Ride-hailing firm Uber has stepped up lobbying of the Hong Kong government after losing a critical court case on the legality of its business model, with some drivers vowing to keep carrying passengers despite the threat of an intensified crackdown.
In a letter to stakeholders, legislators and other policymakers on Tuesday, Uber’s local head of public policy and government affairs called on them to use their influence to persuade the government to change its stance on the company.
“As we face this critical and uncertain period, I hope that we can continue to count on your support so that Uber and our partners can carry on serving the millions of Hongkongers who rely on our apps,” Richard Wilder said.
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“There are different ways that individuals can support Uber at this point, either by raising the issue with relevant stakeholders as you see fit or by submitting to the chief executive’s policy address consultation directly.”
The plea came after the Court of Final Appeal on Tuesday threw out the last-ditch bids of 24 Uber drivers who were found guilty of carrying passengers for hire or reward without a hire-car permit, and were fined between HK$3,000 (US$380) and HK$4,500 in 2018.
The defeat was a devastating blow to Uber, which has provided millions of trips to residents since arriving in 2014, as well as delivering food orders.
“We are extremely disappointed with the court’s decision, and we will continue to support the 24 partners and their families during this challenging time,” Wilder said.
The senior executive admitted the top court’s ruling, coupled with a lack of regulatory progress on ride-sharing in Hong Kong, had “profound consequences” for Uber and the 14,000 active drivers who hoped to find flexible earning opportunities during the coronavirus pandemic.
“We know that the single most common reason for becoming a driver-partner is to make up for lost income during the current economic crisis, with the second most important reason being the need to meet ongoing obligations to support their families,” Wilder said.
For the second quarter this year, the US-based firm posted a net loss of US$1.8 billion with global revenue dropping 29 per cent year on year to US$2.2 billion. Since the second quarter of 2019, it has exited a number of overseas markets including South Korea, India and Egypt.
The firm’s revenue in Hong Kong was not disclosed, but a source said the city had been a profitable market, which explained Uber’s reluctance to quit the city despite the government’s repeated crackdowns on its service.
Despite operating in the city for six years, the drivers are still working illegally and Uber has faced strong resistance from the taxi industry, which counts 18,163 licensed cabs.
The company has been calling for a partnership with the Hong Kong government to address the city’s mobility future. However, officials have stood firm in cracking down on the service, with proposed increases in penalties for drivers caught providing illegal rides.
In July, Uber said that in May it was ready to move its Asia-Pacific headquarters to Hong Kong if it saw progress on ride-sharing regulations. But the company had decided to keep its regional headquarters in Singapore for the medium-term.
“Since then, we have seen strong public support for reforms, but not the level of certainty from the government that we need. As we continue those efforts, we have decided to keep Singapore as a regional hub for the medium term,” it said at the time.
Despite the latest legal blow, some drivers remained defiant, saying they would stay with the company as the job had eased their economic hardship.
Paul Yip, 47, a salon owner, joined Uber five years ago as a part-time driver but went full-time this year after the health crisis hit his business hard.
“In the past, I earned a net income of more than HK$40,000 from my salon every month, but in recent months due to the pandemic, I have been unable to make any profit and have had to dip into my own savings to pay rent of over HK$40,000,” Yip said.
He made HK$20,000 a month as a driver. “I won’t give up on being an Uber driver as I enjoy it very much,” he said. “I like driving and its flexible operation hours. I can pick up an order anytime I want.”
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Yip said he had assessed the risk and estimated he would face a fine at most if caught by police.
“Even though the court ruling is final, it doesn’t mean this policy can’t be changed,” he said. “I actually see a great demand in society for Uber’s service, and I have often picked up officials and their families from government residences from time to time. I have confidence that one day the government will give the green light to Uber. It’s just a matter of time.”
Jeff Chan, 42, started working as a part-time driver six years ago and turned full-time last year, earning about HK$30,000 a month after quitting his job at an online learning firm. But his income has dropped to about HK$20,000 a month due to Covid-19.
Amid this economic difficulty, if we stop driving for Uber, how can we survive? We need to feed ourselves and our families
Jeff Chan, driver
Chan insisted on remaining in the job despite concerns over being arrested for providing an illegal ride. “I won’t give up on being an Uber driver as I am not doing something to hurt people,” he said.
“In fact a lot of Uber drivers share the same thought as me. Amid this economic difficulty, if we stop driving for Uber, how can we survive? We need to feed ourselves and our families.”
Liberal Party legislator Frankie Yick Chi-ming, representing the transport sector, said Uber and its drivers should stop providing rides without a hire-car permit.
“Uber needs to abide by the law,” Yick said. “If it wishes to continue its ride-hailing operation, it should seek a hire-car permit for every vehicle operated on its platform.”
Police should step up enforcement against such illegal rides, he added.
But obtaining permits remains a challenge, at least under the current situation. A company or individual driver must apply for them from the government and the number is limited to just 1,500. Each vehicle requires a separate one, and the route must be specified. Given Uber does not own any vehicles, obtaining the permit would fall to each driver.
Uber is no stranger to controversy. In April 2018, one of its drivers, 50-year-old Hui Ki-wai, was killed when his BMW collided head-on with a taxi in Kowloon’s Argyle Street, resulting in a four-vehicle pile-up.
The accident, which left four others injured, was the first in the city involving an Uber car, and sparked questions over whether the company would compensate those affected, with Uber admitting its insurance did not cover injuries to its drivers.
At the same time, it was reported that court records and police reports showed that more than 100 drivers in the United States had been accused of sexual assault or abuse of passengers.
Uber then immediately announced it would start running yearly background checks on its drivers.
Lawmaker Charles Mok, representing the information technology sector, estimated that Uber’s capital cost in Hong Kong was limited as it did not own the vehicles.
“Its business model largely depends on its partnership with vehicle owners,” he said. “All it needs is to provide a ride-hailing platform via its app to match riders and drivers … so the overall capital cost would be limited.”
Mok said there was a great demand for Uber in Hong Kong, because many residents did not mind paying more for a better service than they often found in taxis.
“Many people are very unhappy with the city’s taxi drivers, for their rude attitude and poor service, so they don’t mind paying more for getting a better service,” he said.
He said the government’s continued failure to improve the city’s taxi service, such as requiring taxi owners to renew their vehicles after a certain time, largely contributed to Uber’s popularity in Hong Kong.
“The government has simply turned a blind eye to the poor taxi service,” he said. “It just leaves the taxi owners and drivers to their own devices. The consequence is that more and more Hongkongers are using Uber rides while the taxi industry is left rotting.”
This article Uber steps up lobbying effort in Hong Kong after court deals devastating blow first appeared on South China Morning Post