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The Rise of Uber Dealt a Current Blow in London

FindLaw columnist Eric Sinrod writes regularly in this section on legal developments surrounding technology and the internet.

Once upon a time not that long ago, we generally took taxis for ground transport from one specific location to another within and around cities. At times, it was difficult to obtain a taxi when desired, or to avoid a wait, a taxi would need to be reserved quite a while in advance. But, then along came Uber as a ride-sharing game-changer with many positive advantages. However, Uber also has taken some recent hits, including losing its license to operate in London.

Uber is fantastic in many respects. By using an app on a smartphone, we can track the closest Uber driver, and in many urban areas an Uber car will come to us within just a couple minutes. No longer are we tied to taxis, or even the need to rent or own cars in Uber-friendly cities.

In addition, Uber has provided employment opportunities for thousands of people who want to provide rides on the side of their primary jobs, or for people who desire to drive for Uber on a more full-time basis. Uber's worth has been estimated to be as high as $70 billion.

Of course, the taxi industry has not been happy with Uber, as Uber has made major inroads into what was the taxi market. And Lyft has joined Uber as part of the new ride-sharing model.

While Uber's rise has been relatively meteoric, it has been facing a variety of current problems. For example, while there have been many hundreds of thousands of rides without any incidents, there have been some reports of sexual assaults on passengers, including assaults allegedly perpetrated by drivers. To be clear, this has been the very rare exception.

Moreover, different criticisms from diverse voices such as some regulators, customers, unions and investors led to the removal of Uber's founder and CEO, Travis Kalanick. He was just replaced by Dara Khosrowshahi, previously of Expedia.

These problems have been significant, and they were just compounded by London's transportation agency's decision late last week to decline to renew Uber's license to operate in London -- Uber's largest European market, according to a recent New York Times article.

In making this decision, the agency said 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." Among issues troubling the agency are how Uber conducts background checks on its drivers, and how Uber has dealt with criminal offenses. Uber asserts that its methods are the same as those of black-cab drivers.

This decision by the agency occurs within a year of a British tribunal ruling that Uber could not characterize its drivers as self-employed contractors; meaning that Uber would have to comply with labor standards requiring pensions and holiday pay.

According to the New York Times article, Uber's London license will expire on September 30, but Uber has been afforded 21 days to appeal. Uber has declared that it indeed will appeal, and it is permitted to continue to operate in London during the appellate proceeding.

If Uber is stopped in its London tracks, there will be a huge impact, as there are 40,000 drivers, and 3.5 million customers who use its app at least once every three months, as reported in the article. Also, some have suggested ethnic and class issues, as the majority of black-cab drivers are white native-born Britons, whereas many London Uber drivers are immigrants, as reported by the New York Times.

Stay tuned to see whether the decision by the London transportation agency will stick, or whether it will be overturned on appeal and Uber will be allowed to continue to operate in London. Perhaps if Uber can show that its methods truly are not different than those of black-cabs, or even that it can measure up to those methods very soon, it could continue to live on in London.

Eric Sinrod (@EricSinrod on Twitter) is a partner in the San Francisco office of Duane Morris LLP, where he focuses on litigation matters of various types, including information technology and intellectual property disputes. You can read his professional biography here. To receive a weekly email link to Mr. Sinrod's columns, please email him at ejsinrod@duanemorris.com with Subscribe in the Subject line. This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.

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