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New car-hailing app banned in London
Taxify, a ride-hailing app that launched in London this week with plans to take on US rival Uber, has been banned by Transport for London as it is “not licensed to accept private hire bookings” in the city.
TfL said on Friday that it had instructed Taxify to stop accepting bookings and it had done so. “The law requires private hire bookings to be taken by licensed private hire operators at a licensed premises, with appropriate record keeping”, it said in the statement.
Taxify, which operates in London under the licence of another company that it owns, said it had “temporarily stopped operations to clarify its legal position with the regulator and reach a resolution so that services can return to normal”.
In an earlier interview with the Financial Times, Markus Villig, Taxify founder and chief executive, said: “We were going to get our own license then we collaborated with City Drive Services. Legally we have a company who has a licence and has been operating for years in London and we are just providing our technology to them. We bought this company. We bought the license. It comes up for renewal in two years.”
The move by TfL deals a blow to the Estonian start-up backed by China’s car-hailing giant, Didi Chuxing, whose arrival in London was expected to trigger the start of a bitter price war among global rivals in Uber’s largest European market. Other competitors are also poised to challenge the US group’s five-year dominance in the UK: Via, the US van-sharing app, this week announced a tie-up with German carmaker Daimler to start operations in London.
So far, only 3,000 drivers have signed up with Taxify, compared with Uber’s 40,000 in the UK. But the group has ambitious plans to undercut its US competitor. It was charging commissions of 15 per cent, compared with Uber’s 20 to 25 per cent, and doling out bonuses of £3 per trip as it attempts to lure drivers and customers.
Uber had welcomed the competition. “There are already a lot of competitors in the field where we operate,” said Pierre-Dimitri Gore-Coty, head of Uber for Europe, the Middle East and Africa. “We rather see that as a good thing because we think competition gets us to think about delivering the best possible experience for users and drivers.”
But the US group is also facing difficulties in London, where its licence hangs in the balance following questions from the Metropolitan Police about its approach to reporting sexual and violent incidents between drivers and passengers.
TfL will this month decide whether Uber can continue to operate in the capital for another five years and has said it will consider a letter from the police raising these concerns. Uber said it was “surprised by the letter”, adding that it expected victims to report incidents themselves.
The UK’s $11.5bn taxi market has remained relatively untapped by car-hailing apps since Uber’s entry in 2012, which brought growth in the country’s traditional taxi and private hire industry to a standstill. But so far, rivals have been reluctant to take the group on, for fear of becoming embroiled in a price war.
Londoners spend more money as a proportion of GDP on transport — 6.9 per cent — than people in New York, Hong Kong, San Francisco, Tokyo and Singapore, according to data from Haver and Goldman Sachs. Without competition from other car-hailing apps, the city has become a bright spot of profitability for Uber, according to accounts filed with Companies House.
Last year Didi forced Uber’s exit from the Chinese market after a multibillion dollar war for passengers and drivers. Then in August, it took a 12 per cent stake in Taxify — a first sign of its ambitions for Europe: “Through its investment, Didi has become an important strategic partner to Taxify and we will seek collaboration on product, technology and financing,” a spokesperson for the company said.
There are signs that competition in the UK will increase from other quarters too, as carmakers take bets on sharing as a way of tapping into new revenue streams. Via and Daimler plan to take commissions of about 15 per cent in London once their joint venture is launched.
Daniel Ramot, founder of Via, says Uber is vulnerable to competition. The group temporarily began recruiting drivers this summer. “We found a tremendous response from drivers,” said Mr Ramot. “Drivers were referring other drivers — there seems to be a huge thirst for an alternative in the UK.”
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