WEBVTT - Uber Faces Potential London Ban (Audio)

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<v Speaker 1>On Friday, Transport for London, which oversees that city's transit system,

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<v Speaker 1>announced that Uber was not quote fit and proper to

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<v Speaker 1>hold a private hire license, and the agency announced that

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<v Speaker 1>Uber's license to operate in London will be revoked on September.

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<v Speaker 1>London is one of Uber's largest and most lucrative markets,

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<v Speaker 1>with about forty tho drivers and three and a half

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<v Speaker 1>million regular users, according to the company, and Uber has

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<v Speaker 1>said it will challenge the revocation in court. It's also said, though,

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<v Speaker 1>that it is willing to make concessions to get its

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<v Speaker 1>license renewed. Here to talk with us about London's action

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<v Speaker 1>against Uber is Benjamin Edelman, a professor at Harvard Business School. UH. Benjamin,

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<v Speaker 1>Uber's had a lot of battles with regulators around the

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<v Speaker 1>world on various things. They've had all sorts of problems.

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<v Speaker 1>Their CEO as host did this year. UM, why did

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<v Speaker 1>London now conclude that this is a UH that they

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<v Speaker 1>shouldn't have a four higher taxi license. Well, it's a

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<v Speaker 1>combination of concerns, the very scandals that you reference. UH.

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<v Speaker 1>Certainly London was concerned about gray Ball, the Uber function

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<v Speaker 1>that was designed to and did block regulators from seeing

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<v Speaker 1>what Uber was up to. Can't really have a second

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<v Speaker 1>set of books to show the regulators versus what the

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<v Speaker 1>real drivers see that didn't reflect well on them. There

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<v Speaker 1>are concerns about safety, about reporting to the police. The

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<v Speaker 1>overall concern is that Uber doesn't play by the rules

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<v Speaker 1>and that maybe doesn't work so well in London. You

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<v Speaker 1>can just barely get away with it in most U.

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<v Speaker 1>S cities, but outside the United States sometimes the rules

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<v Speaker 1>are taken a little more seriously. So Benjamin Uber has

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<v Speaker 1>fought these battles not only in the United States but

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<v Speaker 1>outside the United States. And it says it's going to

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<v Speaker 1>appeal the regulator decision. It threatened to take the city

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<v Speaker 1>to court, and it started a Twitter campaign and an

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<v Speaker 1>online petition that already has more than seven fifty thousand signatures.

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<v Speaker 1>What is the judicial process that it will have to

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<v Speaker 1>go through? Well, formal judicial process looks a lot like

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<v Speaker 1>what you'd expectet will be uh formally argued in court

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<v Speaker 1>with lawyers for both sides. But at the same time,

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<v Speaker 1>Uber follows its standard playbook and trying to turn this

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<v Speaker 1>into a political contest all but a popularity campaign. Can

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<v Speaker 1>we get more Twitter fans than you and if that's

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<v Speaker 1>the test, if that actually made the difference, Uber surly

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<v Speaker 1>would win. The amazing thing is that, of course the

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<v Speaker 1>regulators feel that pressure. Mayor of London is going to

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<v Speaker 1>feel pressure from his constituents and ultimately it's hard for

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<v Speaker 1>him to do the opposite of what the voters want.

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<v Speaker 1>So are there things Uber might be able to do

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<v Speaker 1>besides pressuring the regulators to get them to change their

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<v Speaker 1>minds here absent going to court. Certainly Uber has made

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<v Speaker 1>changes in specific jurisdictions where so required by capable regulators.

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<v Speaker 1>You look at what Uber had to do in Singapore.

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<v Speaker 1>In Singapore, the government insisted from the outset that every

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<v Speaker 1>vehicle used to provide commercial service needed to have commercial registration.

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<v Speaker 1>The driver needed to have commercial driver's license, and so

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<v Speaker 1>Uber did it the opposite of what they did in

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<v Speaker 1>the United States, of course, where the drivers are all

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<v Speaker 1>using regular driver's licenses in regular non commercial cars. In Singapore,

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<v Speaker 1>they had to do what the government wanted, and they

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<v Speaker 1>did so. Benjamin, what would be the biggest issue as

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<v Speaker 1>this is appealed? Would there be one that stands out?

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<v Speaker 1>If I were Uber, I'd probably be challenging the order

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<v Speaker 1>as arbitrary as insufficiently linked to specific problems. I'd say

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<v Speaker 1>that gray ball was a technique used in other jurisdictions

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<v Speaker 1>but never used in London. So what's the big deal.

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<v Speaker 1>On the flip side, London will say, look, we're assessing

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<v Speaker 1>your character as a company. You're a company with unfit character.

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<v Speaker 1>This series of scandals reveals something about your corporate personality

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<v Speaker 1>and that's not the kind of company we want operating

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<v Speaker 1>on our streets. Taxpayers pay for the streets, and taxpayers

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<v Speaker 1>don't want you. They're actually both pretty good arguments, and

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<v Speaker 1>it's almost like two ships crossing in the night. Well, Benjamin,

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<v Speaker 1>you know London is a pretty big market, but Uber

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<v Speaker 1>is a very big company around the world. How big

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<v Speaker 1>a hit is this to Uber not to be able

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<v Speaker 1>to operate in London assuming this gets upheld right, Well,

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<v Speaker 1>London is one thing, but you've got to think about

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<v Speaker 1>the other countries that might look to London's example. They

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<v Speaker 1>see Uber all but banned from so many places in Germany,

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<v Speaker 1>and how about London, And you think about the situation

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<v Speaker 1>in Tokyo, which has been an awfully tough market for Uber,

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<v Speaker 1>and China of course off the table after the company

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<v Speaker 1>all but gave up there. Well, it's a series of

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<v Speaker 1>disappointments and defeats for Uber that ultimately add up to

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<v Speaker 1>something more than some of the parts. And Bannon just

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<v Speaker 1>about thirty seconds. Does it seem to you as if

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<v Speaker 1>Uber is handling this a little bit differently from other

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<v Speaker 1>confrontations and cities where you have that open letter saying

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<v Speaker 1>you have my commitment that will work with London to

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<v Speaker 1>make things right, to keep the city safe. Right, the

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<v Speaker 1>Uber of a year ago wouldn't say on the first

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<v Speaker 1>day that they're prepared to come impromise. The Uber of

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<v Speaker 1>a year ago would fight, fight, fight to the death.

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<v Speaker 1>And that's not the strategy they're taking now. Well, so

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<v Speaker 1>they have I mean they have one. In other places

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<v Speaker 1>they seemed to indicate they were going to go to

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<v Speaker 1>court right away. Do you think it's going to end

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<v Speaker 1>up being more of a negotiation that gets them back

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<v Speaker 1>in here or are they really going to have to

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<v Speaker 1>fight in court? We've got about thirty seconds right. The

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<v Speaker 1>ultimate question is whether the regulators, who hold all the

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<v Speaker 1>all the power here, whether they'll accept what Uber comes

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<v Speaker 1>to offer. Will the regulators feel compelled when when voters

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<v Speaker 1>citizens signed petitions, doesn't matter Can you petition your way

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<v Speaker 1>out of a parking ticket? If I parked in front

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<v Speaker 1>of a fire hydrant? Can I get all my friends

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<v Speaker 1>to sign up and say I shouldn't have to pay?

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<v Speaker 1>I don't think that would work very well for me,

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<v Speaker 1>and the fire hydrant can uber somehow by having more

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<v Speaker 1>friends get itself out of the kind of trouble that

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<v Speaker 1>they're in. Maybe it's worked in other places that worked

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<v Speaker 1>right here in Boston, so maybe it'll work in London.

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<v Speaker 1>To our thanks to Benjamin Element of Harvard Business School,