Via Financial Times

Was Transport for London’s refusal this week to extend Uber’s London licence really a “dark day for competition and progress”, as some free-marketers claim? Or was it, in fact, a shaming day for those of us bourgeois parents who enjoy not having to pick up our teenagers in the middle of the night and find it expedient not to ask too many questions about who’s at the wheel?

If another company had employed 43 drivers with fake identities, including one who had been cautioned for distributing indecent images of children, there would have been an outcry. I would not let my 10-year-old travel alone in a cab but I know plenty of parents who use ride-hailing apps to do that, under the illusion that tracking guarantees safety. Now we know they are tracking the car, not necessarily the driver. Some of the 43 were uninsured; some had been banned from driving; the most recent case was uncovered three weeks ago.

Business groups and think-tanks are making a mistake to cast Uber v London as a totemic fight to preserve capitalism. Some have parroted Uber’s response that the 14,000 trips identified as fraudulent are a tiny fraction of the total, but that does not excuse the scale of the negligence.

Those who accuse London’s mayor, Sadiq Khan, of protectionism overlook the fact that TfL has not questioned Uber’s business model, only its procedures. Competition and choice are the lifeblood of capitalism; predatory pricing and underhand practices give it the kind of bad name that is being exploited by the opposition Labour party.

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Some argue that banning Uber is an overreaction (the company is still operating in London, pending appeal). I’m not so sure. The regulator has already given the company several stays of execution. The “pattern of failures” it has found are more worrying, in some ways, even than the individual sexual assaults by Uber drivers that have previously been prosecuted. In one 2015 case, two women in Leeds told police they had been assaulted by the same Uber driver. The company denied the claims and eventually settled out of court. Leeds city council subsequently found that the man, Naveed Iqbal, had used his brother’s Uber driver login. Four years later, it seems that Uber has still not fixed the technology.

This is disappointing, given the current chief executive’s attempts to clean things up. Upon his appointment as CEO in 2017, Dara Khosrowshahi acknowledged that Uber had been “far from perfect” under founder Travis Kalanick. He has since tried to engender a more responsible culture and TfL credits the company with having become more transparent and co-operative. Why, then, has Mr Khosrowshahi allowed such loopholes to persist?

Uber confirmed to me that its drivers are able to change the bank details and phone numbers linked to their accounts. The company emphasises it does have checks in place, but the ability to change such details led to both Deliveroo and UberEats being accused of having created a black market in illegal migrants renting other people’s accounts, a claim both companies deny.

Perhaps Mr Khosrowshahi’s attention has been focused on making Uber what he calls “an operating system for everyday life”: a provider of takeaway food, rental bikes and public transport information as well as ride-hailing. While this may be a worthy ambition, it is also consistent with the company’s history of seeking to stay ahead of regulators, this time by making its drivers a sideshow.

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Uber’s claim that it is just a technology platform, not a transport service, has been mocked as a ploy to reduce its tax bill and shirk employer responsibilities. Now, regulators are closing in. In September, the governor of California signed the landmark Assembly Bill 5, which seeks to protect workers who work for gig economy companies but are treated as independent contractors with no entitlements to minimum wage or holiday pay. Uber and Lyft, another ride-hailing app, responded by putting up $60m to fund a statewide ballot initiative to repeal the law.

Uber has also suggested that its drivers should not be classified as regular employees under AB5, because Uber “is serving as a technology platform for several different types of digital marketplaces”. Just as Google and Facebook insist they are platforms, not publishers, Uber claims, against the evidence of our own eyes, that it is not actually a transport company. As it diversifies, it may continue to escape regulators.

There are legitimate worries about the 45,000 Uber drivers who could lose their jobs in London. But drivers own their own cars and many already do some work for rivals. If Uber leaves, they will gravitate to competitors including India’s Ola, Singapore’s Grab and Estonia’s Bolt. The latter verifies driver identities through manual checks. When Lyft and Uber left Austin, Texas, in 2016, after refusing to comply with local laws there, new companies filled the gap. One was a non-profit that let drivers keep 100 per cent of their fares: perhaps it is a harbinger of the future.

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In the medium term, the greatest threat to drivers’ livelihoods is Uber’s goal of autonomous vehicles, in which it has invested heavily since its inception. Those who profess to care about drivers — many of whom are low-paid and struggling to gain a foothold in big cities — might think about that.

Uber is a classic disrupter, a brilliant innovator that has transformed transport in many cities. It has also exploited our naivety and our lust for convenience. I call that freeriding. And it’s time to call it out.

The writer is a former head of the Downing Street policy unit and a Harvard senior fellow