Uber - Beginning Of The End

Time was when driver and rider matching app Uber could do no wrong - that is, not in the eyes of its users, investors, and all too many in the media who failed to look before leaping to acclaim the new kid on the public transportation block. But now, after several cities have banned the app, drivers have begun to organise amid disquiet at unilaterally imposed rate cuts, and rider opposition to opportunist “surge pricing”, all is starting to change.

Questions are being asked as to how Uber can sustain the losses - which are running at over $1 billion a quarter - and continue to burn through cash. The thought has entered the minds of an increasing number of observers that, in order to make the business model sustainable, income must rise significantly. And with drivers screwed down on their cut, that means fares must increase. But with competition from established taxi and other private hire operators, that is not going to happen.

Worse, the reputation of Uber’s deeply unsavoury CEO Travis Kalanick - who called established taxi services “assholes” and makes no secret of his desire to wipe them out - has taken a knock after he was caught on camera treating one of his own drivers in a way that was described - probably with tongue in cheek - as “disrespectful”.

But all of that is mere background to the behaviour of Uber in London, where the right-leaning part of the punditocracy has spent the recent past fawning over Kalanick and his Wunderkind, only to see drivers of the capital’s black cabs push back with a vengeance and prevail upon Transport for London - which was little better than supine under the leadership of Alexander Boris de Pfeffel Johnson - to grow a pair on regulation.

Sadiq Khan - demanding higher standards

The moment of truth for Uber came today at the High Court: “The ride-hailing app firm Uber has lost a high court case in a ruling that means all minicab drivers in London will have to pass a written English test, including a short essay”. And what is Uber’s problem with demonstrating that their drivers have a decent command of English?

You’ll love this: “Tom de la Mare QC, who was representing Uber and the drivers - Hungarian national Sandor Balogh, Bulgarian Nikolay Dimitrov, and Imran Khan from Pakistan - had argued that the language requirement would result in 70,000 applicants failing to obtain a licence over the next three years”. Well, tough titty, say I. They should consider themselves fortunate that they don’t have to match the standards demanded of black cab drivers - who have to do The Knowledge.

London’s Mayor Sadiq Khan has, not surprisingly, welcomed the ruling, although Uber is seeking leave to appeal. And in an ominous development, business freesheet City AM, whose editor Christian May has in the past been a big Uber fan, has run the headline “Taxi for Uber: High Court rules in favour of TfL saying private hire drivers will have to pass a written English exam” [my emphasis].

Uber has lost in court. It may also be losing its fan base. How much longer will it be before cities realise they can get along without it? Because then, it will have lost the war.