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Uber’s London Fight Is a Sign of Tech Battles to Come

September 27, 2017, 10:23 PM UTC

If there’s been one common thread running through almost every industry in the last decade, it has been how a handful of tech firms have revolutionized how the world does business. There’s Google for accessing information; Twitter for sharing opinion and news; Facebook for interacting with friends; Amazon for shopping, AirBnB for places to stay and Uber for getting around.

Until relatively recently, most consumers and governments took this as a positive trend. While there were disputes over individual and limited issues – not least the companies’ unwillingness to pay tax or comply with requests from local regulators – they usually were seen as good for the economy and job opportunities. With their slick lobbying and PR operations, the tech entrepreneurs of Silicon Valley were courted by politicians and civil society alike.

That is changing. The decision by London authorities to strip Uber of its license to operate in the British capital is part of a wider backlash in a rapidly escalating war between governments and the tech firms they believe have become too powerful and contemptuous of rules and democratic authority. Uber and its biggest rival Lyft were ejected from the Texas capital of Austin last year for refusing to fingerprint their drivers. In 2013 in San Francisco and Oakland, tech giants such as Google and Apple’s private employee buses, which were illegally using public bus stops, were blocked by protesters.

Other cities are clearly watching carefully. New York’s city regulators said Monday they were looking at their own probe into Uber, looking specifically at its impact on the city’s own yellow cab sector.

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Political perceptions of these tech firms are changing too. After the so-called “Arab Spring,” many Western governments – and the Obama administration in particular – openly praised the tech firms as being a positive global influence, helping democratize the world.

That assumption unraveled as the same platforms later fueled the rise of far right parties in Europe and the Trump presidential campaign. Under Congressional pressure, Facebook voluntarily turned over details of 3,000 election-related ads that appeared to have been paid for by Russia-linked buyers.

Such scrutiny may only be the beginning. Increasingly, firms such as Facebook and Twitter are being blamed for seismic changes in Western political systems, accused of allowing themselves to be hijacked by automatic bots and hardliners to radicalize politics and often spread extremism.

Getting too close to tech firms now brings its own political dangers. U.S. think tanks that happily embraced funding from Google now find themselves criticized for it, accused of reining in any debate critical of the company and its counterparts.

Instead of spreading opportunity, such firms are increasingly blamed for killing jobs. Amazon’s success is at the heart of what trade analysts refer to as the “retail apocalypse,” the shutting of growing numbers of stores across the United States and beyond. Uber has proved toxic to more tightly controlled taxi industries. The drivers of London’s famous black cabs have been particularly hard hit, and their aggressive lobbying of politicians is seen as one of the key factors behind London mayor Sadiq Khan’s decision to suspend Uber’s operating license.

The decision proved immediately contentious. For all the criticisms of Uber – that it ignores regulators and the employment rights of those who drive for it, and that there have been reports of abuse and sexual assaults by drivers – it has slashed transport costs for its users. It has also provided opportunities – although without much in the way of job security – for hundreds of thousands around the world. An Uber-launched petition to reverse the London ban quickly notched up 600,000 signatures.

For the firms themselves, this is a familiar dynamic. Facebook, Google and Twitter in particular have been tangling with national governments since they began operating in relatively autocratic countries such as Russia, China and those in the Middle East, where those in authority have long felt threatened by the quick and easy access they offer to information. Sometimes, the tech companies have found themselves blocked outright.

Increasingly, the perception has become that many of these firms are simply willing to push their luck to see what they can get away with.

Technology firms do have a difficult balance to strike. Google, Apple and others have long made a virtue of protecting user data against what they see as overly intrusive requests for access by authorities. In some areas, the rights and wrongs are arguable. In others, however – such as the payment of tax – governments and campaigners believe the issues are much more clear-cut.

In many respects, Uber and AirBnB are seen amongst the most egregious examples of companies that have seriously and deliberately pushed the limits of what is strictly legal. While London’s already more stringent taxi regulation means Uber needs a license, in many other cities both it and its drivers operate outside the conventional taxi licensing system. AirBnB lets out rooms in cities that explicitly ban short-term rentals. Both have based their entire business model on working around, if not entirely flouting, pre-existing local regulations. Authorities often seemed to lack the ability, or the political will, to enforce the rules.

The London Uber decision is perhaps the most significant escalation in that war so far. It’s not that the firm will necessarily be ultimately banned from the streets, as it will continue to operate pending an appeal. The most likely scenario is that the firm and regulators reach a deal – although that could be a difficult process.

Early signs are that the firm is indeed willing to compromise. On Monday, its chief executive sent London authorities a contrite letter saying that the firm realized it had to change. Mayor Khan welcomed the statement, saying he favored talks to resolve the issue.

What Khan – a fast-rising star within the opposition Labour Party – has demonstrated, however, is that the firm can only operate if authorities allow it to do so. It is fundamentally replaceable – indeed, there have already been suggestions that a quickly-formed rival with better employment and safety practices might take its place. Something similar happened in Austin: although the Texas state government overruled the ban on Uber and Lyft in May, both companies now face more local competition.

Giant tech firms are unlikely to go away. But neither are national or local governments, democratically elected or otherwise. With a host of new technologies coming down the line – self-driving cars, automatic shops, artificial intelligence – many controlled by the same companies, these fights are only going to get bloodier.