Is The On-Demand Business Model Threatened?
The noose is tightening on Uber and the On-Demand business model.
In the UK, London rescinded the company’s license, and a UK court more directly countered Uber’s business model by finding Uber’s drivers should be classified as employees, not self-employed entrepreneurs.
Katrin Bennhold, Michael J. de la Merced | Uber C.E.O. Aims to Win Back London
The effort on Tuesday [by Uber CEO Dara Khosrowshahi], is meant to show that Uber is adopting a more conciliatory approach to working with cities. Such a change in attitude is important as Uber continues to expand globally and justify its sky-high $68.5 billion valuation ahead of an initial public offering that Mr. Khosrowshahi has said could come in 2019.
There are plenty of challenges, though.
The company’s most senior executive based here, Jo Bertram, recently resigned. And elsewhere, Uber continues to face pressure from both governments and competitors. It gave up its ambitions to expand in China last year when it sold its operations there to a venture run by Didi Chuxing, a homegrown rival. It also sold its Russian business this summer to a new joint venture run by its main competitor in that country, Yandex.
Uber has also faced criticism over the treatment of its drivers. Last month, the company appealed a British court decision in which judges ruled that Uber drivers should be classified and treated as employees. The company argues that its drivers are self-employed contractors.
That claim has come in for scrutiny from Europe’s highest court as well. Any shift in how Uber treats its employees would have wide-reaching implications not just for the company but also for the so-called gig economy, forcing “on demand” businesses to offer workers the payments, protections and benefits that full-time employees are typically entitled to.
Notably, however, Transport for London’s ruling revoking Uber’s license here made no mention of the company’s labor practices.
“It’s absolutely extraordinary that workers’ rights have not come into it,” said Caroline Russell, a Green Party member of the London Assembly, a mini-legislature that scrutinizes City Hall.
Yes, it is strange. Although that may be outside of the purview of Transport for London. It may just be that ‘uber for x’ is not going to turn out to be the mantra of the age, after all.
Originally published at stoweboyd.com.