How can Uber save its place in London’s taxi market?

Uber in action. Image: Freestocks.org.

Dara Khosrowshahi will have to do more than post a humble tweet if he is to rescue Uber in London. The CEO of the ride-sharing company will need new reserves of humility, allied with positive action, if his firm is to be given a third chance to make it work in the UK capital.

Uber was first warned early in the year when it was given a short-term license extension rather than the full five years. The idea was that it would put its house in order. Transport for London (TfL), the body which issues taxi licences, was unhappy with the level of cooperation with authorities over driver checks and alleged sex attacks on passengers. So called “greyball” software designed to mislead authorities by preventing them from making checks on drivers also raised concerns.

Uber appears to be struggling to understand that higher standards of behaviour are expected from large businesses compared to start-ups. Once upon a time, Uber may have passed below the radar. But with 40,000 drivers and 3.5m customers, they are a significant business, and attract significant attention.

Control issues

It does appear that the door has been left open for Uber if it can address its behaviour, and that of its drivers. The company is lodging an appeal, which will give it a further 21 days in which it can continue to operate. The question is whether Uber is capable of bringing control and discipline to the way it operates. Does it have the structure, processes and procedures necessary to fully comply with TfL’s regulations?

The impression is left that Uber has simply not matured to the degree needed for such a large business. The extent of allegations and bad publicity is burying the business in London, its largest European market. Uber’s reported obstruction of regulation is catching up with it. Its customers have tried to make their voice heard, but online petitions are unlikely to cut much ice with TfL, whose first responsibility is for passenger safety. Uber needs to address its own behaviour first. And this is no time for an adversarial approach.

A gentle, placatory strategy is much more likely to be successful than taking on TfL. It will mean Uber going against type. The Licensed Taxi Drivers’ Association suspects Uber will seek to take on TfL through the courts, a move which would win no friends at TfL. Wars with regulators rarely end well.

Disaster area

It might seem that all is lost already if you believe some commentators. They suggest that London mayor Sadiq Khan has pushed this decision through to appease black cab drivers for political motives.

In truth, the possible loss of votes from 3.5m Uber customers and 40,000 drivers in the next mayoral election makes that rationale look flawed when you compare those numbers to the 20,000 London black cab drivers who are celebrating the decision. This action is probably Khan’s least favoured path and final resort. And it’s fair to point out that theoretically, he has no part to play in the decision, even if he clearly supports it.

From Uber’s point of view, it is no over-reaction to call this a disaster. Significant investor-funded incentives will have been poured into the London market to attract drivers and customers in developing the business. Uber has around one third of the London taxicab market but many of its self-employed drivers work for other taxicab businesses too. Some competitors also have their own apps.

This means switching costs are low for drivers and customers who switch to competitors such as Addison Lee and Gett. In the space of a few days most customers will have happily used or considered other taxicab firms. From 21 October, when the appeals process extension is due to end, Uber’s business will seep away and it will be difficult to get back. That makes Khosrowshahi’s task all the more problematic: how to develop an amicable and practical response while the clock is ticking, and when the company’s instincts may be to lash out.


Domino effect

To make matters worse, Uber operates in 40 towns and UK cities which may have experienced similar behaviour and who may now feel empowered to follow London’s example. Intense scrutiny will fall on the company from civic authorities, politicians, the media and the public. This is the cost of scale. And scale achieved too quickly makes the scrutiny hard to manage.

So, what can Khosrowshahi do? Litigation – should Uber lose the appeal which has 21 days to be heard – would be a high-risk option. If they lost the case then the London market might never be open to them again. It would also be a lengthy process and by the end of it there might be no market left for them at all.

The CEO needs to use the personal touch. He should visit Khan, cap in hand, to plead for a further three months to demonstrate that behaviour will change. He should then make sure it does. This would include transparency and full cooperation with TfL and the police over alleged driver attacks, demonstrating that all drivers have been subjected to required checks, and that “greyball” software is not being used.

The ConversationThis goes against Uber’s usual secretive and antagonistic culture. The tone of Uber’s approach in its young life has owed much to the spiky urgency of founder and former CEO Travis Kalanick’s personality. The tough task will be to convince the London mayor, and authorities elsewhere, that the culture has changed while Kalanick and his supporters remain on the board peering over Khosrowshahi’s shoulder while he is trying to negotiate a fix. How London plays out will be a litmus test for Khosrowshahi’s proclaimed wish to step away from Uber’s toxic reputation.

John Colley is associate dean at Warwick Business School, University of Warwick.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Owning public space is expensive. So why do developers want to do it?

Granary Yard, London. Image: Getty.

A great deal has been written about privately owned public space, or POPS. A Guardian investigation earlier this year revealed the proliferation of “pseudo-public spaces”. Tales of people being watched, removed from or told off in POPS have spread online. Activists have taken to monitoring POPS, and politicians on both sides of the pond are calling for reforms in how they are run.

Local authorities’ motives for selling off public spaces are normally simple: getting companies to buy and maintain public space saves precious public pounds. Less straightforward and often overlooked in this debate is why – given the maintenance costs, public safety concerns and increasingly unflattering media attention – developers would actually want to own public space in the first place.

To answer that question it’s important to note that POPS can’t be viewed as isolated places, like parks or other public spaces might be. For the companies that own them, public spaces are bound up in the business that takes place inside their private buildings; POPS are tools that allow them, in one way or another, to boost profits.

Trade-offs

In some cities, such as Hong Kong and New York, ownership of public space is a trade-off for the right to bend the rules in planning and zoning. In 1961 New York introduced a policy that came to be known as ‘incentive zoning’. Developers who took on the provision of some public space could build wider, taller buildings, ignoring restrictions that had previously required staggered vertical growth to let sunlight and air into streets.

Since then, the city has allowed developers to build 20m square feet of private space in exchange for 80 acres of POPS, or 525 individual spaces, according to watchdog Advocates for Privately Owned Public Space (APOPS).

Several of those spaces lie in Trump Tower. Before the King of the Deal began construction on his new headquarters in 1979, he secured a pretty good deal with the city: Trump Tower would provide two atriums, two gardens, some restrooms and some benches for public use; in exchange 20 floors could be added to the top of the skyscraper. That’s quite a lot of condos.

Shockingly, the current president has not always kept up his end of the bargain and has been fined multiple times for dissuading members of the public from using POPS by doing things like placing flower pots on top of benches – violating a 1975 rule which said that companies had to provide amenities that actually make public spaces useable. The incident might suggest the failure of the ‘honour system’ under which POPS operate day-to-day. Once developers have secured their extra square footage, they might be tempted to undermine, subtly, the ‘public’ nature of their public spaces.

But what about where there aren’t necessarily planning benefits to providing public space? Why would companies go to the trouble of managing spaces that the council would otherwise take care of?


Attracting the ‘right sort’

Granary Square, part of the £5bn redevelopment of London’s Kings Cross, has been open since 2012. It is one of Europe’s largest privately-owned public spaces and has become a focal point for concerns over corporate control of public space. Yet developers of the neighbouring Coal Drop Yards site, due to open in October 2018, are also making their “dynamic new public space” a key point in marketing.

Cushman Wakefield, the real estate company in charge of Coal Drops Yard, says that the vision of the developers, Argent, has been to “retain the historical architecture to create a dramatic environment that will attract visitors to the 100,000 square feet of boutiques”. The key word here is “attract”. By designing and managing POPS, developers can attract the consumers who are essential to the success of their sites and who might be put off by a grubby council-managed square – or by a sterile shopping mall door.

A 2011 London Assembly Report found that the expansion of Canary Wharf in the 1990s was a turning point for developers who now “assume that they themselves will take ownership of an open space, with absolute control, in order to protect the value of the development as a whole”. In many ways this is a win-win situation; who doesn’t appreciate a nice water feature or shrub or whatever else big developer money can buy?

The caveat is, as academic Tridib Banerjee pointed out back in 2001: “The public is welcome as long as they are patrons of shops and restaurants, office workers, or clients of businesses located on the premises. But access to and use of the space is only a privilege and not a right” – hence the stories of security guards removing protesters or homeless people who threaten the aspirational appeal of places like Granary Square.

In the US, developers have taken this kind of space-curation even further, using public spaces as part of their formula for attracting the right kind of worker, as well as consumer, for nearby businesses. In Cincinnati, developer 3CDC transformed the notoriously crime-ridden Over-The-Rhine (OTR) neighbourhood into a young professional paradise. Pouring $47m into an initial make-over in 2010, 3CDC beautified parks and public space as well as private buildings.

To do so, the firm received $50 million  in funding from corporations like Procter and Gamble, whose Cincinnati headquarters sits to the South-West of OTR. This kind of hyper-gentrification has profoundly change the demographics of the neighbourhood – to the anger of many long-term residents – attracting, essentially, the kind of people who work at Procter and Gamble.

Elsewhere, in cities like Alpharetta, Georgia, 3CDC have taken their public space management even further, running events and entertainment designed to attract productive young people to otherwise dull neighbourhoods.

Data pools

The proposed partnership between the city of Toronto and Sidewalk Labs (owned by Google’s parent company Alphabet) has highlighted another motive for companies to own public space: the most modern of all resources, data.

Data collection is at the heart of the ‘smart city’ utopia: the idea that by turning public spaces and the people into them into a vast data pool, tech companies can find ways to improve transport, the environment and urban quality of life. If approved next year, Sidewalk would take over the mostly derelict east waterfront area, developing public and private space filled with sensors.

 Of course, this isn’t altruism. The Globe and Mail describe Sidewalk’s desired role as “the private garbage collectors of data”. It’s an apt phrase that reflects the merging of public service and private opportunity in Toronto’s future public space.

The data that Sidewalk could collect in Toronto would be used by Google in its commercial projects. Indeed, they’ve already done so in New York’s LinkNYC and London’s LinkUK. Kiosks installed around the cities provide the public with wifi and charging points, whilst monitoring traffic and pedestrians and generating data to feed into Google Maps.

The subway station at Hudson Yards, New York City. Image: Getty.

This is all pretty anodyne stuff. Data on how we move around public spaces is probably a small price to pay for more efficient transport information, and of course Sidewalk don’t own the areas around their Link Kiosks. But elsewhere companies’ plans to collect data in their POPS have sparked controversy. In New York’s Hudson Yards development – which Sidewalk also has a stake in – ambiguity over how visitors and residents can opt out of sharing their data when in its public square, have raised concerns over privacy.

In Toronto, Sidewalk have already offered to share their data with the city. However, Martin Kenney, researcher at the University of California at Davis and co-author of 2016’s ‘The Rise of the Platform Economy’, has warned that the potential value of a tech company collecting a community’s data should not be underestimated. “What’s really important is the deals Toronto cuts with Sidewalk may set terms and conditions for the rest of the world," he said after the announcement in October.

The project could crystallise all three motives behind the ownership of POPS. Alongside data collection, Sidewalk will likely have some leeway over planning regulations and will certainly tailor its public spaces to its ideal workers and consumers – Google have already announced that it would move its Canadian headquarters, from their current location in Downton Toronto, into the first pilot phase of the development.

Even if the Sidewalks Lab project never happens, the motives behind companies’ ownership of POPS tell us that cities’ public realms are of increasing interest to private hands.

Want more of this stuff? Follow CityMetric on Twitter or Facebook.