Automotive

Why Uber is failing in Europe

UBER is one of the most successful start-up companies of the last decade and its app is one of the most popular apps in the world. Just a few clicks on your smartphone and you can call a ride, have your location identified by GPS and be picked up within minutes while automatically paying through your user account. The simplicity of this ride-sharing app has won over millions of users and thousands of drives in the US, so why is it struggling so much in Europe?

The idea for this app started in 2008 in Paris, where its two founders, Travis Kalanick and Garrett Camp could not find a taxi. Fast forward two years, this fascinating company launched in San Francisco. Initially, they were offering only luxury black cars that were 1.5 times more expensive than a taxi. Their success did not come about until 2012 when they introduced UberX and let their drivers use their own cars, which allowed for prices to be lower.

Today, Uber offers UberPool, which allows riders to share the car with other riders going in the same direction and paying even less money for the ride. It also offers UberEats, which delivers food and UberRush, which delivers packages. As a result, the app was an instant success, especially with millennials – around 77% of people in the US that are using ride-sharing services, are using Uber. Despite that, they have not had the same success in Europe.

Uber has faced furious resistance from taxi industries and government regulators all over Europe. In almost all major European cities like Berlin, London, Paris, Madrid taxi drivers have organized protests to fight against Uber and their disruptive way of doing business. Uber represents itself as a digital service and not a transport service; therefore they do not have to obtain the same licenses and authorizations, go through exams and health checks like taxi drivers do, who for that reason, see them as an unfair competition.

Many governments, whether on the national or state level, agreed with the taxi drivers and have taken action against the ride-sharing app. Uber is banned in Denmark, Portugal, Italy, Hungary, Bulgaria and is facing suspension in Finland, France, Spain, and the Netherlands. In Poland, laws had to be changed so Uber drivers do not have any advantage over taxi drivers. In Madrid and Berlin, Uber drivers have to be fully licensed and be recognized as employees that have a minimum wage, sick days, paid holidays, etc. (something they do not have in the US). And in London, the court is still deciding whether to allow Uber to operate or not.

The reason why Uber is facing this backlash is that they are not willing to follow the rules and comply with the local laws, something which Europeans are very proud of. In the US, Uber is only banned from Alaska (for the same reasons as mention above) and Austin, Texas (refusal to fingerprint and background check its drivers). As far as the rest of the world goes, it has been banned in Japan, Taiwan, the Northern Territory in Australia and Vancouver, Canada.

 

Lately, Uber has seen some decline in their business due to its unpleasant and unhealthy internal culture and the behavior of its CEO, Travis Kalanick. But with more than 40 million users per month and more than 1,5 million drivers, it does not seem like it has been suffering awfully as it continues to be one of the most successful ride-sharing apps. The question remains should Europe continue to be protective of their taxi drivers and have Uber conform to their local laws or should they start to accept these ride-sharing apps as a part of the digital trends that are unavoidably coming our way and taking over our lives.

Author: Melita Ferjanic 

Contact: mferjani@s-gsg.com