Uber's rabble-rousing tactics mean its days in Hong Kong and mainland China are numbered
Robert Boxwell is unimpressed with their way of doing business, and says the 'petitions' in Hong Kong and elsewhere will come back to bite the company
After seven Uber drivers were arrested and its Hong Kong office was raided, the company sent a link to a "petition" through its app to its Hong Kong customer base. Within days, democracy showed its power, with more than 50,000 people signing what essentially looks like an Uber Hong Kong group hug. The petition thanked Uber users for their "Uberlove", but didn't really demand anything.
I wrote last month that Uber will never make it in mainland China. Organising their Hong Kong customers to sign a petition is one more nail in Uber's China coffin. Uber is Twitter on wheels, and the petition seems more like Occupy Central than a smart business move.
Uber's rabble-rousing in Hong Kong wasn't a one-off. More than a million users signed Uber petitions last year. Last month, the anarchist coders in San Francisco forced the mayor of New York to scrap a proposed cap on Uber cars there, in part by linking users to a New York Times op-ed item supporting "ride sharing". Beijing must have loved that. It's hard to see mainland authorities buying Uber China's sweet talk while the company throws bombs at local laws it doesn't like elsewhere. The Chinese know propaganda when they see it. Uber effectively traded China for Hong Kong with their petition. I'd trade China for Hong Kong in a minute for practically everything, but not if I were trying to build scale in a global taxi business.
Uber has been racing into cities worldwide, signing up uncertified drivers, who troll around with one eye on their iPhones, looking for customers. Clogged streets and increased air pollution from new gypsy cabs on the road are your problem, not theirs. Their problem is local laws. Uber's drivers generally aren't licensed and don't go through the same rigorous background checks that regulated taxi drivers do. The district attorneys of San Francisco and Los Angeles sued Uber in December for deceiving the public by claiming its background checks were "industry-leading". The suit, amended and expanded this week, notes examples of Uber drivers with convictions for murder, sexual assault, robbery, assault with a firearm, identity theft and driving under the influence. One had been convicted of "felony kidnapping for ransom with a firearm". Nice. They all made it past Uber's checks. They didn't make it past California's.
Public safety is the main reason taxis are regulated worldwide. When your daughter is coming home late from work, you don't want her getting in a car that hasn't undergone a regular safety check with some guy who did time for sexual assault. The number of taxi licences issued is limited for the same reason governments give monopolies to electric utilities. They both provide a public service, and you have to protect those who make the investment. Allowing competition in the taxi industry may be a good thing and is probably inevitable in the long run. But letting some Silicon Valley coders blow up billions of dollars of Hong Kong investment isn't.
Uber can turn its customer and driver base into mobs. More than a million people signed Uber petitions last year, sent directly to them through the Uber app. Lord knows how many people call or text the mobile phones of local politicians when Uber publishes them. Uber CEO Travis Kalanick calls this "principled confrontation". "We're totally legal ... and the government is telling us to shut down," he told Vanity Fair last year. Sure.
Here's the reality. Kalanick once described the app to a crowd in San Francisco: "When you open up that app," he crowed, one hand holding a microphone, the other thrusting like a rapper, "and you get that experience of, like, 'I am living in the future, like, I pushed the friggin' button, and a car showed up, and now, I'm a pimp'."
Although smarter guys now write their smooth-talking Silicon Valley public relations nonsense, there's nothing principled about the way they storm into cities. They just want to make a lot of money as fast as they can, and if it means thumbing their noses at governments, stomping on the necks of hard-working taxi drivers, and cutting corners on safety, well, that's not their problem, either.
There are about 18,000 taxis in Hong Kong, carrying about one million fares per day. Last year, passengers filed slightly more than 10,000 complaints. Even if the number were 100 times those reported - a million - they'd still be small compared with the number of passenger rides each year - about 365 million. Yet practically everyone who takes enough taxi rides has had a bad taxi story. Human nature is to tell everyone about the bad ones and forget about the good ones. Uber won't solve that. If you think Uber drivers are going to be different from taxi drivers in the long run, you're nuts.
They talk about you, too. In fact, Uber drivers rate you after your ride. No tip? One star. Turn off their radio and roll up the window? One star. And don't ever keep them waiting. You get the picture. They even know your name. You'll never even know how many Uber drivers let you stand on the roadside, holding the illusion that Uber is your saviour in your hand, because other drivers gave you a thumbs down.
Uber's Occupy Central-like petition probably helped seal their fate in Beijing and probably won't help them in Hong Kong or any other Asian country where big-money interests control the taxi industry. You have to wonder what they're thinking. Uber competitors who work with local taxi industries to bring a technology platform won't make the same 20-30 per cent from every ride, as Uber wants, but they'll be more welcome by existing players and governments. The taxi service in Hong Kong, which probably isn't as bad as it's made out to be, will improve. Uber just won't be the one doing it.
Robert Boxwell is director of the consultancy Opera Advisors