Uber Technologies Inc. has had its fair share of woes since its initial public offering (IPO) some months ago in May as it has not been profitable ever since. Now, the ride-sharing company is about to fall deeper into its problems as it has lost the license to operate in London, after several issues.
Now Uber is a long way down from its $45 IPO price in May. At the moment, UBER is trading just under $30, representing a 33% loss in about six months. The level is the end result of a 6.3% loss in reaction to the news it would lose its license in London. The loss from that drop was estimated to remove almost $3 billion from its $50.4 billion market cap, before the news.
But how has it happened? According to Transport for London (TfL), Uber’s license will not be renewed because the company has an unignorable “pattern of failures”. This is the second time in under three years Uber has had license problems with the TfL with the recent extension given in September.
Reportedly, Uber changed specifics in its systems, which allowed many unauthorized drivers to upload photos and information onto other driver’s accounts, with some even being able to fake their identities. According to reports, there were 14,000 of these fraudulent trips perpetrated by 43 drivers, between the end of 2018 and early 2019, in London alone.
A TfL statement acknowledged that some of the issues raised over time have been addressed by Uber. Regardless, the company has not done enough, necessitating the decision to deny a license renewal. The statement reads:
“Despite addressing some of these issues, TfL does not have confidence that similar issues will not reoccur in the future, which has led it to conclude that the company is not fit and proper at this time.”
TfL’s Director of Licensing, Regulation and Charging Helen Chapman has also corroborated the above excerpt, admitting that Uber did make a few moves in the right direction. However, Chapman has said that “it is unacceptable that Uber has allowed passengers to get into minicabs with drivers who are potentially unlicensed and uninsured.” Many of the 43 drivers already had their licenses revoked, including one who had been noted for his involvement in the spread of indecent pictures of minors.
Even after the expiration, Uber can continue to operate as long as it appeals the decision, as the company has already said it would. As long as Uber officially begins an appeal process within 21 days of the expiration, it can continue operations while the appeal is ongoing.
The mayor of London Sadiq Khan has spoken in support of the TfL ban. The mayor expects that London residents will be displeased with the decision but stresses that authorities need to uphold standards. He said:
“I know this decision may be unpopular with Uber users, but their safety is the paramount concern. Regulations are there to keep Londoners safe, and fully complying with TfL’s strict standards is essential if private hire operators want a license to operate in London.”
If Uber loses its appeal, 45,000 licensed drivers will be affected.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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