London’s 45,000 Uber drivers can breathe a sigh of relief after a judge in London granted the ride-hailing company a 15-month probationary license to keep operating in the city. Dara Khosrowshahi, the company’s chief executive officer, might also have cause to celebrate.
The Tuesday ruling was a legal and public-relations victory for the newish CEO who took charge of the company last year as it was already reeling from multiple scandals and headlines of the unflattering kind. Within weeks, he was confronted with yet more bad news when London’s transit regulator said it wouldn’t renew the startup’s operating license in the city. His flight to London soon after was both a diplomatic mission and the beginning of a test to prove he was the right person to salvage the scandal-drenched business.
“Such a young business has suffered a number of growing pains which have not been helped by what seemed to be a rather gung-ho attitude of those running the business in the very recent past,” Judge Emma Arbuthnot said in her ruling Tuesday.
It was a nod toward the strides Khosrowshahi has made, in less than a year on the job, to turn things around. Previously the CEO of Expedia Group Inc., the 49-year-old executive was appointed as Uber’s new boss in August, two months after his predecessor Travis Kalanick resigned. At the time, the ride-hailing company was dogged by scandals related to its male-dominated culture, the use of controversial software to bypass regulators, the concealment of an enormous data breach, and the mishandling of a 2014 Indian rape case.
In September, Transport for London — the city’s transit authority — concluded San Francisco-based Uber wasn’t “fit and proper” to hold a license, and said the company failed to do proper background checks on drivers, or report “serious criminal offenses.” It also took issue with software called “Greyball” that was used to thwart government sting operations to apprehend potentially lawbreaking drivers. Uber’s “approach and conduct demonstrate a lack of corporate responsibility,” the regulator said in a statement at the time.
The company was given 21 days to appeal, which it did, and was able to continue to operate while that process played out. But the legal fight was only half the battle: Uber was facing growing public unease due to the frequency of scandals the business was embroiled in, protests from labor unions and the city’s traditional black cab industry, and political headwinds. London Mayor Sadiq Khan defended TfL’s decision, saying that “providing an innovative service must not be at the expense of customer safety and security.”
What followed was Khosrowshahi’s meticulous strategy, involving public mea culpae, governance changes, software overhauls, reworked safety and crime protocols, and political diplomacy.
In January, Uber announced its drivers would have to take uninterrupted breaks after completing 10 hours of work, to fend off accusations that its workers would stay behind the wheel for excessive periods of time at the potential expense of rider safety. In February, the company said it was forming “driver advisory groups,” which would see small teams of its workers meet weekly to discuss issues they were facing in order to report those concerns to senior Uber staff.
More significant changes soon followed. The company said it would open 24-hour telephone support lines for all drivers and riders, promised better contact with police, and pledged to directly report any “serious incidents” that occur during a passenger’s journey. Uber said it would also share drivers’ license details with riders.
More recently, Uber announced a set of financial insurance packages would be made available to drivers in the U.K. and elsewhere in Europe, covering them for lost earnings due to sickness, injury or other reasons, as long as they had completed 150 trips over the eight weeks prior to a claim.
Still, for London’s tens of thousands of Uber drivers, such improvements would be moot if their place within the so-called “gig economy” was disrupted by one of the world’s most valuable startups being forced out of town. “It would be devastating,” one Uber driver told Bloomberg.
But by the spring there were signs that Uber’s strategy was working: Following an April court hearing in London, a lawyer for the company said TfL’s list of concerns had more than halved since its September decision.
On May 24, in a final blowout of PR scene-setting ahead of the June appeal hearing, Uber’s U.K. general manager, Tom Elvidge, wrote in London’s Evening Standard newspaper that “we had to look to ourselves rather than blame others.” He said TfL’s initial ban had become “the latest wake-up call for a company that had grown incredibly quickly but still needed to grow up.”
It was a carefully crafted piece of marketing, but it underscored Khosrowshahi’s successful strategy to steer Uber away from scandals that erupted under his predecessor’s charge.
It won’t do much to appease London’s black-cab drivers. In a statement on the day of the regulator’s September decision, the union Unite predicted that “Uber will no doubt throw all its legal and corporate lobbying might to overturn this decision.”
Vocal opponents of the company also continue to fill up Twitter with fierce rhetoric using #WhereToBritain — a hashtag originally used by Uber to promote its British television series that followed the lives of drivers in various cities and featured Manchester United soccer stars and burlesque dancers as passengers.
While Tuesday’s decision will let the ride-hailing company maintain its foothold in its biggest European market, it’s just the first of two major court battles the company faces in London this year. Uber’s appeal of a decision granting its drivers benefits including overtime and paid vacation is scheduled to be heard by another court on Oct. 30.
–With assistance from Jonathan Browning and Jeremy Hodges.
©2018 Bloomberg L.P.