June 11 (Bloomberg) -- Uber Technologies Inc., the car-sharing service that’s rankling cabbies across the U.S., is fighting its biggest protest from European drivers who say the smartphone application threatens their livelihoods.
Traffic snarled in cities from London to Madrid and Berlin to Paris as strikes and gatherings by more than 30,000 taxi and limo drivers blocked tourist centers and shopping districts. They are asking regulators to apply tougher rules on San Francisco-based Uber, whose software allows customers to order a ride from drivers who don’t need licenses that can cost 200,000 euros ($270,000) apiece.
The biggest city-center protest was in London, where black-cab drivers were joined by private car services and trainees to protest what they saw as the government’s failure to hold Uber to the same standards as other car services and taxis. While similar demonstrations this year have led to smashed windshields and traffic chaos in Paris, a united front in Europe highlights the challenges for Uber’s expansion.
“A strike won’t work,” European Commission Vice President Neelie Kroes said in a statement today. “What we need is real dialogue where we talk about these disruptions caused by technology.”
A funding round last week values the company at $17 billion, almost five times the figure in an earlier round. Out of some 128 cities it serves, 20 are in Europe, including Manchester, Lyon and Zurich.
In London, thousands of black cabs and private hire cars descended on the tourist hubs of Trafalgar Square and Parliament Square, blocking some of the city’s busiest streets. Scooter and motorbike riders studying for the cab-driver exam joined in, honking their horns as the police tried to regulate traffic.
London taxi drivers have said that the app’s fare calculator amounts to a meter, which aren’t allowed in hired cars that aren’t registered taxis. Last month, TFL asked the High Court to rule on whether the fare system was legal.
“We have to have a license to own a cab, we have to have a driver’s license, a cab driver’s license,” said Mark Haslam, a 58-year-old black-cab driver, who took part in the protest. “For some reason they seem to be outside the law.”
Another driver, John Maloney, 64, was standing on top of a black cab on the corner of Whitehall and Trafalgar Square with a sign saying “enforce the law.” He was dressed as a judge, wearing a white wig and black cape.
No major accidents or clashes were reported. The London police, saying organizers hadn’t asked for proper permission to assemble, had threatened to arrest protesters if they arrived before 2 p.m. and didn’t leave by 3 p.m.
London organizers had called on drivers to join the demonstrations with posters mimicking a World War I recruiting campaign, featuring military commander Horatio Kitchener and his characteristic handlebar mustache.
In Paris, drivers blocked the Charles de Gaulle and Orly airports this morning and prevented private-car services from picking up passengers, said Nadine Annet, vice president at the FNAT taxi association. Cabbies also slowed down traffic the A1 highway that circles Paris, leading to a 200-kilometer (120-mile) jam, local TV reported. The vast majority of France’s 55,000 professional taxis and Paris’s 15,000 cabs are on strike today, Annet said.
Kader Djielouli, a 44-year-old protester who’s been driving taxis in Paris for 15 years, said he’s lost 40 percent of his revenue since 2009 because of services like Uber.
Private-car services “are taxis without being taxis,” he said at a cab stand near the Opera metro station in Paris. “We are against them. There need to be the same rules for all.”
In Madrid, thousands of drivers marched to block the Paseo de la Castellana, one of the city’s main avenues, as police escorted the demonstration by cars, a helicopter and officers on foot. Protesters chanted insults targeted at Uber and chased taxis that weren’t taking part in the rally.
In Berlin, more than 500 taxis lined up in columns of 20 in the plaza stretching out from the Olympic stadium. Four youth chanting “friends of Uber” were escorted away by security under shouts of a few enraged drivers.
Berlin cabs earlier packed airports and the upscale Kurfuerstendamm shopping district. At the Tegel airport, one of the three starting locations for the Berlin demonstration, taxi driver Kubilay Sarikaya said this morning he was skeptical about the protests. While he’d been working since 3 a.m., he said he’ll go along if his friends do.
“While we are demonstrating, the other guys are hauling people around,” said Sarikaya, 33. “There have to be other ways. Ultimately I think folks know that they can always count on the good old cab to get them where they need to be.”
In Milan, no taxi was to be seen after about 5,000 drivers this morning went on a strike that is set to last until 10 p.m.
Uber took the demonstrations as an opportunity to promote its service, saying in a statement its teams across Europe will keep the cities moving today.
“While the taxi protests may seek to bring Europe to a standstill, we’ll be on hand to get our riders from A to B.”
Uber also chose this morning to open its service in London to black-cab drivers, describing its 5 percent commission as the lowest of all booking systems in the city. Uber has thus far offered luxury cars and cheaper rides in London, while excluding licensed black cabs. Later in the day, Uber said signups in London to its service today were 850 percent higher than last Wednesday, declining to give the actual number.
The protests have a deeper significance beyond the taxi industry. They underscore the growing backlash against the likes of room-booking service Airbnb Inc. and video-streaming provider Aereo Inc. as they clash with traditional industries arguing the competitors should be subject to the same regulations.
“European cities have tended to regulate taxi drivers much more than the U.S.,” said Charles Lichfield, an analyst at Eurasia Group in London. “I do think the protests have a better chance of succeeding.”
In the U.S., local taxi groups have also lobbied against Uber and similar services in cities such as Seattle. In Europe, regulators and courts are struggling with the disconnect between the desire to protect a regulated industry and the need for more technological innovation.
“For years the government has slapped new fees onto taxis and imposed more constraints -- everything from car colors to, now, GPS tracking,” FNAT’s Annet said. “The least we’re asking for is that our competitors get the same tough love.”
Following complaints by Paris cab drivers, France this year imposed a rule on private services, requiring a minimum 15-minute wait between the time a car is booked and the passenger is picked up. The decree was later struck down by the country’s constitutional court.
Hamburg’s economy ministry on June 6 issued an order preventing Wundercar, a German peer of Uber, from operating in the city, saying that transporting people for profit and without a license is against the law. Berlin administrators are probing a similar move against Uber, spokeswoman Petra Rohland said. A Berlin court banned the Uber Black chauffeur service in April, although the injunction hasn’t been enforced.
The Spanish region of Catalonia said yesterday it will ask Uber -- which is available in Barcelona -- to immediately stop its activities in the area. The regional government is also telling security forces to increase control and detection of illegal taxi services.
“Consumers want to have these services. I’ve personally never sat in a run-down Uber car, but I’ve definitely experienced a lot of run-down taxis,” said Arndt Ellinghorst, head of automotive research at ISI Group in London. “It is a bit scary how protectionist Europe can be.”
Uber raised $1.2 billion in new financing led by Fidelity Investments last week, valuing the company at about $17 billion, before added investments. The company had earlier raised $307.5 million from investors including Google Ventures, TPG Capital and Menlo Ventures.
The company’s assets may be worth just $5.9 billion, Aswath Damodaran, a finance professor at New York University, wrote on his blog this week. He said the figure was based on optimistic assumptions about the taxi industry’s growth and Uber’s market share and profitability.
Chief Executive Officer Travis Kalanick -- who started Uber in 2009 after he and partner Garrett Camp couldn’t find a cab in Paris -- has pushed the company into 37 countries. He said the low prices and ease of use that their drivers can offer will lead to a base of support from consumers that regulators won’t be able to ignore.
A typical journey from Finsbury Square, near London’s financial district, and Paddington Station takes between 20 and 30 minutes by car to travel approximately four miles. Uber estimates that that journey would cost between 14 pounds ($24) and 16 pounds. London’s transportation authority estimates that the trip could cost between 15 pounds and 22 pounds.
The German market for taxis and rental cars was 4.3 billion euros last year, said Michael Mueller, the president of the German Association of Taxis and Rental Cars. It would shrink by 1 billion euros at the price levels Uber advocates, he said.
Uber said in its blog it’s responsible for 20,000 new jobs per month. The median income for drivers using the UberX platform, Uber’s low-cost service, is $90,000 per year in New York and more than $74,000 in San Francisco, the company said.
Uber advertises itself to prospective drivers as a way to start your own business, drawing users who aren’t professional chauffeurs. That’s different from apps such as Hailo, which recruit from the industry. Uber customers can tap the app on their smartphone and see the locations of taxis in real time, pay via a stored credit card and rate their driver.
“Citizens of these cities are getting around the cities much more cheaply,” Kalanick told Bloomberg TV in an interview this week. “How does a regulator or city official take that away from the population? Say that inexpensive transportation that’s high quality, you shouldn’t have?”
To contact the editors responsible for this story: Kenneth Wong at firstname.lastname@example.org Ville Heiskanen, Mark Beech