Why Uber’s fate could herald backlash against ‘digital disruptors’

Giuliana Ingegneri is worried about her father, Adriano. Since December he has combined his job as an Uber driver with stints at the family business. But on Friday, Transport for London’s bombshell announcement that the technology giant’s licence will not be renewed in the capital sent shockwaves through the Ingegneris’ Tooting home.

“My dad helps out with the family carpet cleaning business so the flexible hours work well for him,” said Giuliana, 16. “He also has diabetes so it’s important he can work when he wants so he can attend his medical appointments. Sometimes he will work 20 hours a day and earn around £300 and on others he will only make £8 a day.”

Like many of the drivers’ families who now face financial hardship as a result of the decision, Giuliana worries about their future.

“We also rely on his Uber work to buy supplies to provide our carpet cleaning service so if that goes I don’t know what we’ll do. This will put a massive strain on the economy and Transport for London as well as families of Uber drivers. Now it’s a chasing game to find a job for the thousands of drivers who will be out of work.”

A backlash against the decision and the mayor of London, Sadiq Khan, who has endorsed it, is growing. Yesterday evening more than 500,000 people had signed a petition calling for it to be overturned.



Giuliana Ingegneri and her father Adriano who is an Uber driver relying on his wages to support the family’s carpet-cleaning business

“I’ve supported Sadiq Khan fully since the beginning but he has totally misjudged the mood, and needs, of Londoners on this one,” explained one Guardian website user, Rhianne from south-east London. “Combined with overpriced, unreliable, non air-conditioned, chronically overcrowded public transport and London fast becoming a gated community, this feels like another kick in the teeth for normal people. And I am sure it really does for 40,000 Uber drivers trying to make a decent living in one of the most expensive cities in the world.”

The trade minister, Greg Hands, and several rightwing thinktanks have come out fighting for the controversial company that is seen as the ultimate disrupter – the noun given to the new wave of technology firms that threaten to dismantle established industries.

In the mind of many Uber supporters, the Transport for London (TfL) decision – coming a few days before Khan’s appearance at the Labour party conference – revealed an organisation in thrall to established labour interests. Sources told the Observer that the decision was communicated to Uber only two minutes before it was announced and that there had been only one meeting in the last year between the company and the senior team at TfL who insisted that the licence renewal could not be discussed.

“TfL has once again caved into pressure from unions who never miss an opportunity to rip off passengers,” said Alex Wild, research director at the rightwing pressure group Taxpayers’ Alliance.

The pushback against the laissez-faire philosophy of the US west coast’s tech community is being waged on both sides of the Atlantic.

In the US, calls to regulate technology companies have made strange bedfellows of Democratic senator Elizabeth Warren and ex-White House aide and Breitbart chief Steve Bannon.

Last week the former chief strategist to Donald Trump reiterated his view that firms such as Facebook and Google should be regulated like “public utilities”. Meanwhile progressives such as Warren warn of the monopolistic behaviour of Google, Amazon, and Apple while pushing for a renewed debate over antitrust laws.

“Silicon Valley is going from being heroes to villains,” said Vivek Wadhwa, a distinguished fellow and adjunct professor at Carnegie Mellon University. “It’s been brewing for quite a while, but there’s a big shift happening.”

But, still, the speed of this shift has surprised many.

“In our wildest dreams we didn’t think TfL would refuse the licence,” said Maria Ludkin, legal director at the GMB union. “We thought they’d attach conditions to make sure Uber would improve passenger and driver safety.”

To its critics, Uber’s failure to address these issues is emblematic of a ruthless, unyielding corporate culture that flowed from the top and never seemed to learn from its mistakes.

In July, its chief executive, Travis Kalanick, resigned following a series of scandals and criticism of his management style. A month before, a number of staff were sacked after a company investigation into sexual harassment and bullying.

In the UK there were concerns that the company had failed to report assault allegations against its drivers to police.

In the year to February 2017, there were 48 sexual offences where Uber was referenced in a crime report for a taxi and private hire journey in London – a 50% rise on reports in the previous year.

But these figures tell only part of the story. Many customers say they choose Uber because they trust it with their personal safety.

“A lot of passengers praise Uber because they feel safe and you know the driver that is taking you,” said Abdul, a driver from Shepherd’s Bush who worries that he won’t be able to pay his student loan or his rent if TfL does not reverse its decision.



In July, Uber chief executive Travis Kalanick resigned following a series of scandals and criticism of his management style Photograph: Danish Siddiqui/Reuters

Ironically, while many drivers like Abdul have leapt to Uber’s defence, it was the company’s treatment of them that drew attention to the aggressive corporate culture which brought about its downfall in the capital.

Last October, following a case brought by the GMB that has wide-ranging implications for all companies in the gig economy, an employment tribunal ruled that Uber’s UK drivers should be classed as workers rather than as self-employed.

“We’d had an epidemic of companies saying their people are self-employed when in fact, when you examine their rights and responsibilities, the way they’re acting each day, it’s pretty clear they’re either fully employed or are workers entitled to sickness pay, etc,” Ludkin said. “We brought the Uber case because we had so many drivers coming to us. We looked at their contracts and thought it was a ludicrous idea that 30,000 of them were self-employed, which was Uber’s position.”

Uber responded with a ferocity that it is now likely to employ in the courts fighting TfL’s decision, bringing an appeal that will be heard this week.

During the tribunal, further examples of Uber’s aggressive corporate culture surfaced.

“The last thing they want is their drivers checking out and going home during rush hour,” Ludkin said. “So they introduced incentives to their apps – just as the drivers were logging off they’d be offered runs they knew those drivers really wanted, like airport runs. At the same time we were hearing rumblings from the Met police about a massive increase in accidents involving Uber drivers and lots of them had been driving excessive hours.”

Ludkin believes Uber’s intention was to swamp the market to put black cabs out of business, a claim rejected by Uber. “Uber is a genius company in terms of technology, there’s no question about that,” Ludkin said. “But when you step back and think about what’s the over-riding business model for Uber, it’s not a company that’s making any money. Rather, it’s a company that’s got a huge amount of money invested in it, like Amazon. For years Amazon didn’t make any money; what they did was eventually overwhelm the marketplace. They destroyed all competition and then made shedloads of money, exactly the tactics going on at Uber.”



Uber’s new chief executive, Dara Khosrowshahi, has called for a period of “self reflection” within the company. Photograph: Bloomberg via Getty Images

It was the Met’s concerns about Uber that are thought to have heavily influenced TfL’s decision. In citing the company’s failure to “demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications”, TfL also expressed reservations about the use of software called Greyball which it claimed was used to block regulators from gaining full access to the Uber app, something that prevented officials from adequately carrying out their law enforcement duties.

Uber’s belief that it could shrug off the threat from regulators was partly born out of a confidence in its formidable network of political contacts. The Daily Mail alleged that under David Cameron, Downing Street lobbied Boris Johnson, then London mayor, to protect the company from onerous regulation. Amid concerns about the relationship between Number 10 and Uber, Rachel Whetstone, the company’s head of policy and communications and a friend of Cameron, resigned.

Uber now has 19 days to appeal against TfL’s decision and history suggests that it will find a way back. The company ceased operations in Austin, Texas last year after losing a referendum requiring background checks on its drivers, only to return. Earlier this year, it was banned in Italy after a court upheld a complaint by taxi unions. That ban has since been annulled.

Transport sources claim TfL has been surprised by the extent of the backlash against its decision and is making conciliatory noises, suggesting a compromise will be found eventually.

Uber, meanwhile, is donning the hairshirt. In a global email to staff late on Friday night, Uber’s new chief executive, Dara Khosrowshahi, said “the truth is that there is a high cost to a bad reputation” and called for a period of “self reflection”.

Kalanick would never have been so penitent. Maybe Uber is growing up. Or maybe it’s had enough of disruption for a while.


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