What's going on?
London’s transport authority TfL halted Uber in its tracks on Monday by revoking its operating license – and the ride-hailing company’s investors slammed on the brakes, initially sending its shares down 6% (tweet this).
What does this mean?
Uber first hit London traffic in 2017, when TfL revoked its license. It’s since been granted two extensions, but TfL has now refused to renew that license again – alleging that the company uses unauthorized drivers at the expense of Londoners’ safety.
Uber’s shares initially dropped 6%, but investors relaxed a little once they’d read the small print: Uber’s still allowed to operate while it appeals TfL’s decision. Even so, there’s continued uncertainty surrounding Uber’s access to its biggest European market – and whether that’ll encourage overseas regulators to start investigating the company too.
Why should I care?
For markets: Storm in a teacup?
This license issue is yet another problem for a company many Londoners are already avoiding in favor of France’s Kapten and Estonia’s Bolt. More competition means lower prices, and that might be problematic for Uber, which needs to prove it can make a profit. The car-sharing company’s also in the middle of a legal battle with the UK courts, which want Uber’s drivers to have the same benefits as full-time employees. With such a bumpy road ahead, it’s maybe no surprise that shareholders – including its founder – are jumping ship: Uber’s stock has fallen 13% in the last month.
The bigger picture: Play by the rules.
Fellow “sharing economy” startup Airbnb is going through similar troubles. Governments in Paris, Barcelona, San Francisco, and New York City have all cracked down on the company, while the FBI is currently investigating its role in hosting scammers. And after a shooting at Halloween, Airbnb’s now announced a new verification scheme. It’s likely trying to get its house in order ahead of its planned initial public offering next year.