Why Uber is a four-letter word to regulators

David Reed, director of research and editor-in-chief, DataIQ

Imagine a new challenger bank launches with promises to disrupt the banking industry. It has a slick app and branches that are open 24/7 offering great service. Best of all, its charges are well below what established rivals levy and it is offering a cash incentive to switch your account. So you do.

After a while, the terms and conditions get changed and you start to notice charges for things you thought were free. The service is still great, but its not proving to be as cheap as you thought. Only now, you can’t switch back to your former bank as it has stopped accepting new customers because of cost-cutting. 

Now you start finding out some things about the app that you don’t like. When you are not using it, it is still tracking your behaviour, mapping your location against retail outlets. You get messages warning about your balance when you are about to go for a drink. Your account even gets blocked while you are out. 

At that point, wouldn’t you want a regulator to take a look at these practices, not least because you didn’t know about them when you signed up? So, if you are an Uber user and recently signed its petition or have negged Transport for London for refusing to renew its taxi licence in London, why is that any different?

One of the reasons for TfL’s decision which attracted less attention was the use of Greyball - software that runs within Uber’s app. It says the company could be using it to deny regulators from gaining full access to the app or even preventing them from undertaking their official duties.

That charge reflects an investigation carried out by the New York Times which appeared to show the company was tracking law enforcement officials, giving them a different view from ordinary users or even stopping them from accessing functionality altogether. Uber has denied this and said in March that, “we are expressly prohibiting its use to target action by local regulators going forward.” It acknowledged that the tool is used for risk profiling, customer management and marketing, however.

Commercial companies have a right to refuse service and to manage their risk, of course. Data and analytics are central to this, with mobile apps a rich source for modelling user behaviour and forecasting demand as well as potential new services. But as the General Data Protection Regulation will make clear, this has to be transparent and fair. If you track users for several minutes after they have left a taxi, as Uber used to do (it claims to have stopped), then customers should know this and have the option to switch that off as it is not part of the service they signed up for.

When it comes to regulation, Uber’s defence against TfL puts it in a complicated position. Remember, it says it is not a taxi business, but a technology platform which allows self-employed drivers to find fares and riders to find taxis. It is already arguing against a recent employment ruling that it is, in fact, a direct employer.

In trying to counter TfL, Uber will need to explain why Greyball has been used to identify regulators and law enforcement officials (if this has been the case). In London, TfL requires access to specific information and transparency in how taxi operators work. That is why black cab drivers are licensed by the police, for example. It needs to be able to examine the app and use it to book journeys to check how the service is working - black cabs are subject to random inspections in the same way.

To renew its licence, Uber may find itself having to acknowledge the very thing it has resisted to date - that it is, in fact, a taxi operator. Being transparent with regulators and customers should form part of its business culture, either way. In any case, even if it wins against TfL, a lack of transparency about how personal information is being used and the way profiling is applied to identify regulators would likely be a breach of GDPR. And the fine for that would be a lot more costly than even the loss of Londoner’s fares.

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Knowledge and strategy director, DataIQ
David is developing the framework for soft skills and career development among data and analytics practitioners. He continues to be editor-in-chief and research director for DataIQ.