Tech

Uber to end service in Colombia after regulatory crackdown

Key Points
  • Uber will end operations in Colombia at the end of the month after local competition authorities found it to have violated market rules.
  • Uber also faces the threat of losing its ability to operate in London after a local authority revoked its license, a decision it's appealed.
  • The company also faces regulatory threats at home, most notably from California's new gig economy law.
Dara Khosrowshahi, chief executive officer of Uber Technologies Inc., listens during a panel discussion at the Bloomberg Global Business Forum in New York, U.S., on Wednesday, Sept. 26, 2018.
Mark Kauzlarich | Bloomberg | Getty Images

In its latest regulatory blow, Uber will end operations in Colombia on Jan. 31, CNBC confirmed Friday. Local news outlet El Tiempo first reported the news.

Uber shares were up less than 1% on Friday afternoon.

Colombian authorities ordered Uber to cease operations of its ride-hailing service after a judge sided with the country's competition authority, which claimed the company broke market rules, Reuters reported in December.

Taxi drivers had protested Uber and other services, Reuters previously reported, claiming the services had an unfair advantage due to a lack of regulation requiring them to pay the same fees to which traditional cabs are subject.

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Uber to pull out of Colombia starting January 31st

Uber appealed the ruling, according to Reuters, though it did not ban its other divisions, like its delivery service Uber Eats. Uber called the Colombian regulator's decision "arbitrary," in a statement on its end to operations translated from Spanish.

While Colombia only represents a market of around 2 million riders and 88,000 drivers, Uber's decision to abandon its operations there shows the impact regulation can have on its services. In November, London's transport regulator stripped Uber of its license to operate. Uber said at the time it had 3.5 million riders and 45,000 drivers in that market, and has appealed the decision.

Uber also continues to face regulation at home, most recently with California's new gig economy law known as Assembly Bill 5. The bill, which took effect Jan. 1, requires gig economy workers to be reclassified as employees rather than contractors. Uber and Lyft both opposed the bill, as did other services. When it ultimately passed, Uber's chief legal officer Tony West told reporters there's still room for interpretation in the bill, which says contractors must do work outside the typical course of business. Uber and food-delivery start-up Postmates sued California over the law last month.

"Several previous rulings have found that drivers' work is outside the usual course of Uber's business, which is serving as a technology platform for several different types of digital marketplaces," West said.

Uber still faces the potential for legal challenges under the new law and for other states to be inspired by California's legislation, especially as presidential candidates call for greater protections for workers.

— CNBC's Deirdre Bosa and Annie Palmer contributed to this report.

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