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Uber banned in London, too

Summary:
Uber keeps having a difficult time in Europe. In London, the company’s operating license has not been renewed. Transport for London, the local government body responsible for public transportation of all kinds in the British capital, found Uber to be guilty of putting passengers at risk. The reason seems not to be trivial: TFL found that “14,000 trips were taken with drivers who had faked their identity on the firm’s app”. Apparently, the company was already acting to close the breach in its security system, but that was deemed not to be enough. Free-market think tanks protested vigorously: this article from CityAM presents the reactions of the Institute of Economic Affairs and the Adam Smith Institute, albeit calling them – disturbingly, at least to me – “business

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Uber keeps having a difficult time in Europe. In London, the company’s operating license has not been renewed. Transport for London, the local government body responsible for public transportation of all kinds in the British capital, found Uber to be guilty of putting passengers at risk. The reason seems not to be trivial: TFL found that “14,000 trips were taken with drivers who had faked their identity on the firm’s app”. Apparently, the company was already acting to close the breach in its security system, but that was deemed not to be enough.

Free-market think tanks protested vigorously: this article from CityAM presents the reactions of the Institute of Economic Affairs and the Adam Smith Institute, albeit calling them – disturbingly, at least to me – “business groups”. IEA’s Shanker Singham

said the decision marked a “dark day for competition”.

“Uber – and other platforms like it – give consumers real alternatives to the monopoly enjoyed by London’s black cab industry,” he said.

“As with any regulatory crackdown on new entrants, this action will harm London’s consumers, particularly damaging the least-well-off who cannot afford the high cost of black cabs.”

If you care about competition and consumers’ free choice, it is rather easy to see that. Yet Uber bans are ubiquitous in Europe. In some places smaller players doing basically the same thing have emerged and filled the gap: think about Cabify in Spain. But in some others, even good Apps for the traditional taxis (consider “MyTaxi”, now called “FreeNow”) have been severely curbed.

From the viewpoint of economic freedom, which consists in allowing freedom to entry in a market, this is bad. I suppose that assessing the damage inflicted on customers requires more data and a great deal of attention to the specificities of each city. London is a place where public transportation, though expensive, runs very well; other cities are not that lucky. At the same time, it seems to me that there is little correlation between the effectiveness of public transportation as it is, and the strength of the anti-Uber lobby.

The lesson is probably the most easily expected one: politicians tend to protect businesses and market players that already exist, and care not too much about economic freedom, which would allow others to enter the game. But one wonders why Uber strategy in dealing with such problems has failed almost uniformly in Europe. Are vested interested invincible, or perhaps the newcomer has just underestimated them?

Alberto Mingardi
Mingardi, one of the rising stars of European libertarianism, is the founder and Director General of the Italian free-market think tank, Instituto Bruno Leoni. His areas of interest include the history of economic thought and antitrust and healthcare systems. He is particularly well known for popularizing the work of past scholars under-appreciated by today’s libertarians. Currently an adjunct scholar at the Cato Institute, Mingardi has also worked with the Heritage Foundation, the Atlas Economic Research Foundation, the Acton Institute, and the Centre for a New Europe.

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