Travis Kalanick...Travis Kalanick is a serial entrepreneur. He was born in Los Angeles and went to college at UCLA. The first company he founded, Scour ( in 1998, was the first P2P file exchange search engine. The second company, Red Swoosh, was founded in 2001 and sold in 2007 to Akamai Technologies. He is now CEO of Uber, which he co-founded in 2009 with Garrett Camp. He speaks at conferences and business events, including Tech Crunch, Tech Cocktail, and LeWeb. His motto is breaking stuff in order to fix it.Kalanick is a fan of startups and entrepreneurs, to which he dedicates his life. Credit: Redux / eyevine For further information please contact eyevine tel: +44 (0) 20 8709 8709 e-mail:
Travis Kalanick, chief executive of Uber © Redux/Eyevine

When Uber decided to introduce its controversial ride-sharing service to the European market in April 2014, the company already had a blueprint to follow. It would use the same strategy that had worked so well in the US, which could be summed up by an unofficial motto of its “growth” team: it is “easier to ask for forgiveness than permission”.

This approach led them to launch UberPop, which allows ordinary car owners without a special licence or training to offer rides to the public, in European cities without receiving clearance from local authorities first.

Europe’s taxi regulators were furious. But Uber planned to counter their objections by mobilising its users, just as it had rallied US customers to lobby politicians and watchdogs on its behalf.

“They want to be too big to ban,” says a person familiar with the tactics.

But the hardball strategy, encouraged by Travis Kalanick, the taxi app’s pugnacious chief executive, has backfired. Two of its top European executives are due to stand trial this month, its offices have been raided, drivers have been arrested and it has been the target of angry protests across the continent.

Uber’s aggressive style has failed to bulldoze opposition in Europe as effectively as it has in the US — and perhaps even paved the way for harsher treatment than it would have received if it had played by the rules. For its part, Uber says the regulatory pushback reveals more about the monopolistic taxi industry it seeks to shake up than flaws in its strategy or corporate culture.

In the coming months, the company faces a series of court cases and regulatory decisions that may force it into at least a partial retreat in Europe or, worse still, fundamental changes to its business model. Based on interviews with current and former Uber executives, transport regulators and others close to the situation, The Financial Times has charted Uber’s route to a tenuous legal position in Europe.

Even by the standards of its US tech forebears, Uber’s global push has been remarkable. The six-year-old start-up has raised $10bn and become the best-funded private technology company, with a market value of $50bn, a valuation predicated on the belief it will become the world’s dominant transportation company. The war chest has allowed the San Francisco company to march across the US, into Europe and on to China and India. It employs 4,000, operates in 60 countries and 340 cities.

In the past decade, other American tech disrupters, notably Google and Facebook, attempted to conquer Europe with soft power, funding philanthropic efforts in public and offering concessions to business practices in private. Only after years of negotiation did they face significant pushback from the region’s lawmakers and regulators.

Protests in Paris over Uber's arrival
© Getty

Uber has been more confrontational — and has faced stiff resistance from the start. Following angry protests and even attacks against Uber drivers in France, the company suspended UberPop in the country. Its low-cost ride-sharing service faces court-ordered bans in Germany, Italy and Spain. Seventy-five Uber cars have been impounded in Belgium. Drivers have been arrested in Brussels, Amsterdam and elsewhere.

Other services continue as normal, such as UberX, which in Europe uses licensed minicab drivers. But these offerings may face curbs in markets such as the UK and Hungary, where there are proposals to limit even these licensed services.

Worries inside the company about arrests were realised in June when Thibaud Simphal, Uber France’s chief executive, and Pierre-Dimitri Gore-Coty, the company’s general manager in Western Europe, were detained. They will stand trial in Paris on September 30 on charges of “misleading commercial practices” and “complicity in the illegal exercise of the taxi profession”.

Mark McGann, Uber’s head of public policy in Europe, accepts the company has “made some real mistakes” but is seeking to take a more conciliatory approach. “When you grow as a start-up, you need to partner with governments and find people willing to take on vested interests,” he says. “There are people driving around big hunks of metal every day and, because they have been told that [Uber] is going to threaten their existence, that has led to immense opposition. Governments when faced with that threat have chosen to close us from the market.”

But a person familiar with Uber’s European operations says: “Uber is clear-sighted about what the likely consequences of its business model are. But I think the point is, they think they are on a mission from God.”

Mr McGann is optimistic. “The momentum for reform of passenger transportation is, I believe, unstoppable,” he says.

But others are less convinced.

Shooting the messenger

At Uber, individual staff performance is judged against a number of conventional standards such as “speed” and “scale”. But it also measures “fierceness”, which staffers understand as a “take-no-prisoners” attitude.

“A Californian would say ‘be fierce’, a Brit would say ‘be bold,’” Mr McGann says. “I can guarantee you that, if we had hired 100 public school boys who spoke softly, we would have met with the same level of resistance” in Europe.


Funding raised from investors

That sense of fierceness was clearly on display in April 2014 when the company introduced UberPop in Paris, Brussels and Barcelona with an eye towards rapidly expanding into other markets. Uber’s European business and legal teams repeatedly warned their American bosses that this move was likely to generate regulatory pushback. In late 2014, Uber’s European policy chief told Mr Kalanick that the spread of UberPop would face an “uphill struggle” in many countries because of these concerns. Mr Kalanick fired the policy chief.

The warnings were prescient. Before long, the sense of fierceness had morphed into anxiety among some Uber officials. Even before Uber’s offices in Paris and Amsterdam were raided by local authorities in March, senior executives were already on edge. Nervous staff members worried that they would be arrested when they attended meetings with regulators in some cities.

The resistance was particularly acute in France, where taxi drivers pay €240,000 for a traditional licence, and Germany, where taxi companies are required to obtain commercial driving licences and insurance policies.

Uber argues it is a technology platform, not a taxi operation, so many of these regulations should not apply. The company does not consider drivers using its system to be employees, instead describing them as “partners” contracting to use its technology.

Critics argue this position also allows it to avoid significant costs attached to running a traditional minicab service, such as paying for employment benefits including sick pay and holidays.

At the time, Uber appeared less concerned about the legal objections ahead and more worried about competition in the rear view mirror. Lyft was launched in the US in 2012, gaining free publicity from the pink moustache its drivers stuck to the front of their cars.

Lyft’s ride-sharing model, where anyone who passes a background check can pick up passengers using its app, was a low-cost competitor to Uber, then a limousine-hailing service.

Uber initially planned to launch its competing ride-sharing service only after Lyft had tested the regulatory waters. However, seeing the mass-market potential and first-mover advantage, Mr Kalanick quickly reversed this strategy, expanding ride-sharing into as many cities as possible.

When UberPop emerged in Europe (the ride-sharing service is known as UberX in the US), the company’s strategy of not seeking permission before launching in cities had been largely successful across the US. If asking customers to lobby their local politicians worked in the US, why not in Europe?

After UberPop was banned in France in June, a petition in support of the company received 120,000 signatories. But local regulators were spoiling for a fight. One Uber staffer laments a European political climate more dismissive of its electorate than in the US. “The opinion of consumers is not necessarily being listened to,” he says.


Uber valuation

As Uber executives began to realise such methods were having little success, it began to change its tone.

Mr Kalanick, who once described his competition as “an asshole named Taxi”, told the Financial Times last year that Uber had to “get better at communicating who we are and what we’re about, and showing people who want to say we’re a little brash that we actually aren’t that caricature that they read”.

In January, he told a conference in Munich that Uber would create 50,000 jobs in Europe this year, an effort to show politicians and policymakers that it could be a force for good in the region. In Germany, Uber’s rivals have successfully used the courts to challenge the company under city passenger transport laws, the Personenbeförderungsgesetz, which require drivers to be licensed if they carry passengers for a profit. In July last year, Hamburg became the first city in Germany to ban Uber’s ride-sharing service.

Crucial rulings ahead

“Quite apart from the breach of the passenger transportation law, many essential questions in [business] models like UberPop remain unclear,” says a Hamburg city spokesman. “Will the income be taxed properly? Are the drivers employees of Uber, meaning their employment is subject to social insurance? These questions were never answered satisfactorily by Uber. There is therefore no indication that models such as UberPop can be legitimately established in Germany.”

UberPop represents a significant part of its business in Europe. People familiar with the matter said the low-cost ride-sharing service generated “sizeable” revenues and was important as it is often the first Uber product available in a new market. Uber says that the majority of its revenues in Europe comes from its licensed services such as Uber X.

Uber is still hoping politicians and taxi authorities will come around. France’s Constitutional Court is expected to rule on the legality of Uber’s services this month. The European Commission is looking into bans on the company’s services in France and Germany to judge whether their laws violate competition rules. The European Court of Justice is weighing whether Uber should be considered a transport company or a digital service, a move that could upend bans on the company across the continent.

But if these authorities rule against Uber, its model may prove untenable. While Mr Kalanick seems to thrive in a permanent state of war, he may find that there are only so many fronts on which he can fight at once.

Additional reporting by Adam Thomson

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