Uber’s London roadblock will be good for the competition

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frequently charge "more than a budget flight to Europe" to transport people across London and are technologically "outdated", with many even refusing to take card payments.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".

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

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.