SoftBank-backed taxi app Ola launches in London, looking to unseat Uber as No. 1 player

Key Points
  • Ola rolls out its service in London on Monday, as Uber faces the threat of being banned.
  • The India-based firm says it wants to be the "market leader" in the U.K. capital.
  • The company claims its focus on safety differentiates it from other players.
The Ola app displayed on a smartphone.
Mint | Hindustan Times | Getty Images

Indian ride-hailing app Ola has launched in London, where Uber faces the threat of being banned, as it aims to topple the Silicon Valley giant as market leader in the U.K. capital.

The company, which shares tech investing juggernaut SoftBank as an investor with Uber, rolls out its taxi-booking service in the city on Monday. The firm's app is similar in many ways to Uber's but has a few safety-focused features it says make it stand out.

For instance, when a passenger gets into a car, they have to give a unique four-digit code before the driver can start the trip. It also comes packed with an artificial intelligence-powered system called Guardian, which picks up on deviations in route patterns and gets Ola to check with the driver or customer that "nothing untoward" is happening.

"We aspire to be the market leader in London," Simon Smith, Ola's head of international, told CNBC in an interview. "We believe that, with our proposition around quality and safety, offering a great experience not only for customers but drivers as well, there is no reason why we can't be market leader in this market."

Softbank's global dominance in ride-hailing industry
Softbank's dominance in Ridehailing

The firm has already registered over 25,000 drivers in London, just over half of Uber's 45,000 in the city. It's also partnered with the training unit of U.K. motoring association AA, education firm Pearson and consulting giant Mercer to test its drivers on risk assessment, English speaking and customer service.

Ola's arrival in London comes as its key rival, Uber, fights for survival in the city. Local regulator Transport for London (TfL) decided not to renew Uber's license to operate in November, citing a "pattern of failures" that put the safety of its passengers at risk. For now, the company can continuing operating in London as it appeals the decision.

According to TfL, drivers were able to game Uber's system to pick up passengers without being authorized. It says they were able to do this by uploading their photos to another driver's account. This happened in at least 14,000 trips and some of the drivers were unlicensed, TfL said.

Asked whether Ola's system could be similarly exploited, Smith said he's "confident there won't be an issue," but if there is, it'll contact the regulators to "explain what's happened and what our plan is to rectify it." Its app also has an emergency tool that can be selected to alert Ola, a customer's relatives and the emergency services.

Ola Head of International Simon Smith.

To incentivize drivers to use its platform initially, Ola isn't taking commission off them for the first six weeks of its launch. After that, the firm will take an 18% cut of all rides, less than Uber's 25% commission rate. Meanwhile, passengers will be given up to £25 in ride vouchers if they sign up in the first week after launch.

London is awash with ride-hailing operators already, with Estonia's Bolt and France's Kapten also looking to chip away at Uber's dominance. The rise of Uber and the new entrants has put pressure on London's iconic black cabs, as they often charge much cheaper fares.

While such ride-sharing services have proven popular, investors have been concerned about whether such businesses can become profitable. Uber and Lyft's share prices are both down since they listed last year, due to concerns over their huge losses, though Uber insists it can reach profitability by the end of the year.

Ola says it has a better shot at reaching profitability than its competitors, as it's already reached positive earnings in its home market of India. London isn't the firm's first U.K. market, and Smith said that, over the last three months, it's seen 60% growth in bookings in Birmingham, while bookings have doubled in Exeter and Reading.