In November 2019, Transport for London (TfL), the transportation authority of the British capital, denied Uber a new license to operate in Greater London. TfL claimed that Uber exhibited a "pattern of failures" regarding existing regulations and concluded that the ridesharing company "is not fit and proper at this time."2 Following the decision, CEO Dara Khosrowshahi lamented, "This TfL decision is just wrong. Over the last two years we have fundamentally changed how we operate in London."3TfL's decision was met with approval by London's taxi drivers, who objected to what they viewed as Uber's preferential treatment by regulators and its increasing encroachment on their market share. "We've won the battle, let's see who wins the war," said one of London's traditional black cab drivers.4

It was not the first time Uber had clashed with local authorities in London and elsewhere. Since July , 2010, when Uber's first rider used the app to hail a ride across San Francisco, California, the company had engaged in a confrontational relationship with regulators and incumbents in markets worldwide. Uber cast itself as a technology platform as opposed to a transportation company, and it had a history of circumventing regulatory processes required of competing transportation operators. With venture capital backing, Uber further raised the ire of competitors by heavily subsidizing drivers and riders to get them to switch to Uber whenever it entered new markets.

On September 28, 2020, after nearly a year of appeals, a judge reversed TfL's denial, granting Uber permission to operate in London for the next 18 months.5 It was the latest development in a long, fraught history between Uber and TfL. The Silicon Valley-based company could ill afford to lose such a prominent and populous market, especially with increased pressure to achieve profitability as a public company. Worldwide, both Uber and its CEO were under tremendous scrutiny, and Khosrowshahi knew that navigating the pushback from local and national governments and established competitors was essential to Uber's success. What would Uber's strategy be over the next 18 months to ensure its long-term survival and success in London? Over the long term, what strategy would ensure Uber's global success as the transportation landscape continued to evolve?

Uber Company Background

In 2009, Travis Kalanick and Garrett Camp founded Uber. Late the previous year, they had come up with the idea of calling and paying for a cab via a smartphone app after struggling to find a taxi on a wintry night in Paris.6 By 2011, the company had expanded beyond the Bay Area to New York City, Chicago, and other U.S. markets. In December 2011, Uber launched in Paris, marking its first international foray. The company expanded rapidly, entering Australia in 2012 and Africa, Asia, and South America in 2013 (see Exhibit 1). In 2018, Uber derived 56% of its $10.9 billion in revenue from operations in the United States and Canada, 18% from Latin America, 16% from Europe, the Middle East, and Africa, and 9% from Asia Pacific (see Exhibit 2). By 2019, Uber was in 700 cities worldwide, where three million drivers used the platform to provide more than 15 million rides each day.

Evolution of Uber Products

At its founding, the company then known as UberCab offered private luxury car service in the San Francisco area, which riders could call with a push of a button on their phones. Customers were primarily Silicon Valley executives, and UberCab was marketed as a more convenient and reliable black car service with professional livery drivers. Riders requested rides using the app, and available drivers would then receive a notification and could accept the ride. A built-in mapping function then guided the driver to the rider's pickup location and destination. Riders paid via the app, which pre-stored their credit card information. At the time, rides typically cost about one-and-a-half times as much as a taxi fare, and Uber kept 20% of each fare, while the rest went to the drivers.

In 2012, UberX debuted, allowing non-professional drivers to offer rides in their own vehicles via the Uber platform. UberX fares were about 35% lower than Uber's black cars (now called UberBLACK) and competitive with, and often lower than, taxi fares.9 By 2019, Uber had added a cheaper carpool option (UberPOOL), an electric bike- and scooter-sharing option (JUMP), a meal delivery service (Uber Eats), and a number of other options (see Exhibit 3). Not all offerings were available in all locations. One Uber employee said, "When we enter a new city, we launch with a standard package. We let riders get used to our core products, and then we iterate and alter our offerings depending on the market's reaction."10 In 2018, the ridesharing company facilitated 5.22 billion rides worldwide on its platform and was approaching 12 billion rides offered cumulatively since 2015 (see Exhibit 4).

Uber for Riders

To use Uber, riders downloaded the app on their smartphones, registered for an account, and entered their credit card information. Through a simple interface, riders submitted their desired destinations and were shown projected arrival times and pricing across available service options (e.g., UberX, UberPOOL, etc.). Once a rider made a selection, Uber alerted nearby drivers and matched a driver. The rider could see the driver's name and customer rating, the make, model, and license plate number of the vehicle, and the estimated arrival time at the pickup and drop-off locations. The app's map allowed riders to track drivers' progress in real time while awaiting pickup and during rides. As rides concluded, the app charged riders' credit cardsfares varied by product, distance, and availabilityand riders could leave a tip and rate drivers; drivers also had the ability to rate riders.

Uber for Drivers

Eligible drivers could sign up to use Uber's platform by registering for an account, submitting a few documents, meeting local vehicle requirements, and passing an online screening.11 In 2019, Uber charged drivers a flat fee for each trip and kept 25% of the gross fare, which was based on set per-mile and per-minute rates determined by an algorithm.12 When there were more ride requests than there were drivers available, surge pricing raised per-mile and per-minute rates by a certain multiple, adjusted every few minutes. Uber claimed that drivers earned $15-$30 per hour.13 Fares varied by service, so drivers could, for example, earn more per ride for UberBLACK than UberX, although they might receive fewer requests for the higher-paying rides. Drivers could sign up to provide different types of Uber services, depending on their vehicle and what they thought would be most profitable.

Corporate Finance

From early on, Uber was backed by substantial capital investments. In 2010, Uber received its first angel investment of $1.25 million, followed by series A and B rounds led by Benchmark Capital, Menlo Ventures, and Goldman Sachs. By 2012, the company was worth $330 million.15 Uber continued to add both financial and strategic investors in subsequent rounds and was valued at $60 billion in 2015. By 2018, Uber had raised $21 billion over the course of numerous funding rounds and was the highest-valued startup in the world at $62 billion.16 In May 2019, the company went public at $41.57 per share; by year's end, the share price fell to around $29 and market capitalization stood at about $50 billion.

Principled Confrontation

From its inception, Kalanick operated Uber by the motto growth above all else, with an ask for forgiveness, not for permission mentality when it came to expansion into new markets and interactions with regulators and competitors.18 It was the same mindset he had brought to two previous startups that pushed cultural and legal boundaries: the early file-sharing tool, Scour, which was sued for $250 billion by entertainment-industry companies, and Red Swoosh, another peer-to-peer tech company that was eventually acquired by content-delivery giant Akamai.19 As early as 2010, Uber clashed with San Francisco and California transportation authorities over its lack of a proper taxi license.20 In response to regulators, then-CEO Ryan Graves wrote in a blog post:

UberCab is a first to market, cutting edge transportation technology and it must be recognized that the regulations from both city and state regulatory bodies have not been written with these innovations in mind. As such, we are happy to help inform the regulatory bodies on this new generation of technology [. . .] Our commitment is to facilitate an improved transportation option that provides safe, reliable, and convenient travel. That will not change. We will continue full speed ahead with the mission of making San Francisco city a great place to live and travel.

The company soon removed the word Cab from its name and rebranded as Uber, without changing strategy.22 Over the next decade, Uber regularly clashed with regulators in markets from Boston to Las Vegas in the U.S. and, worldwide, from Colombia, to China, to Ghana, and beyond.

Often, disputes centered on Uber's definition of itself as a technology firm, not a transportation company. Uber did not own vehicles nor employ drivers, but rather provided a platform that riders and drivers used to connect with one another. The company frequently began operating in markets without obtaining transportation licenses or meeting regulatory standards required of typical taxi operators. According to one writer, "Uber developed an aggressive expansion technique called 'principled confrontation' in which Uber simply began operating in a city or region until being told that it didn't have permission to do so. At that point the firm would mobilize public support for its service, using an array of lobbyists, followed by a political campaign to change the local regulations."

Uber took a similarly confrontational approach with existing taxi operators. It subsidized drivers aggressively and offered steep discounts to customers in new locales in order to gain market share. Backed by venture capital, Uber could afford to outspend many competitors and typically sent advance teams to new cities before launching in order to recruit drivers and quickly gain the scale necessary to reliably match the number of riders and drivers using the platform. Uber's tactics led to passionate and at times violent opposition from competitors in the form of massive taxi-driver strikes, protests, political lobbying, and physical attacks on Uber drivers and passengers. In some cases, regulators required Uber to stop operations, or Uber simply chose to exit from markets (see Exhibit 5).

Culture Problems at Uber

As Uber expanded, it faced challenges and bad publicity centered on privacy and user data, the safety and reliability of the rideshare model, and its corporate culture. In 2014, the press reported on a feature colloquially called "Creepy Stalker View," which allowed Uber employees to track individual users by GPS.24 In 2017, a blog post by former Uber engineer Susan Fowler accused the company of having a misogynistic culture. In response, Uber commissioned an investigation headed by former U.S. Attorney General Eric Holder, whose report detailed a toxic corporate culture and recommended that Kalanick's responsibilities be lightened.25 These problems, along with pressure from key investors and mounting legal challenges in various markets, led to Kalanick's resignation in June 2017.26 In August 2017, Dara Khosrowshahi, previously CEO of Expedia, became Uber's chief executive.

In 2019, Uber employed more than 22,000 engineers, data scientists, designers, marketers, product managers, product operations managers, and other corporate workers.28 However, media reporting continued to identify past and ongoing incidents of sexual harassment, use of threatening and bigoted language at the highest corporate levels, lack of responsiveness to internal allegations of racial discrimination, failure to address thousands of reports of sexual assault involving drivers and passengers, an endemic lack of corporate transparency, and other issues.29 Ahead of its spring 2019 IPO, Uber identified cultural issues as an investment risk, acknowledging, "Our workplace culture and forward-leaning approach created significant operational and cultural challenges that have in the past harmed, and may in the future continue to harm, our business results and financial condition."

New York, U.S.A

Initial Launch and Motivation

In May 2011, Uber began operating in New York City, its first market beyond Silicon Valley. With more than 18 million residents in the metro area, New York was the most populous city in the U.S. and boasted a robust public transportation system that included subway, bus, and rail. Taxi licensing was regulated, meaning each taxi required a city-issued medallion. Between the 1930s and 1990s, the city did not release any new medallions, and by 2011 some medallions auctioned by the city sold for more than $1 million each.31 Investment firms typically owned medallions and leased them to independent operating companies or individual taxi drivers, who paid $1,000 annual medallion renewal fees. Regulators also set meter rates, with an initial flat fee plus per-mile, wait-time, and other charges.

In 2011, around 13,000 medallion taxis operated in New York, along with limousines, ambulettes, and hired car services that charged by the hour.33 However, many taxis were in poor repair or unclean, and service quality varied. Only some taxis accepted credit cards or had GPS, and finding cabs at certain times of day and in certain locations was challenging.34 Prior to Uber's arrival, more than 1,000 New Yorkers had already signed up for the app. "We decided to respond to the demand. We were coming to New York eventuallywhy not now?" said Kalanick.35 At the time, Uber charged a base fee of $8 for each ride, plus an incremental amount based on time, distance, and speed of the ride.36 The minimum cost of the black car service was $15 per ride, which included the tip for the professional livery driver, and fares worked out to around 1.75x as much as a similar ride using a traditional taxi.

Reaction by Consumers, Competitors, and Regulators

New York's existing transportation options were generally considered more convenient than those in the Bay Area. However, a majority of New Yorkers owned smartphones, and, with no existing rideshare or e-hailing culture, Uber experienced several years of nearly unrestricted growth. By 2015, there were 78,000 for-hire vehicles in New York, about 20,000 of which were affiliated with Uber. From 2014 to 2015, Uber's share of all for-hire and taxi pickups in New York City increased from 4% to 15%, while the overall number of pickups remained level.39 By 2015, Uber's encroachment on the incumbent taxi industry led to a decline in medallion prices, to around $740,000.40

As Uber and other app-based ridesharing services increased their presence, New York's existing operators and city authorities pushed back. Mayor Bill de Blasio claimed in a 2015 opinion article that Uber drivers were in part responsible for New York's growing congestion and traffic problems.41 He wrote that ridesharing drivers were less efficient than taxis, completing an average of eight rides per day, compared with 32 by the average medallion taxi.42 Meanwhile, taxi driversand their financial backers, who owned or financed the medallionsbrought and lost a lawsuit against Uber in New York State court. Uber also faced a variety of other legal, political, and public relations challenges. An industry advocate referred to Uber's ascendance as "a catastrophe," claiming, "[the] entire [taxi] industry continues to be illegally destroyed, while elected officials allow it to happen on their watch."43

In 2015, de Blasio championed a bill that would limit the number of registered Uber cars allowed in Manhattan and impose a minimum wage for drivers. Uber responded aggressively, spending over $3.2 million in ads opposing the proposed regulations.44 Uber also added a satirical featurecalled the "de Blasio" optionthat warned riders of 25-minute wait times if the mayor's plan was enacted.45 In July 2015, de Blasio tabled the bill, but in 2018 the city council passed many of the same regulations, making New York the first major U.S. city to strictly regulate Uber.46 The city issued a freeze on the number of new rideshare cars licensed to operate (the total was around 100,000), imposed a mandatory $17-per-hour minimum wage for drivers, restricted the amount of time drivers were allowed to spend on the road while waiting to pick up new riders, and introduced a new company license that large firms like Uber would have to renew each year by submitting detailed financial and operating information to the city.47 As of 2019, both Uber and competitor Lyft were suing the city over the law.

Regional Developments

Uber's experience in New York City mirrored its confrontations with regulators in other U.S. cities. For example, in 2016, the city council of Austin, Texas, passed a law requiring strict background checks for rideshare drivers, including fingerprinting.49 Both Uber and Lyft argued that the requirement would negatively affect driver sign-ups, and the two companies poured $8 million into political lobbying to stop the law from going into effect.50 When the new rules were affirmed by a public vote, both Uber and Lyft left Austin. In 2017, the companies lobbied the state of Texas to institute a ridesharing licensing regime that would supersede city rules. In 2018, they successfully achieved new legislation with softer background checks and moved back into Austin.

In 2018, following protests by drivers, California passed a law making it more difficult to classify service providers as independent contractors as opposed to employees.51 This meant companies like Uber and Lyft could be required to treat drivers as employees, offering health insurance, minimum wage protections, overtime pay, the right to unionize, and other benefits.52 However, in November 2020, California voters approved Proposition 22, a ballot measure that reversed the 2018 state law and allowed gig economy companies to treat workers as contractors rather than employees. Uber, Lyft, DoorDash, and others spent a combined $200 million in support of Proposition 22 prior to its passage.

Bogot, Colombia

Initial Launch and Motivation

In September 2013, Uber arrived in Bogot, Colombia, a city of eight million residents and the second Latin American market Uber entered, after Mexico City.54 For four weeks, it did not broadly announce its presence, making a "quiet landing" by releasing "a secret fleet of cars in Bogot," as one media outlet put it.55 Once Uber had recruited drivers and its presence became widely known, its popularity soared. Within a year, there were 500 Uber vehicles on the streets of Bogot, and Uber touted the launch as its most successful yet.56 An executive later claimed that "users grew four times faster during our first year here compared with San Francisco's launch."57

Reaction by Consumers, Competitors, and Regulators

When Uber first arrived, Colombia had no e-hailing culture, no existing rideshare companies, and no relevant regulatory frameworkand the incumbent taxi industry in Bogot was unreliable and unsafe. Traditional taxi drivers were known to sometimes tamper with meters and take unnecessarily long routes to increase fares.58 Worse, there were serious safety concerns. In particular, Colombian riders feared the so-called millionaire's ride, when an armed taxi driver forced wealthy riders at gunpoint to withdraw and then hand over large sums from ATMs.59 Bogot had no subway, and the crowded bus system closed down at night and was plagued by pickpockets.60 Although Uber rides initially cost more than taxis, Uber vehicles tended to be better quality, safer, and easier to locate, and local reporting stated that Uber "carefully investigates potential drivers' legal records."61

Traditional taxi drivers were a powerful constituency and agitated against Uber from the time of its arrival. The national taxi drivers union objected that taxis faced significant regulations from which Uber and its peers were exempt. These included the requirement for drivers in Bogot to obtain a medallion at a cost of tens of thousands of dollars; the need to renew taxi drivers' licenses every three years; and strict restrictions on how many hours per week and on which days taxis were allowed to operate.62 Taxi drivers also bemoaned that unregulated transportation providers such as Uber and its rivals did not pay insurance, while regular taxis were required to do so.63

In 2014, following taxi driver strikes in Medelln, Colombia's second-largest city, the Ministry of Transportation banned Uber nationwide.64 Within months, however, it reversed course and announced the service was legal after all and that the government would establish regulations for rideshare services.65 Then, in March 2015, the Colombian government cited Uber for operating an unlicensed taxi service and issued a fine of $140,000.66 In November, the government demanded Uber register as a taxi company within six months.67 Uber refused. At the time, it had 20,000 drivers giving one million rides per month to 250,000 regular users across Colombia.68 In addition, Uber now faced competition in the rideshare market, trailing in third place behind Brazil-based Easy Taxi and homegrown Tappsi.69 Easy Taxi and Tappsi merged in December of that year.

By June 2016, the government had cracked down by impounding more than 1,200 Uber vehicles and fining 47 individual drivers, who also faced suspension of their licenses for up to three years.70 Meanwhile, taxi drivers continued their aggressive and often violent opposition to Uber.71 In one 2016 incident, taxi drivers surrounded and threw rocks at an Uber vehicle for 40 minutes, while a passenger was stuck inside.72 One driver said, "It is not safe to be an Uber driver in Bogot [. . .]."73 In 2017, taxi drivers engaged in a major strike in Bogot, spurred in part by new government requirements to use GPS devices to track drivers and collect fares (an Uber-style feature that increased driver costs).74

During 2018-2019, the government continued to send mixed signals. In November 2018, a local headline stated, "Uber is illegal in Colombia, but nobody cares what the law says."75 In 2019, Uber had two million users and 88,000 affiliated drivers in Colombia and paid taxes, but it was not officially authorized to operate.76 Two government bodies had taken contradictory stances: Colombia's technology ministry declared ride-hailing apps legal, while the Ministry of Transportation continued to prohibit those that did not register as taxi companies.77 In 2019, an Uber executive said, "Colombia is stragglingit's the only place in Latin America where Uber operates where there isn't even an open conversation about regulation. And we're not newwe've been here more than six years."78

As 2019 came to a close, the government responded to a lawsuit brought by taxi drivers against Uber by once again ordering Uber to halt operations in the country.79 In early 2020, Uber suspended operations throughout the country for nearly three weeks before bringing the app back online in late February. Uber claimed its operations complied with Colombian law by helping "users in Colombia enter contracts with drivers in which they are 'renting' the vehicles along with the drivers' services."80

Regional Developments

In 2019, Latin America was Uber's fastest-growing market, in part due to the lack of quality transportation alternatives. One analyst wrote: "In short, transportation and mobility in Latin America has decayed to the point that for large portions of the population, there are not reliable and safe transportation options available."81 Uber's competitors saw the opportunity, as well, with Spanish rideshare company Cabify, Greece's Beat, and China's Didi entering Latin America by 2019.82

One success story for Uber, despite initial struggles, was in So Paulo, Brazil. When Uber arrived in 2014, it faced challenges recruiting reliable UberX drivers, leading to safety issues. Then, unrest among traditional taxi drivers escalated, leading to the beating and kidnapping of drivers who switched to Uber. In 2016, Uber introduced cash payments, and safety incidents increased even more.83 In response, Uber built a more visible, accountable presence in So Paulo, including a $70 million office.84 These efforts helped reduce incidents and may have improved public perception as ridership increased.85

Delhi, India

Initial Launch and Motivation

In 2014, when Uber entered India, the country was home to a wide range of existing taxi options, from motorized and bicycle rickshaws to luxury vehicles serving a total of 50 million riders per day.86 Smartphones were not as common as in more developed markets, and credit card use was also less widespread. The 1988 Motor Vehicles Act (MVA) did not directly regulate the supply of taxis via a licensing system, although it gave Indian states wide latitude to set rules for taxi supply and permitting, fare maximums and minimums, working hours and conditions for drivers, and other features.87 Still, taxi supply remained largely unrestricted, leading to consolidation and domination of the industry by a few key players, including homegrown rideshare service Ola Cabs.

Uber debuted in 18 Indian cities in 2014, including Delhi, the nation's capital and a city of roughly 18 million inhabitants.88 To recruit drivers, Uber offered free smartphones and cash bonuses.89 Car ownership was not widespread, so drivers frequently rented or purchased vehicles, including via Uber's own leasing platform, Xchange.90 Some observers wrote that Uber encouraged individuals to take on too much debt to lease or buy vehicles, and one wrote, "Ridership has grown, but not as quickly as debt-fueled [Uber] fleets."91 Indian Uber drivers typically worked full-time schedules, as opposed to the common practice elsewhere of driving part time using a vehicle the driver already owned.92 In 2015, Uber piloted a cash payment system in Hyderabad before rolling it out across the country.93

Reaction by Consumers, Competitors, and Regulators

India's national government did not treat rideshare services as taxi companies, which were regulated, and Uber did not register as a transportation company under the MVA. This raised thequestion of whether Uber fares ought to be taxed under the country's mandatory 2% service industry tax; if fares were considered individual drivers' revenues, they fell beneath the taxable threshold, whereas if fares belonged to Uber's corporate revenues, they would be taxed.94 Regulators also challenged Uber's lack of a multi-layered authentication process required for credit card transactions. While taxi companies complained (and, in some cases, went on strike) in response to Uber and Ola's growth and exemption from MVA regulations, they had difficulty convincing officials to curtail ridesharing apps. This was in part because regulators saw that the apps offered lower prices that benefitted consumers, while taxi operators had been asking regulators to raise fares annually.95

In 2015, Delhi's government banned Uber and all smartphone-based taxi services after an Uber driver was accused of raping a female passenger.96 Prior to the incident, women had perceived Uber to be safer than other forms of transportation. Said one female customer in her 20s, "Uber was the one thing that gave me the confidence to feel independent in Delhi, which you don't feel here. Now I'm back to square one."97 At the time, Uber did not conduct its own background checks, instead relying on the background checks performed by the government as part of the chauffeur licensing process.98As a result of the incident, Delhi city government prohibited Uber from operating in the city pending the imposition of stringent background checks and the approval of their licenses as taxi operators.

Despite the ban, both Uber and its competitor Ola continued to operate while applying for an official taxi operator permit. Delhi impounded 140 vehicles and asked the Information Technology Ministry to block access to the apps until they had been approved as taxi operators.99 Uber responded by instituting background checks, installing panic buttons, and creating a feature that allowed a network of the passenger's contacts to track their progress. In April 2015, the Delhi High Court lifted the ban,100 but the government still limited the number of Uber vehicles allowed to operate in the city to 2,500 and obligated the company to follow a new fare structure that raised its prices.101

In April 2015, Uber launched UberAuto, a new service for cash-paying riders of auto rickshawsIndia's ubiquitous three-wheeled vehicles.102 Ola already had 16,000 rickshaws on its platform, but Uber struggled to match Ola's reach and canceled the service in December 2015.103 In 2016, India's Ministry of Road, Transport and Highways issued guidelines that legalized ride-hailing services in the country while allowing local authorities leeway to set their own regulations.104 In August 2016, Delhi outlawed surge pricing, which a local leader had termed "daylight robbery."105 Uber's compliance with this price ceiling wavered in the following months.106

Early 2017, Uber India cut back significantly on driver subsidies to show better performance in India ahead of Uber's eventual IPO.107 In 2018, Uber surpassed Ola in terms of app installs, going from 47% download market share in January to 65% in November.108 However, most of these installs were likely already Ola users becoming dual users.109 As of May 2019, Uber operated in 40 Indian cities and the Indian market accounted for 11% of Uber rides worldwide.110 By October 2019, Uber India accounted for 2% of the company's revenue.111 In 2019, Ola remained the market leader.112

Regional Developments

The majority of Indian states sought to hold Uber to the same standards as taxi operators.113 Other regions of India proved to be laboratories of innovation for Uber. The cash payment experiment was first tried in Hyderabad, prior to being rolled out in other regions, UberBOAT ferry service launched in Mumbai, and Uber Lite launched for rural areas of the country with inadequate broadband speeds to support Uber's traditional app.114 In 2016, Uber launched in neighboring Pakistan and Bangladesh, and in 2017, Dhaka, the capital of Bangladesh, was Uber's fastest-growing South Asian market.115 By 2017, India was Uber's largest market after the U.S. by number of trips.116

Following its arrival in Southeast Asia in 2012, Uber battled in market after market with Singapore-based Grab (originally from Malaysia and funded in part by SoftBank) and Indonesian rival Go-Jek (backed by Google and Tencent). Then, in 2018, Uber sold its Southeast Asia business to Grab, exiting eight countries.117 After investing $700 million in the region since 2012, Uber received a 27.5% stake in Grab.118 In 2019, Uber's share of Grab was worth $3.22 billion.119 In 2019, Uber completed a $3.1 billion takeover of Dubai-based Careem, which had been valued at $2 billion, giving Uber a significant foothold in the Middle East, North Africa, Pakistan, and Turkey.120

Shanghai, China

Initial Launch and Motivation

In 2013, Uber had raised a total of $50 million in capital and had operations in 10 countriesandChina loomed as a large and growing untapped market.121 That year, Kalanick returned from a visit to the country intent on establishing Uber in China's cities as soon as possible.122 In 2014, Uber officially launched local operations in Shanghai, claiming at the time that taxi demand in the city was growing faster than in New York, San Francisco, and Singapore.123 Ridesharing was mostly unregulated in Shanghai, where traditional taxi licenses cost more than $80,000 and new licenses had not been issued since the early 1990s.124 Prior to Uber's arrival, two native firms, Didi Dache (Didi) and Kuaidi Dache(Kuaidi), had established themselves as the dominant operators in the fragmented taxi market by offering an app-based means of hailing and paying for taxis, as did a number of traditional taxi operators. As of 2012, Didi was reported to have 80% market share among ride-hailing apps in China.125

Uber's entry into China differed from its expansion into other countries up to that point. In its efforts to avoid some of the stumbling blocks other companies had encountered when entering the Chinese market, Uber courted local partners and government entities.126 For the first time, the company established a local subsidiary in a foreign market: Uber China.127 Uber reportedly hoped that forming a local entity would ease its ability to raise local capital and avoid the bureaucratic hassles foreign companies operating in China often faced.128 In addition, when Uber launched in Shanghai, it contracted with a local rental-and-driver service rather than contracting with individual vehicle owners, as it had done in other markets.129

Reaction by Consumers, Competitors, and Regulators

Nevertheless, Uber encountered obstacles. For example, the Uber app relied on Google Maps, which was not widely available in China. It took the better part of 2014 for Uber to forge a partnership with Baidu, China's leading search engine, to gain access to local mapping services.130 Another challenge was Uber's requirement that customers validate their credit card information to use the app, since Chinese consumers primarily used WeChat and AliPaynot credit cardsfor transactions. In 2014, Uber negotiated a deal with AliPay in time for its Shanghai launch.131 Complicating matters was the fact that both WeChat and AliPay were affiliated with conglomerates that controlled Didi and Kuaidi.

Following its entry into Shanghai, Uber came out with People's Uber, which allowed individuals who had cleared a background check and could provide their own vehicles to drive and offer rides to customers using the app. In 2015, media reported that "affluent and cosmopolitan Chinese have flocked to Uber's service," which on average cost 35% less than traditional taxi fares.132 In addition, Uber drivers gained a reputation for more professional comportment and more luxurious vehicles than traditional taxi operators, along with offering amenities like free bottled water.

At the same time that Uber was trying to gain a foothold in Shanghai, Didi and Kuaidi were competing fiercely for market share, spending hundreds of millions of dollars on generous subsidies to drivers and riders.134 Then, in February 2015, the two competitors merged to become Didi Chuxing (Didi), valued at $28 billion and boasting more than one million drivers in 360 Chinese cities.135 The merged entity launched a rival product to People's Uber that summer.136 In September 2015, Didi Chuxing invested $100 million in Lyft, Uber's main U.S. competitor, and both Lyft and Ola, the ridesharing market leader in India, joined Didi's global network.137 Over the next few years, Didi continued to sink hundreds of millions of dollars per year into driver subsidies and rider discounts.138 In response, Uber subsidized drivers as well, often taking a loss on trips in order to pay drivers rather than charging its standard 25% fee, while also losing revenue by offering free trips to new riders.139

In January 2015, China's Ministry of Transport prohibited privately-owned vehicles from offering ridesharing services, instituting fines exceeding $16,000 and threatening detention.140 Nevertheless, Uber continued operations, claiming that its platform was leading to the creation of more than 60,000 jobs per month in China.141 As of 2016, Uber was operating in more than 50 cities and planned to expand to 120 by September (by comparison, Didi operated in more than 400 Chinese cities).142

In 2016, after years of intense competition, Didi acquired Uber's China arm. Didi invested $1 billion in Uber, and Uber took an 18% stake in Didi, while each company's CEO was granted a seat on the other's board.143 Observers speculated that Uber's decision was motivated in part by regulations passed that year by the Chinese government that included several provisions threatening Uber's operations, including: (1) granting the government access to all Uber user data; (2) requiring Uber and competitors to phase out subsidies and charge "market prices," except when the government intervened on pricing; (3) granting the national and provincial governments the right to allow or ban individual rideshare companies; and (4) permitting local governments to issue/deny licenses to individual drivers.144 According to final regulations released in November 2016, "Chinese Uber and Didi drivers [must] have 3 years of experience, be licensed by a local taxi regulator, and have no criminal record. Cars used must have no more than 370,000 miles (600,000 km) driven to be eligible."145

One observer wrote, "Where the Chinese state steps in is where entrepreneurship goes to die. In selling its Chinese business to Didi Chuxing, Uber is getting out of its China operations at the right time and at a reasonable price."146 Didi had signaled intentions to hold an IPO possibly within 2018, which would be a first among ride-sharing companies.147 Over three years in China, Uber invested (lost) $2 billion in ride subsidies and infrastructure, but it never surpassed 30% market share and was unable to maintain share once subsidies were dialed back.148

Regional Developments

In Japan, Uber delayed launching until 2018 because of the country's laws against unlicensed taxi driving. In 2018, unable to launch UberX or any of its privately-owned vehicle offerings, Uber (and Didi) launched in Japan in partnership with existing taxi companies; by 2019, Uber operated in 14 Japanese cities.149 In South Korea, where Uber first appeared in 2013, its success was hampered by longstanding laws limiting use of non-commercial vehicles for commercial purposes, reluctance by taxi regulators to expand the taxi supply, and intense pushback from taxi drivers, including strikes and two cases of drivers' self-immolating in protest.150

Accra, Ghana

Initial Launch and Motivation

In 2013, Uber debuted in Africa with its launch in Johannesburg, South Africa.151 Its June 2016 entry into Accra, Ghanathe nation's capital and, at more than 2.2 million residents, its largest citymarked the ridesharing company's 13^th launch in an African city.152 The entry was bookended by launches in Kampala, Uganda, the week prior and in Dar es Salaam, Tanzania, the following week.153 Accra's taxi industry was mostly unregulated, and most cars were owned by individuals, with a few larger taxi companies and motorcycle taxis. In addition, shared van taxis called tro-tros, which were privately owned and rented to operators, plied set routes, and sometimes held up to 20 passengers, who paid cash.154 The Ghana Private Road Transport Union of the Ghana Trade Unions Congress licensed tro-tro and taxi drivers and vehicles; licensed taxis were painted a traditional yellow and sported yellow license plates. Taxi owners and drivers paid taxes, and haggling over fares was common, but there were no limits on the number of taxi licenses.155

Uber followed its typical tactics of offering rider discounts and driver subsidies in order to quickly gain market share, giving away up to six free rides when new Accra riders downloaded and registered with Uber.156 As it had recently done in South Africa, Uber allowed cash payments upon its launch in Ghana.157 Due to the predominance of cash transactions, Uber established a system in which drivers were required to create bank accounts to deposit Uber's 25% share of each fare.158 However, within a year, media reports described widespread fraud, with drivers picking up passengers and then convincing them to cancel the trip and pay the driver directly, so it appeared to Uber that the driver never gave the passenger a ride nor collected a fare; in other cases, drivers completed the trip but failed to officially begin the ride via the app, or simply claimed to have forgotten the trips took place.159

Reactions by Consumers, Competitors, and Regulators

Ghana's transportation industry was highly fragmented and lightly regulated. A June 2016 headline declared, "Uber will pretty much regulate itself in Ghana," as the company and Ghana's Ministry of Transport agreed to a statement of understanding that gave the ridesharing platform significant input into a "new, forward-looking regulatory framework."160 In practice, this meant that Uber had latitude to set its own prices.161 As of 2018, traditional taxi drivers in Accra were constrained by government-set prices that were collectively negotiated twice yearly with the Ghanaian Federation for Private Road Transport, a taxi union.162 When 2018 negotiations stalled due to fluctuations in gas prices and failure to keep up with inflation, taxi drivers went on strike.163 Ghanaian trade, employer, and labor organizations united in their protest of Uber's practices and alleged unfair regulatory advantages.

Unlike with taxis, Accra authorities allowed Uber drivers to register their cars as private vehicles with white license plates, allowing them to enter areas, such as hotels, where commercial vehicles were prohibited.164 In January 2018, taxi drivers petitioned the government to order Uber cars to be visibly marked and to have police arrest anyone operating a taxi without proper insignia.165 On April 25, 2018, Accra Uber drivers held a sit-down strike to protest the size of Uber's share of each fare.166 At the beginning of 2019, regulators in Ghana required Uber cars to identify themselves with insignia on theoutside of the vehicle, be individually licensed and insured, and have their cars inspected twice a year like commercial vehicles.167

Regional Developments

In 2016, Uber made a concerted push to expand operations throughout Africa. Like Ghana, South Africa's taxi market was fragmented and featured a regulatory vacuum around ridesharing. In 2019, notwithstanding regulations requiring licensing and permits for rideshare drivers, Uber remained South Africa's rideshare leader.168 In 2016, Uber encountered competition in Kenya when Little Cab, launched by major telecom company Safaricom, entered the market and allowed users to pay for rides on Safaricom's commonly used payment platform. In 2019, Little Cab and Uber had similar market shares in Nairobi.169 Meanwhile, in 2016, Nigeria adopted legislation that incorporated ridesharing into the country's transport infrastructure to remain open "to all future smart mobility innovations."170

Throughout the continent, Uber faced stiff and sometimes violent opposition from incumbent taxi operators and drivers. One report wrote, "Uber drivers have been targets of violent attacks in Cairo and Nairobi, and in South Africa the company resorted to hiring a local private security firm to aid drivers in emergency situations."171 In 2017, a 40% price cut by Uber in Lagos led to driver strikes. Many defected for Estonian competitor Taxify, which had launched in Accra in 2017 and took 15% of each fare as its fee, compared to Uber's then-rate of 25%.172 As of 2018, in Kenya, Nigeria, and South Africa, there were reports of Uber drivers being threatened with violence or attacked by traditional taxi drivers.173 In June 2016, Uber operated in five Sub-Saharan countries.174

London, United Kingdom

Initial Launch and Motivation

London featured one of the most robust and oldest regulated taxicab industries in the world. The city was home to two main types of taxis: black taxis and private hire vehicles. The venerable black taxisalso called hackney carriages or black cabs, although they could be any colorcould be either pre-booked or hailed from the street or at taxi stands. Their professional drivers possessed The Knowledge, meaning they had passed a rigorous examination proving exhaustive knowledge of London's 60,000 streets and 100,000 landmarks, large and small.175 TfL regulated black taxi metered fares and licenses, but since the 1980s the number of hackney licenses had risen only slightly, to just over 20,000, even as London had grown by two million residents and its economy had doubled in size.176 There were also nearly 60,000 private-hire vehicles, run by 3,000 operators, which included minicabs, limousines, and chauffeured cars.177 TfL licensed private hire vehicles, which had to be pre-booked and give passengers accurate fare estimates prior to trips, for 250 per license.178

In 2012, after two years of planning, Uber came to London, making it the ridesharing company's 11^th market.179 Uber began by recruiting drivers and establishing a user base ahead of the 2012 Summer Olympics, which London was preparing to host in July-August.180 To attract drivers, Uber at first offered 25 per hour just to be active on the Uber platform, even if the driver did not get any rides.181 In May, Uber applied for and received its first permit from TfL, and by June about 50 professional livery drivers were using Uber's platform to offer high-end, black car service on the streets of London.182 (Meanwhile, an existing ridesharing service, Hailo, had signed up 9,000 black taxi drivers.)183 Soon, though, Uber's popularity increased, and the platform began operating at full capacity on weekend evenings. More drivers signed up as word began to spread that the platform offered competitive earnings, gave drivers control of their own schedules, and eliminated the need to depend on notoriously petty, often corrupt London dispatchers or deal with cash transactions.

Reaction by Consumers, Competitors, and Regulators

In 2013, Uber rolled out UberX. Within six months, 4,000 drivers signed up, and riders flocked to the platform's lower prices.184 One later report about the period stated, "A 20-minute, two-mile trip in a black cab costs 14. An Uber will get you there for 8."185 In 2014, Uber introduced UberPOOL, an even lower priced option that was about 25% cheaper than UberX, for passengers to share a ride if they were traveling in the same direction. The same year, Uber switched to paying drivers exclusively via commission, and drivers continued to sign uptwo-thirds of them referred by a friend.186 From 2012 through 2014, the number of licensed minicab operators rose 25%, to 13,000, and in August 2014 minicabs were forced to cut prices to compete with UberX.187 In 2015, the number of Uber drivers passed the number of black cab drivers and reached 25,000.18

By 2014, Uber was receiving intense pushback from local regulators and competitors. TfL had initially licensed Uber as a private hire operator and did not regulate its prices, but black cab drivers objected that Uber ought to be regulated under the same taximeter license that they were, rather than a minicab license.189 As an iconic institution of the city, black cab drivers wielded considerable political leverage and were reported to have outsize lobbying influence with TfL and the London mayor's office.190 "TfL was never completely happy with Uber. It didn't entirely fit the existing regulations, which is not surprising as it's a new business model," one TfL official later said. "It also became the cause of an increasing congestion problem for TfL."191 In the summer of 2014, as London and national authorities considered the question of Uber's regulatory status, between 4,000 and 10,000 taxi drivers joined protests across Europe in opposition to Uber, blockading traffic on several occasions.192 That same summer, Uber downloads surged 850%.193

In 2015, the U.K. High Court ruled that Uber could continue operating under its existing license.194 Later that year, TfL proposed regulations perceived to be aimed at Uber, including mandatory five-minute wait times before any livery driver picked up a passenger, and the locking-in of fares at the time bookings were made.195 In 2016, according to reports, "a British tribunal ruled that Uber could no longer treat its drivers as self-employed contractors and would have to meet tougher labor standards, including offering holiday pay and pensions."196 Uber agreed to conduct background checks on drivers, as were required of hackney drivers, and make other changes.197

Despite Uber's promises to meet regulatory requirements, TfL did not renew its license when it expired in 2017, citing safety concerns and poor oversight of drivers.198 The agency stated that Uber was not "fit and proper," using a strong British term for an enterprise's failure to meet standards.199 Uber appealed while continuing to operate, securing a provisional 15-month license, which was set to expire on September 30, 2019.200 At the time, the company claimed to have 3.5 million riders in London, along with 40,000 drivers, which rose to about 45,000 drivers by 2019.201 TfL claimed in mid-2019 that the provisional licensure had led to Uber's "improving its culture and governance," but not enough to warrant a multi-year license renewal.202

On October 1, 2019, TfL granted Uber a two-month reprieve, but when the extension expired on November 25, TfL declined to renew Uber's license.203 TfL stated that Uber "placed passengers and their safety at risk" by allowing unauthorized rideshare drivers to pick up and transport riders on at least 14,000 occasions.204 A TfL press release concluded that Uber "is not fit and proper at this time," and said the agency "does not have confidence that Uber has a robust system for protecting passenger safety."205 Uber was allowed to continue operating while it appealed the decision or until it made

On October 1, 2019, TfL granted Uber a two-month reprieve, but when the extension expired on November 25, TfL declined to renew Uber's license.203 TfL stated that Uber "placed passengers and their safety at risk" by allowing unauthorized rideshare drivers to pick up and transport riders on at least 14,000 occasions.204 A TfL press release concluded that Uber "is not fit and proper at this time," and said the agency "does not have confidence that Uber has a robust system for protecting passenger safety."205 Uber was allowed to continue operating while it appealed the decision or until it made

Changes to meet TfL requirements. On September 28, 2020, Uber won its appeal and was allowed to resume its London operations with a new 18-month license. The judge wrote that, "despite historical failings," Uber had taken steps to improve its safety and that he was "satisfied that they are doing what a reasonable business in their sector could be expected to do, perhaps even more."206

Despite the extension, regulatory authorities were not planning to leave Uber alone. Shortly after the license was extended, the U.K.'s Competition Markets Authority launched an investigation into Uber's planned acquisition of Autocab, which provided Uber-like services to taxis, for "possible effects on competition."207

Regional Developments

In 2014, when Uber introduced its UberX (called UberPOP) service in Germany, the company struggled and ran afoul of German chauffeur laws, which required a specific type of driver's license to transport passengers commercially.208 In 2015, a regional court banned UberPOP throughout Germany, although UberBLACK and UberTAXIwhich allowed existing taxi-operator and rental-car operators to use the Uber platformwere allowed to continue operating in the country.209 In 2016, Uber shut down its Frankfurt offices. Then, in 2017, Uber suffered another blow when the European Court of Justice declared that Uber was subject to EU member countries' local transportation regulations, not exempted under the classification of a technology company.210 In 2019, Uber suspended service in Barcelona and other cities in Spain in response to new regional regulations that included mandatory 15-minute lag times between when a rider ordered a taxi and when that rider was picked up.211

Conclusion

As 2020 drew to a close, Uber reported $6.9 billion in losses over the 12 months prior to its latest filing, continuing the negative trend in profitability since it began publicly reporting (see Exhibits 6 and 7).212 Nevertheless, Khosrowshahi expressed optimism about the company's trajectory.213 Uber announced that it projected it would reach profitability in 2021.214 As Uber battled competitors across the globe, all ridesharing platforms faced a changing and challenging regulatory landscape, as governments and regulators attempted to maintain fair competition in taxi and transportation markets (see Exhibit 8). A 2019 report on regulatory strategies in 13 cities around the world detailed a variety of rules already in place or being contemplated. These included requirements for ridesharing companies to submit data on rides to city governments, fees on ridesharing companies to support public infrastructure, vehicle emissions requirements, caps on the total number of vehicles, restrictions on where ridesharing vehicles can operate, including at airports, and regulations relating to drivers' rights and pay, among others.215

Given the challenges and confrontations in London and other markets, Uber faced the question of

Which strategy would bring long-term success and profitability. Would the company have to adapt its business model and approach to competing in new and existing markets to comply with regulators? How long could Uber go without turning a profit before investors began to question the company's strategy? Under scrutiny from shareholders and regulators, what strategy would lead Uber to profitability in transportation markets around the globe?

QUESTIONS

1. From the case above. Provide an analysis of the case.

2. What is the case based about?

3.List and explain the problems in the case.

4.What are some solutions for the problems you have listed? Explain these solutions

5. What are some recommendations to ensure the solutions you've mentioned are successful. Explain them.