Uber loses license to operate in London

Uber will continue to operate in London while it appeals the decision by the city’s transportation agency declining to renew the ride-hailing service’s license to operate in its largest European market. Uber posted an online petition in support of its appeal, and garnered more than 300,000 signatures in just a few hours.

But the ruling could prove to be a boon for other operators, and could even present an opportunity for Lyft to kick off its long-awaited international expansion.

The decision is the just latest setback for the San Francisco company worth about $70 billion. It has upended public transportation across much of the world by using smartphones to connect drivers with passengers.

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But problems have included allegations of sexual harassment, concerns about its use of software to evade the gaze of authorities and a reputation — fair or not — that it simply does not play by the rules.

Criticism from customers, unions, regulators and, crucially, investors contributed to the removal of founder Travis Kalanick, as CEO this year. He was replaced by Dara Khosrowshahi, who had run Expedia.

“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,” regulator Transport for London said.

A ban on operating in one of its largest markets would certainly hit the company’s bottom line. Uber says it has 40,000 drivers in London and 3.5 million customers who use its app at least once every three months.

And if it loses its London appeal, those customers will be up for grabs for other companies, including Gett, backed by Volkswagen, and Mytaxi, owned by Daimler. Those services connect users with traditional taxis and black cabs, which cost more than an Uber ride.

The situation could be similar to what happened in Austin, Texas, last year. Uber and Lyft left the city in protest over a law there that required drivers be fingerprinted. A half-dozen startups swept in, with varying levels of success. At one point, total ride-hailing volume had dropped about 13 percent from the Uber-Lyft days. By the time Uber and Lyft returned this year, there were only three other services operating at any scale.

London, though, is a much bigger and more lucrative market, and Mytaxi and Gett are already well-established. They cheered London’s decision, with Mytaxi even offering a 50 percent discount to lure regular Uber users.

“We have long questioned whether Uber has been operating within the letter and the spirit of regulation in London,” Andy Batty, Mytaxi’s general manager for Britain, said in a statement. “We believe that Uber’s business model is based on pumping large amounts of private-equity money into maintaining artificially low prices in an attempt to drive out competition.”

Transport for London, which is responsible for the city’s subways and buses as well as regulating its taxicabs, declared that Uber was not “fit and proper” to operate in the city — a designation that carries significant weight in Britain.

“Fit and proper” is a benchmark applied to different sectors of business and charitable organizations in the country to ensure that people or organizations meet the requirements of their industry or specialty.

Until now, London has been one of Uber’s most notable success stories outside the United States. It began service in the city in 2012, just before the Summer Olympics, initially with a luxury service. It added UberX, which competes more directly with the city’s storied black taxis, a year later. By 2015, it had driven Londoners almost 100 million miles, and taken them on 20 million trips. The company now operates in more than 40 cities and towns across Britain.

Its arrival, however, created a clash almost immediately with the black cabs, which trace their roots to 1634.

Black-cab drivers, who earn their licenses by memorizing 25,000 streets and 100,000 landmarks for an exacting test known as the Knowledge, complain that Uber drivers are under-regulated. Many fear that the rivalry will put them out of business: Uber fares are about 30 percent lower than those of black cabs.

The London ruling was specifically against Uber, and does not appear to rule out other ride-hailing services that connect people with private vehicles. That could give Lyft, Uber’s archrival, a window to steal a massive market already accustomed to ride-hailing. San Francisco’s Lyft has long considered international expansion, but has never revealed concrete plans.

Lyft declined to comment on the ruling.

Uber’s London license will expire on Sept. 30. But the company has been given 21 days to appeal in Britain’s courts and will be allowed to continue operating in the city during the appeal process.