Could it be over for Uber?

It’s the taxi-hailing app that was created a mere 6 years ago, and that’s now worth over £43 billion. Love it or hate it, there’s no denying its success. And it’s perhaps because of that phenomenal success that it’s been in the news quite a bit lately.

Remember the palaver (yes, palaver) about whether Uber was providing a service based on the illegal use of taximeters?  And how the High Court ruled that it wasn’t illegal? If you do, you might also remember us mentioning that Transport for London (TfL) had launched a public consultation on the regulations governing the private hire sector in London…

The consultation

The proposals put forward by TfL, which include banning operators from using apps to show cars for hire and restricting ride-sharing, were partly the result of a more wide-ranging consultation on private hire regulations carried out during the summer of 2015.

TfL invited the public to comment on its proposals in a second consultation, which has now closed. And the reaction has been… mixed, to say the least.

Notably, the CMA (the Competition and Markets Authority – the UK’s competition watchdog) raised concerns over 9 of the 25 proposals put forward by TfL, claiming that they would ‘harm competition and, by extension, consumers’. The CMA argued that TfL’s plan would result in regulation that would either be disproportionate and/or reduce incentives for entry  and expansion in the market, and block innovation.

How harmful are these proposals?

According to the CMA, quite a bit, really. Of the 9 proposals they identified as being harmful to competition, they highlighted 5 in particular as being especially harmful:

  • Operators having to provide booking confirmation at least 5 minutes before a journey begins – though the CMA concedes that this would level out the playing field between private hire vehicles (PHVs), it believes that it achieves this by preventing other drivers from taking advantage of technology that would allow them to ‘fulfil a booking more quickly’;
  • Requiring operators to seek approval from TfL before changing their operating model – the concern here is that incentives for innovation would be reduced, thereby hampering competition;
  • A prohibition on displaying cars for hire within apps – the CMA believes this would restrict competition between PHVs and black cabs, and that it could result in PHV customers receiving a lower quality of service;
  • Requiring operators to specify the fare for a journey in advance – the aim here is to prevent overcharging, but the CMA believes this could prevent more ‘innovative pricing models’ from being developed. In addition, it points out the lack of evidence showing that customers regard overcharging amongst PHVs to be a considerable problem; and
  • That drivers can only work for one operator at a time, so as to prevent them from working excessive hours – the concern raised here is that this doesn’t address the issue for drivers working for a single operator, or for black cab drivers. According to the CMA, this proposal could lead to fewer PHV operators existing. This would increase the chances of the PHV platform in London being dominated by a small number of operators, thereby harming competition.

And as if that isn’t enough, the CMA’s chief executive – Alex Chisholm – has spoken out, saying that he’s worried the proposals would ‘artificially restrict competition’ and deter innovation beneficial to customers.

Quite a strong response from the CMA, don’t you think?

What does Uber have to say?

Uber, unsurprisingly, isn’t too pleased with TfL’s proposals. In fact, it’s set up a petition calling on TfL to drop their proposals. And it’s managed to get quite a few signatures – over 200,000 to be more precise. The proposals it seems to be particularly worried about are the 5-minute wait before starting a journey, the prohibition on displaying cars for hire within apps and requiring drivers to work with only one operator.

Now what?

Despite all this, Uber seems to be on the up; it recently launched UberPool, a car-sharing service, in London.

What’s more, Facebook has agreed with Uber to allow users in certain parts of the US to hail an Uber cab from its Messenger app. This is the first time Facebook has done anything like this, and that it chose to do so with Uber is rather telling. If this becomes available to users elsewhere, Uber will only get bigger and bigger – Facebook’s Messenger app has around 700 million users around the world.

But for now, it’s a case of waiting to see how TfL reacts to the responses its proposals receive – especially the CMA’s.

As you know, here at Simplify the Law we never take sides. But doesn’t it seem a bit counter-intuitive that, in an age when you can get apps for doing the most surprising and arguably pointless things, a public authority is taking steps to curtail one which is, well, useful?

Simplify the Law

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