Uber (NYSE: UBER) lost its license to operate in London due to numerous safety failures, according to the Transport for London (TfL). Authorities found that more than 14,000 trips were taken with drivers who used fake identities on the Uber app. TFL informed Uber that the company needs to address this issue with additional insurance and safety checks on drivers and have stated that "Despite addressing some of these issues, TfL does not have confidence that similar issues will not reoccur in the future, which has led it to conclude that the company is not fit and proper at this time."
Uber's system somehow allowed unauthorized drivers to upload their photos to other drivers' accounts resulting in more than 14,000 trips involving 43 unauthorized drivers. These incidents occurred primarily from late 2018 until early 2019. Uber first notified TfL about this in May 2019 and has fixed the issue on the app. The company also plans to introduce facial recognition technology to the app as well. Sadiq Khan, the mayor of London, supported TfL's decision to end Uber's license to operate in the city, stating that "I know this decision may be unpopular with Uber users, but their safety is the paramount concern. Regulations are there to keep Londoners safe, and fully complying with TfL's strict standards is essential if private hire operators want a license to operate in London." Uber previously lost its license in 2017 but was granted two more extensions which will expire this week.
This is a very big setback for Uber because London is its biggest European market. After TfL made the announcement, Uber's shares fell by almost 6%. Uber has responded stating that it will appeal the decision and Jamie Heywood, Uber's regional manager, commented that "on behalf of the 3.5 million riders and 45,000 licensed drivers who depend on Uber in London, we will continue to operate as normal and will do everything we can to work with TfL to resolve this situation.
Indian ride-sharing firm Ola is planning to fill the gap once Uber's operations seize. Ola was granted a license from TfL earlier this year and the company has stated that it has built a "robust mobility platform for London which is fully compliant with TfL's high standards". Ola is backed by Softbank (OTC: SFTBY) and operates in more than 250 cities across India, United Kingdom, Australia and New Zealand. The company was founded in 2011 and has 125 million customers in total. The company received a 15-month agreement this past July which allowed it to enter the London market.