losing its license to operate in London... It's about time the company faced up to the huge consequences of GMB's landmark employment tribunal victory – and changed its ways," she added.

One of Uber's British competitors in London, Addison Lee, is also awaiting a decision from TfL about a longer-term license. The company declined to comment on Friday.

'Hard to see what Uber can prove in 21 days'

"It is a surprise to a lot of people that this decision has taken so long," Justin Peters, chief executive of the minicab comparison and booking app Kabbee, told CNBC via phone interview on Friday.

"(Uber) has circumvented the rules for a number of years and so it is hard to see what they can prove in just 21 days when they haven't been able to do so for several years," he added.

A decision to not renew taxi app's Uber private hire license in London does not affect takeaway food delivery service UberEATS, an Uber spokesman said on Friday.

Sterling slipped 0.2 percent on the news, before paring some of its losses to trade at $1.3558 shortly after midday.

Shares in rival Just Eat rose earlier on the decision by regulator Transport for London.

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