Uber’s London roadblock will be good for the competition

Ride-hailing app Uber has been denied a new licence to operate in London. This is excellent news for rivals. Matthew Partridge reports

Uber cars © Uber

The ban has hit Uber's share price
(Image credit: Uber cars © Uber)

Transport for London (TfL), which regulates traffic in the capital, has put a "roadblock" in front of Uber, says Bloomberg's Nate Lanxon.It has denied the ride-hailing service a new licence to operate in the city, "citing concerns over rider safety and the security of the app".It is especially concerned about a "vulnerability" that lets unauthorised users pick up passengers "under the guise of being a licensed driver". While Uber will be allowed to keep operating while it appeals the verdict (a process "that could take years"), this is a setback in one of the company's biggest markets outside the US.

It's true that Uber "only has itself to blame" for its failings, says Ben Marlow in The Daily Telegraph. Still, TfL could have found a way to police Uber adequately "without penalising millions of consumers". The fact that it hasn't and has insisted on a complete ban suggests that this is more about "protecting the interests of more than 21,000 black cab drivers" than safety. These cab drivers frequently charge "more than a budget flight to Europe" to transport people across London and are technologically "outdated", with many even refusing to take card payments. By contrast, Uber is not only "convenient", but also "affordable".

Competition is mounting

Talk about TfL being part of a "protectionist plot" to protect black cabs is nonsense, says Nils Pratley in The Guardian. After all, "other ride-hailing services" are now available, so if newer rivals can navigate TfL's standards for authorising drivers, "why should they be undercut by a company that is judged to be unfit?". With drivers already learning to use multiple apps, any dislocation from a ban would only be "temporary" and competition "should still emerge". Overall, Uber needs to "do better" if it is to regain the public's trust. While the ban has "dinged" Uber's share price, the rise of the competition is a much bigger threat to its future, say Richard Beales and Liam Proud on Breakingviews. This is because, while Uber "has the resources to fix the problems and prove it is fit and proper' to run a car service", the latest dispute underlines that it is no longer the "only game in town" other than "expensive" black cabs and "unreliable" minicabs. Major competitors include "Bolt backed by Daimler and Chinese ride-hailing giant Didi Chuxing and India's Ola, which is expected to launch shortly". As a result, "it has less leverage to fend off regulators than it used to".

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The decision also raises concerns about Uber's transparency, says the Financial Times. While CEO Dara Khosrowshahi has "tried hard" to change the company's "rule-resistant culture", there is clearly still work to do. This would be a good time for the company to show that it "is willing to listen to local problems" by using its "undoubted technological prowess" to fix the flaws that TfL has found.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri