Uber’s London rivals circle as the company faces its judgement day

The coronavirus pandemic has been brutal for ride-hailing companies. At the height of the crisis, demand for rides on Uber dropped by 80 per cent and revenue fell by 29 per cent year-on-year to $2.2bn. The company cut 3,700 staff during the pandemic.
Last week Uber chief executive Dara Khosrowshahi said the food delivery side of the business, which brought in more revenue than rides during the coronavirus crisis as the bottom dropped out of that market, will help the company to navigate the challenges ahead.

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“While we would have all hoped that by now we would have a clear line of sight to the end of the pandemic, hope is not a strategy,” he said. “The bottom line is we have taken swift action on everything that’s within our control.”
As Uber battles to stem losses, its future in the UK has never been more out of its control. On September 14 it will finally face Transport for London in court to fight the revocation of its London licence over passenger safety concerns, after a July court date was delayed due to coronavirus. That same month, it will likely receive a Supreme Court judgment that will determine whether its drivers can continue to be classed as contractors or whether they are workers, entitled to basic benefits such as holiday pay, minimum wage and sick leave. These are costs that Uber can ill afford – even before the coronavirus crisis.
The Supreme Court case is an assessment of how Uber operated in 2016, and it has since made “fundamental changes” to give more flexibility to drivers, a spokesperson for the business says. The company also points to facial recognition software and account sharing detection as means to appease TfL’s licencing demands. (Both measures were rejected in last-minute negotiations with TfL last year).
If it wins both legal battles, it could yet end speculation about its future in London and avoid prolonged court battles against a major transport regulator. If the Supreme Court case is dismissed, it could also stop drivers bringing future claims against the company. The future of the union that represents them, the App Drivers and Couriers Union, is conditioned on the majority of its members being classed as “workers”. If Uber wins, the union has been warned that its status might be revoked.

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But if Uber loses either case in court it could be a disaster for its operations as it attempts to recover from the crisis. If it loses both, it could be the beginning of the end of Uber in the UK. “That would mess up [Uber’s] business completely,” says Christian Wolmar, a transport commentator. “I would have thought that would completely wreck them.” He argues that the company’s side investment in driverless vehicles is unlikely to pan out, and that its food delivery business has too much competition in the UK to make up for losses in private hire fares.
Uber’s new plan to take over tech company Autocab, which connects people to taxis in areas where Uber doesn’t currently operate, could let it reach thousands in places like Oxford, Tunbridge Wells, Canterbury or Northampton for the first time — but would hardly make up for the revenue loss of London.
For a long time, major rivals have dreamed of knocking Uber off the top spot in the UK’s capital city. That moment may have finally arrived. And as Uber’s legal dates loom and post-lockdown rides ramp up again, major rivals have been forging partnerships and finalising mergers to jostle for a chance to take over.
Private hire app Free Now completed its merger with Kapten last week, a move that it says makes it the second largest operator in London. “If they [Uber] lose the licence, we are ready to be number one,” says Mariusz Zabrocki, UK general manager of Free Now. “Obviously that would be a very big event because suddenly we have millions of customers looking for alternative options. And that’s something that we are ready for.”

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Post-lockdown recovery has been a lot faster for Free Now than the competition, Zabrocki claims, after the company was hit by 60 to 95 per cent drops in ride hailing volumes across its markets in April. “The first couple of weeks were extremely difficult,” he says. “Drivers had barely any work, many of them have to switch to working as delivery drivers.”
Free Now has regained ground in June and July, reaching profitability in most of the markets where it operates, including the UK, and also in European operations as a whole. Zabrocki points to black cabs, offered as an option on its app alongside private hire vehicles, which had their busiest day since early March on July 31 and double the average daily amount for the month prior to the merger.
Last week SoftBank-backed Ola, which launched in London in February 2020, partnered with taxi-hailing company Gett, an aggregator which provides corporate clients with rides through established taxi operators. Ola, which was forced to cut 35 per cent of its workforce during the crisis, can tap into demand from Gett’s clients to make up for any shortfall in consumer demand. Gett and Ola say they have seen an increase in corporate demand in recent weeks following the easing of lockdown restrictions across London.
In June, the number of corporate rides reached up to 89 per cent of the volumes recorded in February, compared to April and May where volumes were 67 per cent and 74 per cent of pre-Covid levels respectively.
“Our aspiration continues to be as it has been since day one – to become the market leader in the UK by offering a differentiated service focused on quality and safety,” says Marc Rozendal, Ola’s UK managing director. He points to the company’s £50 million investment in safety initiatives, as well as the Gett partnership, as commitment to growth in the country — and protection against another surge in coronavirus cases.
Gett, which is not competing directly against Uber or other ride-hailing companies in the UK, could hand Ola an important strategic advantage with a client list that includes a third of Fortune 500 companies, in the same way that its strategic partnership helped Lyft in the US.
Gett chose Ola as a partner not just because of the UK, but the other markets it operates in like India and Australia where its clients also have operations, says Dave Waiser, CEO of Gett. “It’s a win-win partnership, and that’s what I like about it.”
None of them believe that Uber’s employment case will have knock-on effects for the wider ride-hailing market. They argue that they offer far more flexibility for drivers to use any app they want at any time means that they are clearly contractors. Ironically, this is also Uber’s argument.
Things have changed since Uber first took on London’s taxi scene back in 2012. One of the biggest selling points for Free Now and Gett since coronavirus will likely be black cabs, which Steve McNamara, general secretary of the Licenced Taxi Drivers Association, says are best prepared to deal with coronavirus. Newer models don’t just have a hard plastic separation panel, they also have separate clean air filtration systems for passengers and drivers. And all cabs are designed to avoid spreading bodily fluids, he says.
“They are designed for Friday night drunks,” he says. “Somebody chucks up on a Friday night and you can rinse it out and get the cab back to work quickly. So that works just as well with Covid-19 because the materials are hard plastics. Whereas a Toyota Prius or a saloon car of any description, is designed to be used as a car, not a cab.”
As more traffic control roadblocks are set up in London, black cabs will be a much faster alternative to minicabs, because they are allowed down streets only open to bikes and buses, as well as bus lanes.
McNamara isn’t thrilled by the prospect of ride-hailing companies cashing in on these advantages. He says Free Now has become “persona non grata in the taxi trade” after the merger with Kapten, because black cabs refuse to compete directly with minicab drivers. Gett has so far escaped similar backlash. Instead, cabbies are trying to compete with their own offerings, including Sherbet, Taxi App and Cab.App.
“Are we going to do better than the private industry? I would hope so,” he says. “It’s about time we caught a break when we’ve been kicked from pillar to post.”
But, as a result of the pandemic, London’s fragmented and divisive taxi market runs the risk of crumbling apart. As Uber and its rivals share drivers, they have engaged in price wars as their only way to gain market share — a wholly unsustainable strategy in the face of a potential spike in coronavirus cases.
The game has fundamentally changed. At the end of this crisis, the winner won’t be the one with the most market share, it will be the one left standing, says Wolmar.
“Coronavirus has cut the market massively. They’re all scrambling around to get to become the dominant player,” he says. “And it’s only when they become the dominant player that they can make the sort of profits they need to survive.”
Natasha Bernal is WIRED’s business editor. She tweets from @TashaBernal
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