Uber’s lawyers must be making a fortune. They are les enfants terribles of the FTSE100, never far from controversy, always rubbing someone or another up the wrong way.
The novelty of Uber’s business structure landed them in the Employment Tribunal last year over the status of their drivers; a case they lost about as convincingly as it is possible to lose an Employment Tribunal but one they are currently in the process of appealing to the Employment Appeal Tribunal. Win, lose or draw, it is a case neither side is prepared to back down on, and it is one that is overwhelmingly likely to make it to the Supreme Court.
The latest controversy is the decision by Transport for London (infuriatingly styled “TfL”) to revoke Uber’s taxi licence on account of a lack of corporate responsibility. Uber’s immediate response was to all but confirm that the decision to revoke the licence was fair enough: Uber UK’s boss, Fred Jones, apologised, conceded the company had gotten things wrong and vowed to put things right in order to win back their licence.
So common sense reigned? Not quite. The move by TfL naturally angered fans of cheap lifts, unreported sexual assaults and poverty wages. The right wing press have similarly cranked the histrionics all the way up to 11: the decision had shown London was “shut to business”, wept the Telegraph; “closed to innovation”, sobbed the Express; the Daily Mail, writing from the safety of a fall-out shelter freshly stocked with tinned food and loo roll, solemnly cautioned that the move would undoubtedly “spark fears in cities across the country”. Only God, or perhaps Boris Johnson, could save London from the terrible tragedies that were about to befall it…
We are one week hence, however, and most of the capital looks to be still standing. Uber have not only appealed the decision but are also (allegedly) in the process of addressing the offending issues identified by TfL. Sunny uplands await. But, the question remains, if TfL have stripped Uber of their licence, why is the company permitted to operate in Scotland? TfL’s decision was also far from arbitrary: it was based on the fairly straightforward application of some very clearly defined rules. Questions must be asked about why the company has retained a licence in Glasgow and Edinburgh, particularly in light of Mr Jones’ immediate concession. Indeed, last week, the company announced its intention to expand into Aberdeen.
Uber are held up as a paragon of the tech start-up; the darlings of the app-economy; but are we right to have reservations? I will offer you full disclosure before I answer this: I’m old. And I’m bitter. And I don’t like new things, and computers scare me. And their lawyers work in trendy boutique law firms and are too trendy to wear ties to work and use phrases like “drill down”. But beyond my own prejudices and irritations, there is a genuine concern with these tech start-ups.
App companies are parasitic: Uber add nothing to the production chain; their sole means of making money is not through providing a service or through “innovation”, but through finding a cheaper way to obtain a pre-existing service. Traditional companies operate by hiring employees and purchasing capital, in the estimation that the interaction of their employees with their capital will leave them with sufficient goods or services to sell in order to make a profit. Uber strips out that risk by making the employees purchase their own capital (their cars) and by refusing to acknowledge that their employees are employees. This business model allows Uber to make money by taxing the transactional interface between the customer and the employee. In consequence, all the risk involved in running a business has been transferred onto the employee, but with all the benefits (the profit) being retained by the company. Indeed, all the benefits of running a company in the very business-friendly UK are afforded to Uber (our highly educated workforce, our publicly funded roads, our mobile internet infrastructure, our wealthy consumer base), it is only fair that they should play by the same rules as everyone else.
The hope is that the decision by TfL will act as a catalyst for the Scottish local authorities to get tougher on Uber.
