Uber & Regulatory Lurch

in innovation, regulation, disruption

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Today Transport for London (TfL), the body responsible for regulating transportation in London announced something surprising: they will not be renewing Uber’s licence to operate in London, and Uber will have to stop providing its service in the coming months. Of course, there was an understandable uproar from the 40,000 Uber drivers currently making a living from driving in the capital, as well as the millions of passengers that use the service every day. Uber will appeal the decision, but TfL may decide to uphold the ban.

The Regulatory Decision

The reasons TfL have given to suspend Uber centre upon one major judgement. In the report, TfL states that:

Uber's approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications

Read the full report

It is certainly true that Uber hasn’t been a perfect corporate citizen in recent years. Its corporate culture has been shown to be hideously sexist, it has bullied its staff and systematically underpaid its drivers. The judgement made by TfL doesn’t directly reference this behaviour, though, and despite Uber’s activity being undeniably abhorrent it doesn’t directly relate to the public safety and security implications raised by TfL.

Surely if public safety issues were brought to TfL’s attention - as they have been in the past - it would have been appropriate for them to revoke Uber’s licence before it came up for renewal after five years. When it comes to public safety, how is it possible that the issues TfL has cited have only become apparent at the exact moment that the licence needs to be reviewed? In this way the decision seems like a general moral judgement rather than one related specifically to safety.

Regulatory Lurch

The pace of change in today’s world has resulted in regulators being left behind. I’ve identified this in many areas - from crypto currencies to data and education. Sadly, the regulatory approach to technology is often doing nothing for many months or years, and then rather than engaging with the inevitable social and political issues that this technology raises, banning the technology completely.

On the same day that TfL made its regulatory ruling, Jamie Dimon the Chief Executive of JPMorgan made a comment about crypto currencies:

Right now these crypto things are kind of a novelty. People think they're kind of neat. But the bigger they get, the more governments are going to close them down
See full video

This is exactly the same approach that TfL has taken with Uber - permissive at the beginning so that the technology is able to proliferate, resulting in ambiguous employment relationships and unfair competition, and then - unable to control it - aggressively punitive at the end, shutting the entire service down.

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This regulatory lurch - moving from absolutely zero regulation to a ban - is hugely damaging to innovative efforts and acts to characterise entire technologies and activities as illegal without trying to identify the benefits and actively engaging in the debate. Simply banning Uber will not solve the issue of insecure employment for workers, or the fact that many people who are able to act as taxi drivers were prevented from doing so because of extensive regulation in the past. Firms like Deliveroo and Amazon operate with these principles too; will the government shut down these operations as well? Where is the line drawn?

Engagement is the answer

These decisions are damaging. Not just for Uber, but for the 40,000 who drive for the company and the 3.5 million people who use the service. By engaging early with disruptive technologies regulators can actually help to shape services, forcing them to be socially responsible as well as profitable. By ignoring the issues until the last moment no one wins: consumers get a worse service, drivers lose their jobs and the important social and political issues raised by peer to peer technology are - conveniently - swept under the rug.

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