Uber goes to court to fight for its future in London
High-stakes court case next week in one of the company’s biggest markets
Uber Technologies Inc. has spent much of the past year repenting for a string of scandals. Now the company must prove it has changed — or risk being locked out of one of its largest markets.
Uber executives and lawyers will appear in a London court on Monday to appeal regulators’ decision last September that the ride-hailing firm was unfit to operate in the British capital.
Uber’s strategy won’t be to rebut regulators’ complaints, which included a “lack of corporate responsibility” in such areas as reporting serious crimes, people familiar with the case say. Instead, executives plan to acknowledge mistakes and argue their company has made significant strides to address them by changing its governance, policies and top leaders.
Uber is expected to suggest the court issue it an 18-month license, instead of the typical five-year license, one of these people said. The company will also endorse a series of additional conditions, yet to be disclosed, that it has discussed with London’s main transportation regulator, as the court had previously requested. Both measures are an effort to show the firm is willing to accept close oversight.
The decision carries high stakes for Uber but also for London. The city’s residents have embraced the app, which has become a useful transportation option for many in the city.
If the company loses its appeal, it will have to stop operating in a city where it claims 3.6 million riders are active each month — roughly 5 per cent of its global total of 75 million. Timing would be bad for Uber, which is planning an initial public offering in 2019.
The court is expected to hear arguments for a good chunk of next week. The judge hearing the case will have leeway to decide whether to grant Uber a license, and what conditions to place on it. Any decision could come a couple of weeks after the hearing, a court official said.
Uber has been allowed to operate in London as normal pending the appeal.
Uber’s conciliatory approach underscores the shift for a company that only a couple of years ago promoted a philosophy its former chief executive, Travis Kalanick, called “principled confrontation” with regulators and others. That, at times, led the company to resist local officials it said were bound by antiquated laws and beholden to local taxi monopolies.
While Uber began to soften its approach in response to legal setbacks in Europe and the U.S., the biggest change came last summer, when Uber board members ousted Mr. Kalanick, following a series of scandals at the company, including allegations of sexual harassment, claims of stealing competitors’ secrets and the accusations it used software dubbed “Greyball” to evade regulators.
Uber later settled the trade-secrets case and has promised not to use Greyball against regulators. Mr. Kalanick said last year that he needed “to grow up” and when he resigned he said he did so to avoid distracting Uber with another fight.
New Chief Executive Dara Khosrowshahi, who was appointed last August, has since attempted to soften the company’s image, internally and externally.
He rolled out a new set of cultural norms, including one that states, “We Do the Right Thing. Period,” in part to turn the page on that scofflaw reputation, and has appeared in a series of U.S. commercials acknowledging the company’s checkered past and promising a better future. Following last year’s decision by the London regulator, he flew to the city in an effort to repair tattered relations with Transport for London.
Since then, Uber has made changes in the U.K. aimed at addressing regulators’ concerns, including reporting serious incidents to the police, and appointing three independent nonexecutive directors in the U.K. — including hiring Laurel Powers-Freeling, a former senior adviser to the Bank of England, as its U.K. chairman. The company also has made efforts to improve relationships with U.K. drivers, some of whom are involved in separate litigation to be reclassified as workers, rather than independent contractors, something that would entitle them to paid holidays and sick time. Last month, Uber said it would pay for sick leave and some other health-related benefits for drivers and couriers in Europe.
Monday’s hearing before a Magistrate’s Court in Westminster kicks off what is expected to be three days of testimony and arguments, a court official said.
Ms. Powers-Freeling, as well as two Uber managers in the U.K. are expected to testify, as well as a senior official at the London transport regulator, one of the people familiar with the arguments said.