Technology

Tuesday 16 September 2014

Uber on collision course over ban as some rivals flourish

Published 04/09/2014 | 02:30

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Uber app on a Samsung smartphone

The taxi app Uber set itself on a collision course with authorities in Germany as it vowed to continue operating in spite of a nationwide ban imposed by a court on Tuesday.

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The regional court in Frankfurt said in an emergency ruling that Uber, which connects self-employed drivers with smartphone-wielding passengers, did not have the necessary permits.

Legal experts said the injunction applies nationwide, representing the biggest regulatory obstacle San Francisco-based Uber has yet faced in its aggressive global expansion.

A spokesman for the company, which this summer raised €900m in new funding at a valuation of €13bn from investors including Google, said it would continue to serve German customers regardless of the court's ruling.

He said: "We believe innovation and competition is good for everyone, riders and drivers. You cannot put the brakes on progress."

Governments and regulators in cities around the world are restricting Uber's business on the grounds it poses safety risks and unfairly competes with licensed taxi services. Cabbies with permits that can cost €200,000 euros apiece have staged protests in European cities including London, Madrid, Paris and Berlin.

In Ireland, taxi-drivers are less upset about Uber because drivers of its fleet cars here are generally licensed in the same way as limousine drivers.

"Uber are not so much of a threat here," said Jerry Brennan, the national secretary of the National Irish Taxi Association (NITA). "You don't have 3,000 or 4,000 private hire vehicles here, partly because Irish law effectively did away with hackney drivers. That's different from the UK, where private hire drivers still represent a large number of vehicles."

The company, which is also facing suits and legal threats in the US, South Korea, India, the Netherlands and the UK, will appeal and continue to operate in Germany, one of its fastest growing markets, Uber said in an e-mailed statement.

Uber has faced opposition from taxi firms, who argue it is able to undercut them by circumventing licensing regulations designed to protect passengers. In ruling against the company, the court in Frankfurt cited evidence supplied by Taxi Deutschland, an association of taxi dispatchers, which said it was breaking German law.

Based on the ruling, Taxi Deutschland said it will monitor Uber and apply to the court to impose a fine of as much as €250,000 every time it provides service without a licence.

Anja Floetenmeyer, a spokeswoman for Taxi Deutschland, said: "We're not afraid of our adversary because the law is on our side.

"Goldman Sachs and Google can pour as much money in as they want. Even Uber has to abide by the law."

German law only allows drivers to pick up passengers without a commercial license if the driver charges no more than the operating cost of the trip. Because Uber stands to take a cut of any charges, the court held it liable and issued an injunction against the service.

The nationwide ban on Uber follows regional decisions against it by regulatory authorities in Berlin and Hamburg, although neither have been enforced and are subject to legal challenges.

In Britain, the rise of Uber prompted a protest from London black cab drivers in June. London authorities say they are satisfied the company is operating lawfully, however, and Uber claimed the publicity generated by the protest gave it a big boost in new customers.

However, some rival services to Uber are thriving, both in Ireland and abroad. Hailo is available in more than 20 Irish cities and towns and counts half of all of Ireland's 18,000 taxi drivers as registered users. The "vast majority" of these, says Hailo co-CEO Tom Barr, are in Dublin.

"We think you don't have to destroy an industry to be disruptive," he says.

Whereas Uber is provoking riots and city shutdowns across Europe, Hailo has quietly built an army of registered, licensed drivers who see the service as a totally compliant step into a digital future.

The Hailo app has been downloaded 500,000 times in Ireland, while the firm typically gets around 10pc of each driver's fare. In Dublin, it records roughly 20,000 daily Hailo trips. If an average fare is €20, that's €40,000 a day, or €1.2m per month in revenue.

Mr Barr disagrees that Uber is a 'disruptor' and Hailo the 'disrupted'.

"I don't agree with that," he said. "What we've done is to show that we can work well with drivers and regulators. We value that all of our drivers are properly licensed. That means there are no concerns with regard to our drivers' safety records or anything like that. We think it gives comfort to people as well as our drivers."

Unlike Uber, Hailo largely uses existing taxi drivers for its services. The company that was founded in London by a couple of taxi drivers is now expanding across Europe and the US, with over €50m in funding behind it.

Mr Barr said that a new executive limousine service from Hailo was not a direct response to Uber.

"We see ourselves as being different to Uber," he said. "What we've done is to show that we can work well with drivers and regulators and all of our drivers are properly licensed."

The company's new business-booking service, called Hailo Business, allows companies to keep track of employees' taxi-booking activities, including detailed reports on who uses the service, where they travelled to and why they used the service.

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