Being pro-innovation should not allow us to be indifferent to corporate excess, says Wes Streeting
‘Defend the livelihoods of 40,000 drivers’. ‘Protect consumer choice for 3.5 million Londoners’. ‘800,000 people have supported our petition’. Uber can be criticised for many failings, but its public relations machine is not one of them. In the furore that followed Transport for London’s decision not to reissue the multinational minicab firm with a new licence, the fact that the licence was withheld on safety grounds was almost lost. Instead, the row has been painted as a battle between those who believe in competition and innovation and modern-day Luddites advocating protectionism. This does a real disservice to an important debate about the future of our economy and whether companies like Uber are too big to challenge.
TfL’s case against Uber is difficult to argue against. In its statement announcing the decision not to reissue Uber with a licence to operate, TfL set out a range of areas where Uber had failed to comply with regulations designed to keep passengers safe. The decision followed damning criticism from the Metropolitan police that Uber had failed to properly report allegations of rape and sexual assault, suggesting that the company was putting its corporate reputation above passenger safety, including one case where one man accused of sexual assault was allowed to remain on Uber’s books only to go on to commit another ‘more serious’ attack on a woman in his car. In a strongly worded letter to TfL, inspector Neil Billany of New Scotland Yard’s taxi and private hire unit wrote: ‘Had Uber notified the police after the first offence, it would be right to assume that the second offence would have been prevented’.
The disappointment of Uber customers and concern for livelihoods of Uber drivers is understandable. But the 800,000 people who have signed Uber’s petition should petition Uber to comply with the same rules as everyone else – not the regulator for enforcing them.
Such tactics are not new. If the dispute between TFL and Uber is a battle between David and Goliath, London’s transport regulator is certainly David to the multinational might of the Uber Goliath. When New York City tried to cap the number of Uber drivers on the streets of the ‘big apple’, Uber threw millions of dollars at a political campaign led by the man who helped Mike Bloomberg to a third term as the city’s mayor: Mike Travis. After employing five different lobbying firms, mobilising their customer base and spending $4m in television commercials, as well as radio adverts, digital adverts and extensive lobbying of politicians and the media, the city backed down and Travis emerged victorious.
This is Uber’s model: arrive in a city as a plucky start-up and scale up so quickly that before regulators know what has hit them they already have a loyal fan base hooked on a diet of cheap fares made possible through a combination of venture capital, aggressive tax avoidance and poor wages, terms and conditions for Uber drivers. It is a thoroughly anti-competitive model designed to force the competition off the road – Uber posted losses of $645m in the second quarter of this year. This is one of the reasons why the Competition and Markets Authority should launch an investigation into Uber’s predatory pricing model.
The new chief executive of Uber, Dara Khosrowshahi, has struck a more emollient tone than his predecessor and signalled a willingness to change. He could start by bringing Uber into compliance with TFL regulations, making sure his company pays its fair share of taxes in the United Kingdom, rather than the Netherlands, and offering Uber drivers fairer pay, terms and conditions, rather than fighting them in the courts. Without meaningful change, his statements will amount to little more than yet another well-executed public relations initiative.
We are still at the beginning of an industrial revolution that is sweeping the world at an unprecedented scale and pace. New technology confronts us with age-old challenges about how we protect the interests of labour versus capital and how we make sure that the benefits are enjoyed by everyone. We should be champions of new technology, encourage innovation and promote competition in the interests of consumers. But we should not be indifferent to corporate excess – whether through tax avoidance, poor staff terms and conditions or driving competition off the road.
Cities around the world are looking to London to see if we are serious about holding Uber to the same rules as everyone else. If we succeed, it would send a powerful message that no company is too big to challenge or too big to fail.
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Wes Streeting is member of parliament for Ilford North