Throughout recent history, there have been many stories of new industries that have disrupted the old way of life. In the 1800s, the railroad barons revolutionized transportation. In the 1900s, personal automobiles and jet airlines did the job. In the 2000s, it was computers and the internet that changed the world. In several instances, the new industries became so powerful that their decision-makers felt they could get away with pushing the boundaries against regulators and government officials. History has shown that private industries overplay their hands, and the government’s response can be devastating. This was the case when the federal government stepped in and tightly regulated the railroad industry through the Staggers Act.
Transport for London
In London, the capital city of the United Kingdom, Transport for London (TFL) is the agency responsible for governing the transportation network in the metro area. TFL handles rules, licensing and labor issues (to name a few) for taxicabs and other private transportation providers. Beginning in 2012, over the strenuous objections of the traditional (and famous) black cab drivers in London, TFL authorized the ridesharing company, Uber to operate in the city. Five years later, TFL stripped Uber of its license, potentially putting 40,000 Uber drivers out of work.
So how did Uber experience such a catastrophic fall from grace? The short answer of course is that Uber’s sordid history of bad behavior did the company in. Silicon Valley has a reputation of pushing the envelope, just like the railroad barons in the 1800s. One of the most notorious offenders was Uber.
Uber knew that it was going up against longtime, entrenched interests in the taxicab industry and in city governments. So Uber decided that if it asked nicely to be invited to the taxicab party, the company would get nowhere. Instead, Uber elbowed its way into many cities, often through intense lobbying to get the rules changed. Like many Silicon Valley companies, Uber figured that if it got so popular in a particular city, the regulators would have no choice but to bend to Uber’s will. Even if Uber played fast and loose with the rules before, once it got to a massive size such as the 40,000 drivers in London, there would be no way that regulators would challenge the company.
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For the most part, this strategy worked. City after city around the world that once had taxicab monopolies, acquiesced to Uber’s presence (albeit reluctantly in many cases). However, Uber gambled incorrectly with London, one of the most important cities in the world.
Transport for London cited numerous issues as the justification for pulling Uber’s license. The company had its fair share of issues performing background checks on its drivers. Uber had problems obtaining the appropriate medical clearances for all drivers (that ensure passenger safety). TFL felt that Uber did not properly address labor issues, including failing to guarantee basic employment rights for its driver-employees.
Most disturbing was Uber’s use of a software tool named Greyball (the company developed the program internally). Greyball allowed Uber to “fence off” certain individuals from accessing any ridesharing services. Uber is accused of using Greyball to prevent government regulators from knowing that Uber operated in certain locations illegally. Greyball was likely the straw that broke the camel’s back when it came time for TFL to suspend Uber in London.
Historically bad press, including allegations of harassment by several employees, eventually culminated in the resignation of Uber’s CEO (and founder) in June 2017. Uber eventually hired Dara Khosrowshahi as its new CEO. Dara was previously the successful CEO of Expedia. When Transport for London decided to not renew Uber’s license, Dara acknowledged that Uber’s previous track record played a crucial role in that decision. Dara is actively trying to change the culture at Uber. His success could eventually hinge on his ability to convince reluctant municipalities, such as London, that Uber has permanently changed its troublesome behavior.