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| Students protesting the alleged assault by an Uber taxi driver in New Delhi
Less than a week ago, Uber Technologies Chief Executive Officer Travis Kalanick crowed about the company’s growth potential in Asia. Uber’s latest $1.2 billion financing round, Kalanick’s wrote on his blog, “will allow Uber to make substantial investments, particularly in the Asia Pacific region.” The same day, Uber announced its launch in Vietnam and celebrated with a lavish party at the Hanoi Opera House, featuring a 16-person orchestra.
The future of Uber’s biggest business in Asia has become questionable, at best. After an Uber driver in India was arrested for rape, the New Delhi government shut down Uber in the Indian capital, and protesters took to the streets of the city to denounce the company. The government has since gone a step farther, adding that Uber is not only unwelcome, it will be “blacklisted” in the future.
Police continued to question Uber executives on Tuesday, according to a report from news agency Press Trust of India, which reported a police official as saying the investigation has uncovered “gross violations on part of the company in terms of violation of the Motor Vehicle Act and others.” The central government is planning to ask other states to ban Uber. Citing New Delhi police official Brijendra Kumar Yadav, the Associated Press reported that Uber drivers don’t have police-issuedbackground-check badges.
With its Indian business at risk, the company probably didn’t help itself with a statement suggesting that the government, not Uber, bears responsibility because of lax regulation. “We will work with the government to establish clear background checks,” Kalanick wrote in a blog post. Those background checks, he added, are “currently absent in their commercial transportation licensing programs.”
The rape allegation against the Uber driver could lead to a broader crackdown on Uber’s Indian imitators as well. One of the most vulnerable is Ola Cabs, which runs an Uber-like service with more than 33,000 vehicles operating in 26 cities across the country. Ola recently received a $210 million investment from SoftBank (9984:JP), the Japanese company that is the largest shareholder in Chinese e-commerce giantAlibaba (BABA).
The crackdown on Uber will have an impact on Ola. The Delhi government said it would stop other Web-based service providers from operating until they obtain the required permits, the BBC, DPA and other media reported. Given the outcry against Uber, coming on the second anniversary of a gang rape of a 23-year-old medical student that horrified the country, the approval process may take a long time.
The outrage after the 2012 attack helped lead to the downfall of the Congress Party-led coalition government in elections this year. Members of Prime Minister Narendra Modi’s party aren’t likely to make the same mistake. In a country where foreign investment in Internet companies is already controversial—see the dispute about Amazon (AMZN) and other online marketplaces—politicians can show they’re committed to women’s safety by cracking down on companies that are backed by foreigners.
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Wednesday, December 10, 2014
Uber Won't Get Out of Its India Mess Any Time Soon (BusinessWeek)
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